Big ideas from little Andorra: How the principality is luring back skiers

Eighteen months ago, Mathew Prior made a prediction. Launching the annual report on the ski business published by Crystal, one of the companies he runs as the boss of Tui UK's ski division, he announced that Andorra would increase its share of the market in the 2009/10 season. This was a bold statement, given that Andorra's market share had declined sharply in each of the four previous seasons. But he was correct: Andorra did have a better season.

How did Prior know that would happen? He had, if you like, prior information. Andorra had offered cut-price deals to UK tour operators so that they could sell bargain holidays last season. Its penetration of the UK market was bound to increase.

Why was Andorra reduced to buying market share? Because it had steadily declined in popularity among British skiers from 2005 onwards. When its market share fell from 13.7 to 11.9 per cent in 2005/6, that year's Crystal report described the cause as "a change in proposition from a 'value' to a 'quality' offering". Its share fell to 11 per cent, then seven per cent, then five per cent. Crystal spelled out the problem more fully in 2009, saying that in 2008/9 Andorra had "suffered due to the continuing change of product type, leaving behind its traditional customer base but... still struggling to find a new one".

Set in the Pyrenees, Andorra is a principality 50 times smaller than Wales. It owes its existence to a 14th-century Spanish bishop, but it owes its survival in the modern world to trading as a duty-free zone and skiing. In 1957 a local farmer, Francesc Viladomat, figured out that Andorra's sloping fields could more profitably be used for skiing than for agriculture. He installed the first lifts, at Pas de la Casa. Other farming families followed suit.

Four decades later, Pas de la Casa was a resort with 11,000 guest-beds, many of them occupied by British skiers. Although Andorra attracted skiers from the neighbouring countries, Spain and France, it was UK tour operators that provided the bedrock of the business, flying in planeloads for a week at a time right through the season.

Andorra couldn't compete with France and Austria, so it didn't try. It enticed mostly young British skiers, often beginners, with low-priced holidays, duty-free drinks and a ski-school in which about half of the instructors spoke English. The duty-free booze and a burgeoning party scene kept guests happy, and Andorra prospered. By the 2002/3 season it was attracting more British skiers than Switzerland and North America put together, and was threatening to overtake Italy and become our third-favourite ski destination.

The threat turned out to be empty; and Andorra's popularity waned. Last season, Italy attracted more than twice as many British skiers as Andorra.

Pas de la Casa has changed since its heyday. Then, the authorities were lax about health-and-safety infractions; now the worst (and cheapest) accommodation has been upgraded or closed down. But the place still exudes no more charm than most border towns. Just a stone's throw away is France, so presumably it is the French who are responsible for the depressing stock in the supermarkets. In one, the upper floor was given over mainly to tobacco (Silk Cut: €26.50 for 200), perfumes, cleaning products, plastic-pellet guns, paella pans and souvenirs; on the ground floor there was alcohol (4.5 litres of J&B whisky: €40) plus a couple of aisles of foodstuffs. The supermarket was called "Ideal", though I didn't agree.

But across the Envalira pass in El Tarter and Soldeu things have changed more dramatically, especially the hotels. There is a slew of new four-stars and a spectacular five-star, the Sport Hotel Hermitage, which crowns the village of Soldeu. Stripped of the familiar devices of a cosy, traditional, ski-resort hotel (chintz, decorative old wooden skis, roaring fires), the Hermitage is cool, not unlike a beautiful business hotel. The materials are elemental – stone, metal, timber – and the colours earthy; the finishes are immaculate.

Andorra's skiing has been greatly improved, too. Where once there were five separate ski areas, each with its own lift pass, there are now three areas and a couple of lift passes. I can remember when there was a sort of Brandenburg Gate between the ski areas of Pas de la Casa and Soldeu/El Tarter; skiers shuffled across the border, palming one ski pass and offering up the other. But in 2003 the Viladomat family – still the majority owners of Pas de la Casa – did a deal with their neighbours, and two areas became one. Called Grandvalira, it has 193km of pistes, 67 lifts and enough snow cannons (1,097) to cover 40 per cent of the terrain. At about the same time the owners of the adjacent Pal and Arinsal areas, in Andorra's other ski valley, merged them to create Vallnord (which also includes the small Arcalis area).

Grandvalira is the big attraction. Vallnord cannot match its vital statistics, yet I prefer it. While Grandvalira is overdeveloped, with pistes packed into a rather featureless domain, Vallnord has character, thanks in part to its wooded slopes. Even at its highest point there are trees, in a gladed area with the added hazard of moguls.

In its defence, Grandvalira has the steeper and longer runs. Yet it still has barely any terrain to challenge an expert skier. To ski in Andorra is to realise that its ability to compete with the top resorts is limited. By topography, for example: Andorra is certainly mountainous, but in an Alpine setting its peaks – none of which reach 3,000 metres – would not make it to the skyline. There are excellent viewpoints at Grandvalira (from the restaurant at Pessons lake, for example) and at Vallnord (from the northern end of the Pal-Arinsal cable-car), but nowhere is there anything like the majestic Alpine panoramas. The Andorran valleys are narrow, and can seem gloomy except in bright sunlight. On an overcast day, it's hard to imagine British skiers paying a premium to go to Andorra.

Marta Rotes, director of Ski Andorra, the association of the principality's lift operators, says there was never a "plan" to go up-market. She says that investment in improving the ski areas (I reckon £100m has been spent since the millennium) and hotels, plus the elimination of the cheapest accommodation in Pas de la Casa, led to an increase in the average cost of an Andorran ski holiday. In most tourist destinations, national marketing strategies are commonplace, particularly if – as in Andorra's remarkable case – tourism accounts for more than 60 per cent of income. But Andorra is nothing like other tourist destinations. Since it is duty-free and largely tax-free, the government has hardly any money, and hardly any power. Last week, I asked a senior executive in the hospitality business who runs Andorra, the government or the rich farmers? The latter, he said. He was referring to people such as the Viladomats and Josep Calbó, the hotel entrepreneur who built the Sport Hotel Hermitage and many other properties in Soldeu.

But the initiative to restore Andorra's ski business with the UK certainly is a concerted plan, involving parties whose relationships have not previously been harmonious. The cost of supporting UK tour operators has been borne by hoteliers, ski-area owners and the ministry of tourism. "Everybody agreed, which is unusual in Andorra," says Rotes. "It is the first time that we have all worked together, and we have done so because we cannot accept losing the British market." The funding continues for this season and next.

But that is not the limit of Ski Andorra's efforts. Dismayed that Andorra's old image as a cheap ski destination for beginners still endures, Rotes has been visiting the call centres of UK tour operators. "I didn't even know what a call centre was," she says, "but now I go into them, give a presentation and try to convey what Andorra is really like. And the advisers are amazed. One said: 'Nobody knew! We only send beginners there."

Travel essentials: Andorra

Staying there

* A week's half-board at the five-star Sport Hermitage Hotel in Soldeu starts at £1,349 per person with Crystal Finest (0871 971 0364; crystalski.co.uk/finest), including flights from Gatwick and transfers; flights from Bristol, Birmingham, and Manchester are available.

* Holidays with Crystal Ski (0871 231 2256; crystalski.co.uk) start at £355 per week at the Hotel Snowlake in Pas de la Casa, with flights from Gatwick, transfers and accommodation.

More information

* Ski Andorra: skiandorra.ad