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Lapland is waiting for new tourism investments

Although the quickest growth has now started to even out, tourism in Lapland is still growing strongly. There is still more room for growth, especially during the summer season, and the field’s operators are eagerly awaiting not only better transport connections but also new investments and entrepreneurs to accelerate summer tourism.

Last year, the tourism record in Lapland was broken with three million registered over-night visitors. There was a three percent growth compared to the previous record-breaking year. The growth of tourism is especially notable in the program service sector, where turnover increased by up to 23 percent. The accommodation sector grew by 17 and restaurant services by 5 percent.

Tourism in Lapland is still heavily focused on the winter season, which makes up about two thirds of the total volume. However, summer tourism is on the rise, and it is where most of the growth potential of tourism in Lapland can be found.

Domestic tourism makes up most of the growth of summer tourism, but the number of foreign tourists has also increased. For example, the most interesting growth markets of Ylläs and Rovaniemi are surprisingly far.

“We have seen some growth from startlingly distant places, such as Australia and America. This in encouraging, since we have decentralized our marketing and expanded outside the traditional offerings. Rovaniemi is a lively city also in summer, and a popular gateway to other destinations in Lapland,” says Sanna Kärkkäinen, the CEO of Visit Rovaniemi.

The interviewed tourism operators consider accessibility as the major bottleneck of increasing summer tourism in Lapland. More direct flight connections to airports in Lapland are needed, as well as more extensive railway traffic to Fell Lapland, for example.

“Travelling by train is clearly becoming more popular, partly due to sustainability themes. It is also related to the slow travel trend, where travelling itself is valued and not just the time spent in the destination,” says the CEO of Visit Ylläs, Janne-Juhani Haarma.

Expansion projects underway

The growth of tourism in Lapland boosts expansion projects and additional investments at Ylläs, Rovaniemi and Northern Lapland, among other places.

Sanna Kärkkäinen says that smaller investments are made constantly in the accommodation services in Rovaniemi, but the next larger projects are still at their planning stages.

“This year, we are mostly expanding our existing accommodation services. There will also be one new attraction for the coming winter. With regard to other investments, there are many ongoing discussions and plenty of interest in the area.”

At Ylläs, people are waiting for funding for two large-scale projects. Sport Resort Ylläs has an extensive long-term development plan, which includes e.g., hotels.  The 80-room log hotel being built in Äkäslompolo is a little closer to implementation.

“We are still looking for investors, but things look promising,” Janne-Juhani Haarma says.

Two significant accommodation locations are being built in Northern Lapland. Aurora Estate, a luxury hotel in Inari, is scheduled to be opened in the winter season of 2021, and a building project for a village of glass igloos is being launched at Utsjoki.

“These are both notable projects and will bring a very welcome addition to the accommodation capacity of the large Northern Lapland area,” says Marketing Manager Marja Kumpuniemi from Inari-Saariselkä Matkailu Oy.

Room for new entrepreneurs, demand for program services

The growing tourism also increases the demand for new services. In Rovaniemi, for example, new additions to program services are eagerly awaited.

“There is a demand for multi-purpose meeting facilities and various sauna-related services in Rovaniemi. The high season in the winter is very busy in all program service activities related to animals, so I believe there would be more room for interested dog sledding and reindeer herding operators,” Sanna Kärkkäinen says.

In recent years, Ylläs has invested heavily in mountain biking, and was rewarded for it by receiving the “Finnish excursion destination of the year 2019” award. According to Janne-Juhani Haarma, Ylläs could use more competence focused on mountain biking.

“We offer off-road biking activities year round, but the operational peak is during the summer season. We have a need for a business that is specialized in biking and takes into account the growing needs of mountain bikers.”

Regarding the service demand in Northern Lapland, Marja Kumpuniemi brings up the most demanding luxury travelers as well as program services in nature.

“There is a clear demand for more services related to luxury tourism. Also, the fantastic nature around us offers many opportunities for various experiences and program services. For example, we could definitely utilize our extensive waterways even better.”

Obstacles have been overcome before

“Even though there are no massive, over €100 million investments underway in Lapland at the moment, the smaller investments hold great potential,” estimates the CEO of Lapland Chamber of Commerce, Timo Rautajoki.

“The major investments pave the way, but smaller ones are in progress all the time. During the past five years, investments worth around half a billion euros have been implemented in the tourism industry in Lapland, and even right now, there are projects underway that are worth nearly €2.5 billion. There are larger projects on the horizon and e.g., international hotel chains have shown interest in Lapland.”

“I believe that bold and cool-headed investors will do well. There are risks, but that’s always the case in business.”

A large investment boom is being slowed down by the situation of the global economy, influenced by the uncertainties created by Brexit and the trade war. Despite these factors, it should be noted that tourism in Lapland has been growing steadily and consistently over the long term. Furthermore, the customer base is wider than before, and tourism in Lapland is not dependent on any individual market. Threats have been conquered before, as Rautajoki points out.

“The Russian tourism to Lapland plummeted seven years back, and this was seen as a catastrophe.  However, we made it through when we found new tourist groups to fill the gap. I believe that we can increase our growth by investing in the summer season.”