Being in Paris this summer is a dream come true for over 11,000 Olympic participants. Countless prospective travellers believe differently.
In spite of an otherwise busy summer for European travel, Delta Air Lines CEO Ed Bastian claims that customers are choosing to schedule trips to other locations this summer instead of the city, costing the airline $100 million.
As a result of airlines flooding the market with more flights, Wall Street was disappointed by Delta’s third-quarter profit and revenue estimate. The airline restated its forecast for the entire year on Thursday.
“Very few people are going to Paris unless they are attending the Olympics,” Bastian said to CNBC. “You know, other forms of tourism may be moving elsewhere, including business travel.”
Impact on Delta and Air France-KLM
With a joint venture with Air France, Delta offers more flights to Paris than any other American airline. According to consultancy firm ICF, the combined market share of the two carriers in nonstop service between the United States and France is over 70%.
The parent company of Air France, Air France-KLM, predicted on July 1 that the Olympic Games will incur a revenue loss of up to 180 million euros (USD 195.5 million) from June through August.
The corporation stated that “international markets show a significant avoidance of Paris.” “Travel from the city to other destinations is also less than the typical June–August average, as French citizens appear to be delaying their vacations until after the Olympic Games or thinking of other travel options.”
Following the July 26–August 11 Olympics, Bastian predicted that demand from Paris would probably be high. “There’s a little hesitation during the period itself,” he remarked. The projection from Air France-KLM was comparable.
High hotel costs and changing travel preferences
One obvious reason not to visit Paris in the middle of summer is the skyrocketing cost of hotel rooms.
According to hotel data company STR, income per available room at upmarket hotels in Paris is expected to increase by up to 45% in July and August compared to the same months last year. In the meantime, it predicts that during the same months, the metric will rise by 3% to 5% in London and by 2% to 4% in Rome.
During a Thursday earnings call, Glen Hauenstein, president of Delta Airlines, stated that many tourists were already planning their trips to Europe outside of the typical summer travel season. This allows airlines to generate additional income outside of their busy seasons.
“We see the season extending as a whole group of people who don’t have school-related concerns, whether or not they are retirees, whether or not they are people with double incomes and no children,” the speaker stated. “September and October are actually better times to visit Europe than they could be in July and August, when it’s so hot outside and everything is so crowded.”
Surge in travel to Japan
Additionally, he stated that Delta is experiencing a surge in travel to Japan, mostly attributable to a favourable exchange rate for American visitors.
“It was really tough to be able to afford to go see Japan and all that it had to offer when the yen was at 83 [per US dollar]. For American tourists, the world is considerably different now that the yen is at 160, and they appear to be making the most of it, according to Hauenstein.
In summary, while Paris’s allure during the Olympic Games has waned due to high costs and anticipated crowds, leading to a significant financial impact for airlines like Delta and Air France-KLM, alternative European destinations and Japan are seeing increased interest from travellers. This shift underscores the evolving travel preferences, with many choosing to avoid peak summer periods and opting for more favourable conditions and economic advantages in the fall.
(Tashia Bernardus)