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In Focus: Turin, Italy

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In Focus: Turin, Italy OCTOBER 2014 | PRICE €400 IN FOCUS: TURIN, ITALY Ezio Poinelli Director Pavlos Papadimitriou Senior Associate Panagiotis Verykios Analyst www.hvs.com HVS ATHENS | 17 Posidonos Ave. 5th Floor, 17455 Alimos, Athens, GREECE HVS MILAN | c/o Hemera Ventures, Blend Tower, Piazza 4 Novembre, 7, 20124 Milan, ITALY This market snapshot presents current data and information on the hotel and tourism industry in Turin, Italy. In writing such articles we utilise the expertise of HVS for each market to the full extent combining our in-house data and research together with published information regarding each of the examined destinations. Highlights • Italy is the third-largest economy in the euro-zone, but its exceptionally high public debt and structural impediments to growth have rendered it vulnerable to scrutiny by financial markets. Public debt has steadily increased since 2007, topping 133% of Gross Domestic Product (GDP) in 2013, but investor concerns regarding Italy and the broader euro- zone crisis eased in 2013, bringing down Italy's borrowing costs on sovereign government debt from its euro-era record levels; • The government still faces pressure from investors and European partners to sustain its efforts to address Italy's long- standing structural impediments to growth, such as labour market inefficiencies and widespread tax evasion. In 2013 economic growth and labour market conditions deteriorated, with recession at 1.8% and unemployment rising to 12.4%. Italy's GDP is currently 8.0% below its 2007 level however, the short-term economic outlook seems more promising, eventually stabilised after a tumultuous period; • According to the World Travel and Tourism Council, the total contribution of the Travel and Tourism (T&T) economy to the GDP of Italy was €159.6 billion (10.3% of total GDP) in 2013, and is forecasted to rise by 2.1% in 2014, and to rise by 2.0% per year to reach €198.2 billion (11.0% of GDP) in 2024. The Italian T&T economy is currently ranked 8th in absolute terms and 78th according to its relative contribution to the country’s GDP amongst 184 countries; • The total contribution of the T&T to employment, including jobs indirectly supported by the industry, was 11.6% of total employment (2,619,000 jobs) in 2013. This is expected to rise by 1.3% in 2014 to 2,652,500 jobs and rise by 1.6% per year to reach 3,094,000 jobs in 2024 (13.4% of total); • International tourism arrivals in Turin have recorded modest growth rates over the last four years after a period of fluctuation with a negative trend. However, the destination has recorded a very positive trend overall during the last decade. Airport arrivals from abroad recorded a deterioration of 3.5% over the 2011-13 period but have in general being increasing by an average rate of 1.1% per annum; • After the 2006 Winter Olympics the city has achieved to reposition itself attracting a higher proportion of leisure travellers. Corporate segment has suffered the last few years, as in almost every European major city, but the 2015 Milan EXPO and the Exhibition of the Holy Shroud the same year are projected to stimulate lodging demand and instigate an on-going visitation trend in the city. Region Overview Turin is an important business and cultural centre in northern Italy, capital of the Piedmont region, located mainly on the left bank of the Po River, in front of Susa Valley and surrounded by the western Alpine arch. The population of the city is 911,823 (December 2012) while the population of the urban area is estimated by Eurostat to be 1.7 million inhabitants. Turin is ranked third in Italy, after Milan and Rome, in terms of economic strength. With a GDP of $58 billion, Turin is the world's 78th richest city in terms of purchasing power. Turin is well known as the home of the Shroud of Turin, the headquarters of the automobile manufacturers FIAT, Lancia and Alfa Romeo, Iveco, the football teams Juventus F.C. and Turin F.C., and as host of the 2006 Winter Olympics. FIAT’s presence in the city is viewed as a demand driver in the business segment of the lodging industry in the city. The company’s imminent move of headquarters out of Turin to London, UK, for tax reasons, is expected to put pressure on the business segment, and could result in a decline in the market both in terms of supply and demand. On the other hand, the city has recently repositioned itself as a leisure destination as well, especially after the 2006 Winter Olympics. Hosting the Olympics brought an investment of €1.7 billion in infrastructure, such as the city’s metro and other sport facilities. The Olympics represented IN FOCUS: TURIN, ITALY | PAGE 2 an opportunity to revamp the city's look LOCATION OF TURIN and change its traditional image as an industrial city by showing the world its side of vibrant cultural life and noteworthy architecture. Nowadays, thanks to the aforementioned exposure and the city, Turin has become one of the primary Italian tourist destinations and has been established as an important European sport centre. All this has signalled a move from targeting business segment travellers to attracting also leisure tourists. Finally, two major events in 2015 are expected to generate additional room demand in the city of Turin. The 2015 Milano EXPO will take place at a location 35 minutes away from Turin by train, and individuals visiting the exhibition are in many cases expected to choose Turin over Milan in search of lower prices. The second event is the demonstration of the Shroud of Turin. The Holly Shroud will go on display in April 2015 for approximately two months. The Shroud is not on display regularly, and is considered one of the important holly relics of the Catholic Church. This second event is expected to boost the leisure market and target pilgrimages visiting the city both individually but also in organized tours. Major Tourist Attractions in Turin Turin already existed as a city in the Roman era and it is believed that by the time the Palatine Towers were built, the city had 5,000 inhabitants. Turin was under the control of the House of Savoy for a very long time, starting in the 11th century and ending with the abolition of Italian monarchy in 1946. By the time Turin was annexed to the Duchy of Savoy the city’s population was already 20,000 (mid-13th century), was named capital of the Duchy in 1563, while the city’s architecture developed in the Baroque style, still evident in its historic centre. The Residences of the Royal House of Savoy is a UNESCO World Heritage Site. Piazza Reale (Piazza San Carlo) and Via Nuova (Via Roma) were added with the first enlargement of the walls, while the Palazzo Reale (Royal Palace) was also built in the first half of the 17th century. In 1861 Turin was proclaimed the first capital of the Kingdom of Italy, a title that lasted for four years. During the late 19th century the city underwent rapid industrialization, with significant presence in the automotive sector (Fiat, 1899; Lancia, 1906). The city features many historical and cultural tourist attractions like the Turin Cathedral and its adjacent Chapel of the Holy Shroud (home to the Shroud of Turin), Castello del Valentino, the Egyptian Museum, the Museum of the Risorgimento, and a considerable number of churches and palaces. Besides all the above mentioned historical sites, Turin offers plenty of other choices that attract tourists. The exposure from the 2006 Winter Olympics, and the venues built for that purpose have made Turin one of the primary Italian tourist destinations and have established it as an important sport centre in Europe. The presence of Fiat cars, Ferrero chocolate, Lavazza coffee, and other large companies in and around the city are viewed as demand drivers in the business segment of the lodging industry in the city. Turin is a base for wine tourism activities in the area, since the entire region boasts numerous vineyards as well as being home to some of the most notable Italian wine and grape varieties (such as Moscato D’ Asti wines, or the Nebbiolo grapes). IN FOCUS: TURIN, ITALY | PAGE 3 Tourism and Visitation Airport Traffic Turin Airport, also known as Turin - Caselle CHART 1: ARRIVALS BY AIR - TURIN 2003-13 (000s) Airport, is located at Caselle Torinese, 15 kilometres northwest of the city centre. 2,000 The airport is connected by rail to the city of 1,500 Turin by the Ferrovia Turin-Ceres, operated by GTT as line A of Turin metropolitan 1,000 railway service and by bus, by means of the SADEM bus shuttle and charter buses, and 500 Terravision buses. 0 Airport arrivals in the city of Turin have been 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 moderately increasing over the last 10-year International Domestic Total period. The Compound Annual Growth Rate Source: Eurostat (CAGR) for the period 2003-13 was 1.1% primarily driven by an increase in international visitation. Domestic travellers have been growing by a modest CAGR of 0.7% accounting though for approximately 60.0% of total arrivals by air. The total number of passengers arriving in 2013 grew by 11.6% when compared to the respective number for 2003. CHART 2: HOTEL BEDNIGHTS - TURIN PROVINCE 2008-13 (000s) Visitation 7,000 Throughout the entire 2008-13 period the majority 6,000 of visitors to Turin Province referred to domestic 5,000 tourism, accounted almost every year for more than 4,000 75.0%.
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