The Paris Olympics are about to kick off, but don’t expect a sea of international visitors flooding the City of Lights. While millions of spectators will grace the stands, the majority will be French, leaving many businesses disappointed with lower-than-expected visitor numbers.
The Tourist Drought
Paris’ tourism board, Paris Je t’aime, estimates 11.3 million visitors during the Olympic period, with only 1.5 million hailing from abroad. This underwhelming turnout has left hotels, airlines, and travel agencies struggling to recoup their investments.
Alan Bachand, a seasoned sports travel expert who has built his business around major events like the Olympics, Super Bowl, and FIFA World Cup, reports an 80% decline in sales this year.
He attributes this downturn to exorbitantly high prices for hotels, forcing him to charge steep markups on packages. However, with a lackluster demand, Bachand and his competitors have been forced to slash prices to avoid substantial losses, hoping to merely break even.
Airlines Also Feeling the Pinch
Airlines are facing similar woes. Delta Air Lines anticipates a $100 million loss due to the underwhelming traveler response to the Olympics, leaving numerous seats empty. Similarly, Air France, despite expanding its flight capacity to Paris from American cities, reports a revenue loss of over $195 million for July and August, a direct consequence of the Olympic slump. Both airlines have resorted to slashing prices, particularly for reward flights, to fill empty seats.
Point.me, a reward travel search engine, has noted an abundance of reward flights for late July and August, with some offering flights from New York to Paris for as little as 20,000 points one-way, or approximately $200.
A Global Trend
This trend is evident across the travel industry. While Rio de Janeiro witnessed a staggering 115% increase in international flights during its Olympics in 2016, Paris has seen a mere 8% growth, according to travel analytics firm ForwardKeys.
Travelers, while keen to explore Paris, are hesitant to spend exorbitant sums, especially with lingering geopolitical concerns and the recent French elections. Many opted to wait and assess the situation before committing to their travel plans.
Hotel Industry Under Pressure
With the Olympics fast approaching, the hotel industry is scrambling to fill vacant rooms. Hotels across the city, from luxury establishments to apartment rentals, are drastically slashing prices and removing minimum stay requirements to attract last-minute bookings.
This price war comes amidst a record year for European tourism, with American visitors contributing a whopping €800 billion to the region’s economy.
Orso Hotels, a boutique group, reports that it has been forced to lower prices to stay competitive, as many hotels initially set high rates and have been steadily decreasing them for months.
Even with discounts, the overall occupancy levels for Paris during the Olympics are hovering around 80%, significantly lower than the 88.6% and 94.1% seen during the London 2012 and Rio 2016 Olympics, respectively.
Mixed Fortunes for Hotels
While many hotels are struggling to fill rooms, those who never implemented exorbitant pricing strategies are reaping the benefits.
Generator, a hotel chain offering both hostel-style and traditional accommodations, reports a doubling of rates for its cheapest dorm rooms compared to last year, with private rooms seeing a 72% increase.
A Last-Minute Surge Unlikely
With months of planning required to secure tickets for popular events like swimming and track-and-field, a sudden influx of last-minute tourists is unlikely to materialize. Families and friends of athletes have also already made travel plans.
Orso Hotels confirms this, stating that they aren’t experiencing a last-minute boom.
A Lesson Learned
Alan Bachand considers the Paris Olympics a missed opportunity for his business, focusing his efforts on next year’s Super Bowl. However, he is not entirely writing off Paris just yet, hoping to break even with last-minute deals.
The Olympics may be a spectacle, but for many businesses, it has been a costly affair. The lesson learned? While the allure of a major event is undeniable, pricing strategies must be carefully considered to avoid a potential downturn in demand.
