The 2024 Paris Olympics are just around the corner, but a significant hurdle stands between the city and a bustling influx of international visitors. While the games are set to kick off on July 26th, the reality is far from the anticipated boom in tourism.
The city’s tourism board, Paris je T’aime, anticipates a staggering 11.3 million visitors during the Olympic weeks. However, a mere 1.5 million are expected to be from outside of France. This stark disparity leaves many businesses in the tourism sector feeling the pinch, instead of the anticipated windfall.
From Boom to Bust: Disappointed Expectations
Alan Bachand, owner of sports travel firm 14sb, has long profited from pre-booking hotel inventory for major events like the Super Bowl, FIFA World Cup, and the Olympics. He then packages these bookings with tickets, offering competitive prices to die-hard fans.
This year, however, Bachand finds himself facing a sales slump, with figures reaching only 20% of his previous Olympic projections. This stark drop in demand is a significant blow to his business, particularly considering his hefty investment in advance bookings.
“For the first time in 25 years, I will accept less money than I paid for hotel rooms I contracted 30 months ago,” Bachand laments, highlighting the financial strain.
The culprit? Exorbitant pricing. Bachand explains that the initial pricing for hotel rooms was astronomically high, forcing him to pass these costs onto his customers. This strategy backfired, leading to a lack of interest and plummeting sales.
The problem wasn’t limited to Bachand’s company. Airlines are facing similar challenges. Delta Air Lines estimates a staggering $100 million in losses, as travelers opt to skip Paris during the Olympics, leaving seats empty.
Air France, which boosted its flight capacity from US cities to Paris by 15%, is also struggling to fill its planes. They report a revenue loss of at least 180 million euros, attributing it directly to the Olympics.
To offset their losses, both airlines are slashing prices, particularly for customers using reward points. This trend is evident across the industry, with reward travel search engines like point.me showing a significant increase in availability for flights to Paris during the Games.
Despite the steep discounts, the number of international visitors remains significantly lower than previous Olympics. Data from ForwardKeys shows a meager 8% growth in international flights to Paris compared to the 115% increase in flights to Rio de Janeiro during its Olympics in 2016.
This subdued response highlights a shift in traveler behavior. While individuals are still eager to experience the Games, the hefty price tag has deterred many, prompting them to wait and observe the global landscape before committing to a trip.
A Race to the Bottom: Hotels Slash Prices
The lackluster demand has triggered a race to the bottom for Paris hotels. Facing the daunting reality of empty rooms, hotels are frantically trying to boost occupancy by drastically reducing prices and eliminating minimum stay requirements. This trend is prevalent across all sectors, from apartment rentals to luxury hotels.
Orso Hotels, a boutique group with a four-star property, the Wallace, is experiencing the pressure first-hand. Their director of operations, Gilles Le Bras, attributes the need to reduce prices to the initial overpricing by many hotels.
“To stay competitive, we are forced to lower our prices,” Le Bras explains, emphasizing the need to adapt to the market.
The Wallace, typically charging around 410 euros per night, has been discounted on Priceline, with rooms selling for US$340 during the first week of the Games. Similarly, Hotel Dame des Arts is offering a 15% discount code for stays during the Games, hoping to attract last-minute travelers.
This scramble for bookings underscores the urgency facing the hotel industry. CoStar data reveals that Paris hotel occupancy levels are hovering around 80% for the Olympics, significantly lower than the 88.6% and 94.1% occupancy rates achieved in London 2012 and Rio 2016 respectively.
However, not all hotels are resorting to price cuts. Generator, which offers a blend of hostel and traditional hotel rooms, is bucking the trend. Their CEO, Alastair Thomann, reports a substantial increase in prices compared to last year.
Despite the lack of last-minute demand, Generator is confident in their pricing strategy, as many travelers have already booked their accommodations for the Games.
With the Games fast approaching, the outlook for Paris remains uncertain. While some businesses are optimistic about a late surge in bookings, many are bracing for a disappointing event. The race to attract visitors is on, with hotels scrambling to fill empty rooms and airlines offering steep discounts. It remains to be seen if Paris will be able to capitalize on the global spotlight and reap the benefits of hosting the Olympic Games.
