Paris 2024 Olympics: games cast a shadow on tourism bustle, businesses

The 2024 Summer Olympics games begin in Paris today and apart from the over 10,000 athletes congregating from across the world and a few lakh spectators, the expectations of the games' accelerating tourist inflow have not quite been met.

A Euromonitor International report last year predicted an extra 3 million people to come to Paris for the games, increasing tourism spending by up to 4 billion Euros.

However, with reports of high-end hotels seeing a drop in bookings, and shops, restaurants and bars seeing a slump in an otherwise peak season, even as airlines factor in loss of revenues due to decreased level of inbound tourism to the city throughout June -August, it is safe to say that the games may have a counterintuitive impact on the economy.

Airlines servicing Paris sectors take a revenue hit due to the games

In its Q2 earnings on Wednesday, Air France-KLM showed a drop of 30% in operating profits to 513 million Euros ($556 million).

It also reported a decrease in international inbound traffic to Paris due to the games impacted unit revenue by an estimated 40 million Euros, the company said.

In fact, for the entire summer of 2024 (June-August end), which is a classic peak season for European travel, the games are estimated to cost the airlines around 200 million Euros.

The airline added that it sees progressive normalisation happen only by the end of August onwards. 

Delta Airlines, which has the most service of any US airline to Paris, earlier this month forecasted a $100 million hit to the company due to the games. 

Speaking to analysts and investors earlier this month during the Q2 earnings call, Delta president Glen Hauenstein, said:

Fall in hotel bookings

UMIH Prestige, a trade group for hotels that charge at least €800 ($870) per evening said hotel bookings reported a 20% to 50% decrease compared to last summer, Bloomberg reported. 

UMIH Prestige head Christophe Laure told the outlet, “Paris is currently seeing a severe drop in demand for luxury hotel rooms in the run-up to the Games,”

He noted that many travellers are choosing to avoid the city until after the closing ceremonies.

It should be noted that hotel prices had been kept at a premium during the event, and further elevated by an increase in tourist tax which resulted in tourists paying nearly 200% more tourist tax per night, according to accommodation type.

Logistical issues further dampen tourist mobility

It is not just hotel prices, with a city preparing for the influx of more than 10,000 athletes and around 5 lakh spectators expected to witness the games, naturally a set of new, less tourist-friendly traffic controls have been put into place, along with a tightening of security.

Chloe Parkins, senior economist, tourism economics at Oxford Economics, said:

Impact on business and way forward

The French Center for Sports Law and Economics had conducted an economic impact study on behalf of France in 2016.

This study quantified the impact that the 2024 Olympics may generate at up to €10.7 billion and up to 247,000 jobs. 

Of the €10.7 billion, approximately €1.4-€3.5 billion (13-33%) was to be attributed to tourism-related economic impact. 

Parkins said while these figures were welcome, they should be interpreted with caution as much has changed since 2016, most notably the pandemic and inflation.

She has forecasted tourists to return to the city more towards the end of August when the Paralympic games are underway, a prediction in line with airlines' expectations.