Despite making everything in Switzerland about 15% more expensive, the Swiss National Bank’s decision to lift its cap on the value of the country’s currency has given many at the World Economic Forum a reason to smile. And to speculate.
DAVOS, Switzerland — Well before the piano bar at the Hotel Europe — the main after-hours party hub for attendees of the World Economic Forum — started to heat up for the night, piano player Barry Colson was ebulliently high-fiving a handful of the movers and shakers who had begun to trickle into the venue.
It was Tuesday night, the eve of the forum’s first official day, and five days after the Swiss National Bank lifted a cap on its currency, sending the Swiss franc skyrocketing more than 15% in mere hours. The piano bar was set to host a number of events throughout the week, including this evening, when it would swell to over a hundred people crowding around Colson to hear him play an hours-long slew of American oldies.
But it wasn’t the spirit of anticipation and admiration that Colson was celebrating — it was the rise of the Swiss currency. Its sudden increase had just elevated him a little closer to the wealth of those who surrounded his piano, though not anywhere near them at all, really. There were more than a few billionaires here.
“I made three grand more already this month than last year, all off the franc!” shouted Colson, a Canadian who has a monthlong residency at the Hotel Europe around forum time. He shared a high-five with a nearby partygoer, then both held hands aloft in a victory pose for a photo.
“The people here,” he said, motioning to the hotel’s bar staff, “they’re all over the moon!”
The next evening, one of the revelers who’d heard Colson croon Don McLean’s “American Pie” to a crowd of swaying VIPs 24 hours earlier praised the Swiss franc’s jump. It meant an unexpected post-Christmas bonus for him and his Geneva-based colleagues.
“Oh, it’s wonderful!” said the public relations executive in a taxi back from one of the many caviar-and-champagne-fueled parties that dot this idyllic Alpine town during the forum. “It’s fantastic. I just got a 15% raise!”
In a handful of shops that line the town’s main promenade, workers were thrilled at their respective raises, but also a little worried about what the franc’s increased value would mean for tourists coming to town after the WEF concludes on Saturday.
“For us it’s very nice,” said Tina Wilhelm, the proprietor of McPaperLand, a stationery and toy store near the “protest” area of Davos, where activists are corralled during the WEF and allowed to make their issues known at the opposite end of town from the Congress Centre. “But for tourists, we have a lot from Germany and France; it is now more expensive. Already to ski it is 70 or 80 francs. Then, if you want to eat up there it’s another 120 francs. We hope they still come.”
(Today, one Swiss franc is worth $1.14. It was trading almost exactly equal to the dollar prior to the Swiss National Bank’s surprise decision.)
A steady stream of customers filed into the Migrolino market, just down the promenade. Along with the Pronto Co-op grocery chain, it was among some of the larger businesses in town that cut the prices on their items after the franc rose, in a bid to encourage tourism in the area once the forum’s millionaire and billionaire visitors leave town.
“It’s great,” said the Migrolino’s smiley store manager, who identified himself only as Sandro. The franc’s sudden rise is “much better than all the other things going on in the world. People have already bought their apartments for the forum this year, so they come and spend. But after and next year, it might go down.”
Indeed, for those who make their money outside of the country and were merely stopping through for the annual gathering of the global business and political elite, the currency’s rise sparked conjecture and indifference. Davos and the surrounding Alp towns are notoriously expensive, especially when the WEF comes to town, but most attendees are either fabulously wealthy or able to pass on their expenses to a company or government. In many cases, they’re both.
A basic hotel room with scant amenities can go for 600 francs a night during the WEF. A stick of deodorant at the local pharmacy costs 16 francs, and it will set you back 120 francs to have your hair shampooed and blow-dried at the town’s main salon, if you so choose. Need a ride to Klosters, Davos’ neighbor town 7.5 miles to the northeast where hundreds of forum participants stay? That will be a staggering 100 francs, not including tip.
Still, you were hard-pressed to find anyone really complaining too much about the currency’s sudden increase.
“We booked everything in advance and paid for it in advance,” said Ben Rattray, CEO of crowdsourcing petition website Change.org. “So I didn’t really notice.”
Perched at a coffee bar inside the Congress Centre, Natalie Jaresko, Ukraine’s finance minister, noted that the owner of her favorite shop in Klosters, the Pine Cone, had bemoaned the franc’s increase and its potential impact on the the already slow tourist season the region was experiencing due to a lack of snow. But here at the forum, she said, attendees didn’t seem too worried.
“It hasn’t affected me very much,” Jaresko told BuzzFeed News, as two nearby women in full-length mink coats and brightly patterned Louis Vuitton silk scarfs angled for the bartender’s attention to score their free banana smoothies and cappuccinos.
Noting the women’s smoothies, Jaresko added, “We get all of this free food at the WEF, so maybe it’s costing them more. But I don’t think it’s affecting many people attending here.”
Free food and booze is ubiquitous at a number of many official WEF-sanctioned events, as well as, of course, the countless — perhaps thousands — of parties, offsite panels, country-sponsored lunch buffets (the “Make in India” lunch appears most popular), and marketing pop-ups (“activations, in marketer speak) that overtake nearly every square inch of town.
Expense accounts abound, so individuals may not feel the rapid drain of their bank balances all that acutely. But what about companies, many of whom deploy small armies to man their activations at various Davos branding pop-up hot spots like the Pepsico CafÃ© (known throughout the rest of the year as Schneider’s), where everything on the menu, from pizza to pasta to sandwiches, is made from ingredients of Pepsi products, or Ernst & Young’s networking outpost, EYHaus, at the Hilton Garden Inn?
At least one Fortune 50 company’s chair didn’t seem all that concerned with the currency rise’s effect on the week’s total bill, but more with the economics behind it.
“I was traveling to Switzerland on the day it was announced,” Steve Almond, global chair of Deloitte, told BuzzFeed News. “It made me think, Do markets behave rationally? It reminded me of some of the causes that led to the global financial crisis.”
Others harbored a more micro and rather mystifying theory on just what was behind the timing of the franc’s rise. One attendee, wishing to remain anonymous for fear of retribution from the forum, said he’d heard some attendees express shock that the WEF’s founder and global big shot, Klaus Schwab, once described by The New Yorker as probably the most connected man in the world, couldn’t convince the head of the Swiss National Bank to delay the big currency decision until after the forum had concluded.
It’s a revealing theory, one that ascribes almost supernatural power and influence to Schwab, But perhaps, after breathing too much thin Alpine air and experiencing the dizzying display of global power and wealth Schwab’s people manage to put on each year, you can’t blame some for seeing the WEF’s leader in near mythical terms.
But cooler heads dismissed such talk. “There’s no way that could be true,” said Warren Fernandez, editor of the Straits Times, Singapore’s largest newspaper, and a media leader at the WEF. “There’s just way too much riding on that decision. It’s too significant.”