Tuesday, January 27, 2015

Swiss Firms Dig In...

This article at Bloomberg is from the 19th so it is a bit dated and not quite real time; but it appears the initial reaction by Swiss firms is/was to hold the line on price in response to the SNB's recent policy changes.

Here are some excerpts:
As the Swiss franc strengthened some 20 percent against the euro and the pound, Zermatt’s tourist office suggested four options to the hotels, chalets, restaurants and cable-car firms that comprise its 1,100 members: reinstate the 1.20 franc per euro cap for European visitors; offer discounts of 20 percent; cut prices by 10 percent; or take no action. 
“I’m considering holding our prices in euros for a while,” said Southwell, who works for a consultancy in Zurich and rents out his century-old wooden chalet overlooking the Matterhorn... 
Travelers who book their summer holidays in Switzerland before the end of February will also pay pre-Jan. 15 prices, Inghams said. After that, the company’s pre-purchased funds will run out and prices will be adjusted, it said.... 
“Lowering the prices would be the wrong strategy because we have already done all the calculations for this year,” said Rainle, .... 
“We will not try to compete on price but on quality,” according to Patrizia Bickel, spokeswoman for Jungfraubahn, who said it’s important for planning purposes that the currency stabilizes. 
“Our marketing effort will be intensified outside Europe.”
The information in this article is not indicative of the Swiss immediately caving on price.

This initial firm reaction by the Swiss business community has coincided with a stability in the CHF exchange rate after the initial adjustment.

I was on The Economist site the other day reading something and got a "pop-up" ad for Rolex wrist watches... which I don't recall ever seeing one of those before.

So it looks like the Swiss business people are showing some moxie and at least are not going to go down easily.


Unknown said...

Can't be true. Firms have no market power, so prices are determined for them. If they try to hold prices then they'll invalidate all those textbooks.

Matt Franko said...

"Invisible hand"?

"Pricing Minotaur"?

"Humpty Dumpty"?