Hanna Baas, House of Lapland
Hanna Baas
Writer is working as Program Manager at Business Lapland program at House of Lapland

What does Lapland look like from the perspective of tourism investments?

Tourism, especially international tourism, has grown at a rapid pace in Lapland. In 2019, as many as 3.1 million overnight stays were registered in the region, and in addition to overnight stays, the growth has been strongly visible in the turnover of the tourism industry. At the moment the coronavirus outbreak has slammed the brakes on business development. However, tourism in Lapland has a track record of recovering after crises. The long term growth in mind, tourism investments are important.

Lapland, tourism investments and business were discussed in February on Twitter with the hashtag #businesslaplandchat. The quotes in the text are excerpts from the chat.

In Lapland, there is a demand for high-quality services and accommodation that is suitable for high-end international tourists, in particular. Here luxury does not mean gold and finery, but rather high quality, personalized service, experiences and privacy if desired.

The construction of igloo-style accommodation has increased tremendously in recent years, and these high-quality glass domes have risen in almost every tourist center. Igloos are also one of the most googled terms associated with Lapland, along with northern lights and Santa Claus. But is the Lapland igloo market starting to get saturated? What next?

Whether the accommodation is in an igloo-type structure or in a hotel room, everything is done to the highest quality and thought out down to the last detail. Existing capacity will also be maintained to prevent the hotel building from dilapidating next to the shiny igloos.

Tourism can be developed either for the love of tourism itself or a return on investment. When seeking outside funding, the message that we have unique and pure nature and growth potential is not enough. You need to know what the bottom line could be.

Investors are first and foremost interested in returns in business. They want a return that matches the risk. #businesslaplandchat

A good plot, a preliminary concept and estimates of demand are a start. More important than a detailed architectural plan is the numerical verification of the business potential. And if there is a reliable and experienced operator involved, the expectations of success can be set high.

From an investment point of view, Lapland’s challenge has been a low year-round utilization rate. From the point of view of international investors, tourism in Lapland is a seasonal business and the risk rating is higher than in a traditional city hotel.  But improvement is in sight: last year, for example, tourism grew more during the snow-free season than in the winter. And summer is being worked hard on.

Increasing the utilization rate of snow-free season capacity is really important. It could trigger a new wave of investments. #businesslaplandchat

The sales revenue per available room in Lapland has increased. Last year, a room in Lapland brought more sales than a room in Finland on average and, when it comes to individual destinations, Rovaniemi is already reaching the figures of the Helsinki metropolitan area. Improved accessibility is also a good message for investors, both international travel and air travel have nearly doubled within the last ten years.

Operators in Lapland are investing all the time themselves, but a big step forward requires external funding. Different kinds of financing models and investors are needed: both private investors inspired by tourism in Lapland and larger venture capitalists. Even though money talks, it is not the only thing that matters. Lapland needs investors and operators who believe that growth goals and responsible operations go hand in hand.

Lapland’s tourist appeal withstands international comparison, but no large international hotel or resort chains have yet set up here. Is the pull of Lapland’s tourism industry already big enough to land a major international brand? Even one big global player would bring in a new customer base, network and credibility to Lapland as an investment environment.

In international comparison, the appeal stemming from Lapland’s exoticism would be sufficient; now it needs to be transformed into a more scalable investment entity. Having international brands would help. #businesslaplandchat

The impacts of the coronavirus outbreak are impossible to assess accurately at the moment. However, the attraction of Lapland has not vanished; it will endure. We believe that tourism in Lapland will recover quickly when the time comes.

#businesslaplandchat participants:

  • Pari Vartiainen, Finnvera
  • Tuija Tommila, Invest in Finland
  • Heidi Seikkula, Aurora Estate
  • Kimmo Virtanen, Christie&co
  • Noora Barria, Experience 365
  • Sanna Tarssanen, House of Lapland