LUCERNE, Switzerland: Switzerland is enjoying its hottest summer on record, but, far from basking in the sun, the vacation industry is in a downright wintry mood.

Hotel beds are empty; restaurant tables remain bare; cuckoo clocks and chocolate stay on the shelves - all sorrowful testimony to the lack of tourists.

Economic gloom has dampened the famed wanderlust of the Germans.

Asia has recovered from the SARS (severe acute respiratory syndrome) epidemic, but the international tourism business is still sneezing from its after-effects.

And the fear of flying prompted by the war in Iraq and terrorist attacks has combined with the weak US dollar to reduce US tourists to a trickle.

"The start of the season was dreadful. There were no US people and no Asians. It was sad, very sad," Lucerne tour guide Monika Achermann said.

"Now, it's beginning to pick up again, but only slowly."

The sense of gloom hangs heavy over Lucerne - the Swiss tourist industry's epicentre, which has invested and expanded in recent years in hopes of attracting more package tourists and convention visitors and which, more than any other resort, is feeling the crunch.

The central Swiss city is blessed with amazing Alpine and lake scenery, and has kept its medieval heart intact alongside stylish new architecture.

It has a population of 65,000, but hosts an average 1 million overnight stays - half of them by US people and Asians - in dwellings ranging from luxurious lakefront hotels to a converted prison.

Despite the attractions, the city has experienced a 36-per-cent decrease in Japanese visitors to Switzerland in the year's first six months, and a 16-per-cent decline in US tourists.

In a sign of the times, even the top-notch Palace Hotel is offering last-minute bargains - albeit at the hefty price of 300 Swiss francs (US$219) for a double room - and less illustrious establishments are following suit.

Lee and Joan James, from San Diego, California, were booked for a visit last spring to famed Swiss tourist attractions such as the Matterhorn, Gstaad and St Moritz.

But the trip was cancelled due to lack of demand. They were offered a summer tour instead. Even so, there were still plenty of empty seats on the bus.

The couple - who delayed travel after the World Trade Centre attacks - said they are glad they went ahead with their European tour.

"Switzerland is like a storybook land. There's never a moment without a view," said Joan James.

"But, boy, is it expensive," they exclaimed in unison.

Dinner for two at a standard local restaurant can easily cost 80 francs (about US$60) - about a third more than it would have been two years ago, when the dollar was strong.

Zermatt is also feeling the pinch.

"Usually a lot of US tourists come to Zermatt at this time of year," said marketing director Daniel Luggen.

"But this year we have a decrease of one-third."

The resort suffered a blow in mid-July when the main route up the Matterhorn was closed for a couple of days after rockfalls trapped more than 80 climbers.

Guides remain jittery that the exceptional heat is melting the permafrost and making the ascent of Switzerland's most-famous peak more dangerous.

"It's a chaotic year," says Sammy Salm, tour director of Grindelwald, a resort particularly loved by US tourists and Japanese.

The resort lies between the central Swiss resort of Interlaken and Europe's highest railway station, the Jungfraujoch.

"We hope to restore some sort of balance by next spring - as long as there is no new major international crisis," he said.

Grindelwald, with its network of small family hotels, will bounce back, he added.

Swiss Tourism Director Juerg Schmid is not so sure.

He predicts 1,000 of the current 5,700 hotels will close over the next 10 years - about the same number as have disappeared over the past 10 years.

Nearly two-thirds of Switzerland's hotels are family run and have fewer than 20 rooms - far too small to survive cut-throat international competition unless they merge or join a pool devoted to special interest visitors such as cyclists, he said.

Schmid also frets about the future of Swiss International Airlines.

The Swiss flag flier is in the midst of a prolonged survival struggle. It announced in July it was axing one-quarter of its destinations - meaning there will be fewer direct flights to the Alpine country.

Foreign visitors to Switzerland, with its population of just 7 million, last year spent 12.2 billion francs (US$8.9 billion), down 3.5 per cent from the bumper year of 2001.

This year is expected to be even worse.

Agencies via Xinhua

(Business Weekly 08/26/2003 page2)