Surreal markets at the WEF

Fair Market Behavior? Holding Davosers Accountable for Sky-High Room and Rental Rates

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For WEF attendees, renting a Swiss chalet in Davos seems to be a good option. But a chalet could be purchased for the amount of money they spend in a week.

For WEF attendees, renting a Swiss chalet in Davos seems to be a good option. But a chalet could be purchased for the amount of money they spend in a week.

During the World Economic Forum’s 2011 annual meeting, the tiny Swiss town of Davos, with just over 11,000 inhabitants, had 31,200 overnight stays. In general, local Davosers are supportive of this—who wouldn’t be, if you can get paid up to $33,000 a week for renting out your apartment? Based on research done by the University of St. Gallen and funded by the WEF and the Canton of Graubünden, the town is estimated to have benefited to the tune of $46 million to $47 million in 2011 alone.

This year, 2,633 official attendees at the WEF’s meeting accounted for almost a quarter of the town’s population (not counting the thousands of nonregistered participants: non-invited organizations and individuals, hospitality and media staff, party crashers and so forth). They all needed a place to stay, and companies and media organizations were looking for office space as well.

Numerous wealthy people looking for rooms sends prices skyrocketing. To please the event’s organizers, local authorities try to keep control of this surreal market. But Town Hall’s emphasis on the mega-event’s net economic impact on Davos, backed by the aforementioned study, does not convince all the locals, and only a few get a piece of the big pie.

Town-hall building of Davos Klosters

Student Reporter/Tim Lehmann

Town-hall building of Davos Klosters

“For the majority of participants, the prices will never be too high,” explained a staffer from the Panorama Hotel, who did not want to be named. Another worker, at the Morosani Posthotel, said, “There is a rule between the hotels that we charge Christmas rates. Christmas is our most expensive season—high season.” The Davos Club Hotel confirmed that the high season resumed on Jan. 21 and lasted until Jan. 26 (the week of the event).

Local authorities, meanwhile, try to keep control over the room rate bonanza. A “normal price” is indicated by a “White Card” sticker, which about 90 percent of the hotels have, said Davos Mayor Tarzisius Caviezel. The sticker allows hotels to show that they are behaving “within a reasonable price range.” Caviezel said. (Our reporters could not find the sticker, and we did not receive a comment from Morosani Posthotel.)

But then the definition of “reasonable” for WEF week differs somewhat from the norm. “During the WEF, prices get a lot higher—they can reach $670, $770 per person [per night],” the Panorama Hotel employee said. The price written on the hotel’s official leaflet is $290 during high season.

Forum-goers, media organizations and crashers try to get around the high prices of a suspected hotel cartel by renting privately owned apartments. One party-goer told us she had rented an apartment for three for $22,000. Maurus Radelow, who grew up in Davos, said, “Apartment rent rates vary from $3,300 to $33,000, if not more. At normal times, you would not pay more than $2,200 for a week’s stay.”

Another young local Davoser, who rented out an apartment for the first time to a media team of three people, pocketed $3,900 after just five days. The person, who asked not to be named, won’t declare this income. To make the apartment available for renters, the Davoser first contacted Davos Klosters, the town’s tourism office, but was redirected to PublicisLive* in Geneva, a global event management firm that provides operations and logistics for the Davos meeting.

The Davoser said, “They [PublicisLive] offered $110 per person, for one night. And you do not even know who is going to stay at your place, or for how much they rent it out.” The person also wanted to have guests who could be trusted. “There are rumors that some guests act wildly, destroying furniture,” the Davoser said, adding, “We [Davosers] should ask for whatever prices. They [WEF participants] can afford it.”

Though the Davoser first asked for $9,000, the guests, who were from a media organization and came recommended by a friend, did not accept the offer and eventually settled on the $3,900.

Still, locals can easily find those willing to pay the highest prices. As the mayor said, “If you have a 4½-room apartment and someone is offering to pay you $22,000 for 14, let’s say 10, days, I would like to see the person who would say, ‘I don’t want this.’ ”

“But who cares? Locals still claim this is market price,” another Davoser said.

The dizzyingly high prices have led some companies to take matters into their own hands. MegaFon, a Russian telecom operator, set up a temporary tent instead of renting office space from a hotel. Quite a few hotels started to complain about these substitutes, as they are no longer able to rent all the facilities built to serve the needs of the WEF attendees,” Radelow said.

With high prices that make even multinational companies balk, hospitality becomes key. Global competition to host the WEF is huge, said WEF founder Klaus Schwab in an interview for a Swiss weekly newspaper. The WEF’s loyalty to Davos depends on whether participants feel comfortable in the town, he added.

Still, there is a sense of discomfort among Davosers. According to a local shop owner who has been living in the town for more than 30 years, the WEF’s economic benefits for Davos are increasingly concentrated on the five main hotels. A young local teacher complained about the meeting’s “surreal character,” while others say it has turned from a get-together into a PR event. For one young Davoser, though, “it is only one week, and everything turns normal afterwards.”

The Swiss could change things with a referendum on the WEF, but Davos’ mayor insists those critical of the event “will never succeed. Completely illusionary. We have surveyed the population, and they said, ‘Yes, we want the WEF!’ Until the end of 2018, the WEF is secured [to be hosted in Davos], and we are currently working to guarantee this beyond 2018.”


Editor’s note: As a media organization, we sent a seven-person team to Davos, two of whom were officially registered as press. We rented one apartment for five people for seven nights for 3,000 Swiss francs. Two stayed for free with local Davos friends. A public school allowed us to use one of its rooms as office space.

Every Davoser treated us with the best hospitality we could ask for, as we rushed into their homes and into town while pursuing our work: reporting stories like this. Meanwhile, we also had to make sure we will have housing in Davos in the future.

*Correction: February 21, 2014
PublicisLive is wholly owned by MSL Group, not partly owned by the WEF as previously stated.

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