Today, the 2024 Summer Olympics Games begin in Paris. Aside from the 10,000 athletes from around the globe and the few lakh spectators who have gathered to watch the games, expectations about the accelerating tourist flow of the games were not met.
Euromonitor International predicted that an additional 3 million people would come to Paris to attend the Games, which could increase tourism spending by as much as 4 billion Euros.
The games could have an unexpected impact on the economy.
The games have a negative impact on the revenue of airlines servicing Paris.
Air France-KLM reported its earnings for Q2 on Wednesday. The operating profit fell by 30% to 513 millions Euros ($556million).
The company also said that a decline in international traffic into Paris as a result of the games had impacted the unit revenue by approximately 40 million Euros.
The games will cost airlines approximately 200 million euros for the summer of 2024, which is the classic peak travel season in Europe.
The airline said that the gradual normalisation of service will only occur by the end August.
Delta Airlines, the US airline that offers the most flights to Paris of all, forecast a $100-million loss for the company earlier this month.
Glen Hauenstein, Delta’s president, spoke to analysts and investors during the Q2 earnings conference call earlier this month.
From June to August, we are observing a travel impact of about $100 million to Paris due to the Olympics…apart from this temporary event summer travel to Europe remains strong and in line with our expectations.
Hotel bookings fall
Bloomberg reported that UMIH Prestige is a trade association for hotels charging at least EUR800 ($870), per evening, and reported a 20 to 50 percent decrease in hotel bookings compared to the summer of last year.
UMIH Prestige director Christophe Laure said to the outlet that “Paris has seen a significant drop in demand for hotel rooms as we approach the Games.”
He said that many people are avoiding the city until the end of the ceremonies.
Hotel prices were kept high during the event and were further inflated by an increase in tourism tax, which led to tourists paying up to 200% more per night in tax, depending on their accommodation type.
Tourist mobility is further hampered by logistical problems
Not only have hotel rates increased, but also traffic restrictions and security measures. With more than 10,000 athletes expected to attend the Games, as well as around 5 lakh spectators, the city has been preparing itself for a influx.
Chloe Parkins is a senior economist at Oxford Economics and specializes in tourism economics.
The city’s closures will impact local businesses that rely on footfall tourists. In addition, the increased tourism tax due to events could reduce travel budgets and result in lower spending on tourist attractions and retail outlets. Travel has been discouraged by increased disruptions and costs in the run-up to the Games.
How to impact business and move forward
In 2016, the French Center for Sports Law and Economics conducted an economic impact analysis on behalf of France.
The study estimated that the Olympics in 2024 could generate up to EUR 10,7 billion and 247,000 jobs.
The economic impact of tourism was estimated to be between EUR1.4 and EUR3.5 billion (13-33%).
Parkins stated that while these numbers were welcomed, they should not be interpreted without caution because much has changed since 2016. Most notably, the pandemic as well as inflation.
She predicted that tourists would return to the city towards the end August, when the Paralympics are in full swing. This prediction is in line with airline expectations.
The early summer lull is expected to be temporary, as many travellers will try to avoid crowds. France remains a popular destination for many source markets. Tourists who can’t afford to come during the Summer Olympics may travel at a later time or choose to go while the Paralympic Games take place at the beginning of September.
This post Paris 2024 Olympics – Games cast a shadow over tourism, businesses may change as updates unfold
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