Did high hotel prices scare off visitors to Paris Olympics?

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When the Olympic Games kick off on July 26, expect to see mostly French spectators in the stands.

According to data from Paris je t’aime, the city’s tourism board, the capital is expecting 11.3 million visitors during the Olympics weeks-of which only 1.5 million will be international.

While that’s enough to keep stadiums busy, hotels, airlines and travel agencies are feeling a pinch where they had hoped to see a boom.

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Alan Bachand, owner of sports travel firm 14sb, has built his business in the past on pre-buying blocks of hotel inventory for major events-the Super Bowl, FIFA World Cup, the Olympics-and packaging it up with tickets at competitive prices for superfans. But this year, he tells Bloomberg that sales have fallen 80% short of his expectations based on previous Olympic games.

“This is the first time in 25 years that we will accept less money than we paid for hotel rooms that we contracted 30 months ago,” he says. Normally, he says, his sales begin a year before the event. “But the prices were crazy high-we had to spend $1,000 per night on hotels that would normally cost $400-and if we pay a lot of money, we have to mark ‘em up and sell ‘em for a lot of money,” he explains. “Once everyone realized the phones weren’t ringing, around 100 days out, people started to cut prices in half-and we’ve had to do the same.”

At this point, Bachand hopes to break even, rather than lose money on the event. But he isn’t sure it will be possible.

Airlines are in similar predicaments. On July 11, Delta Air Lines Inc. estimated it would take $100 million in losses as travellers opted to skip France during the Olympics, leaving too many unsold seats. In a similar situation is AirFrance, which expanded its flight capacity from US cities to Paris by 15% during the games. Its parent company Air France-KLM has so far reported revenue loss of at least 180 million euros ($195.5 million) in July and August, which it attributes to the Olympics. With many of its added seats still unsold, it too is slashing prices-particularly for people booking with points, where the discounts are more opaque.

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“Cities with non-stop flights to Paris like New York, Chicago, Atlanta and L.A. still have jaw-dropping reward flight availability for late July and into August during the Paris Olympics,” said Gilbert Ott, a spokesman for point.me, a reward travel search engine. “In recent days, I’ve found flights on Air France from New York for 20,000 points one-way, Atlanta for 15,000 one-way, or even further afield like Los Angeles for 30,000 one-way.” That’s as little as around $200 worth, using the typical exchange rate of a penny per point.

The trend applies industrywide. Whereas international flights to Rio de Janeiro grew by 115% year-over-year during its Olympics period in 2016, Paris has only seen a growth of 8%, according to data from travel analytics company ForwardKeys.

Bachand says travellers aren’t afraid to spend these days, but they saw the writing on the wall that prices were set too high. “People want to go but they’re also willing to hold out,” he says, adding that many travellers wanted to wait and see how geopolitical events and the French election played out to better assess safety concerns before making a decision.

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But with so little time remaining before the opening ceremony on July 26, hotels are getting especially antsy. The scramble to boost occupancy by decreasing nightly rates and eliminating minimum stay requirements is being felt across almost all sectors of the city’s hotel industry, including both apartment rentals and luxury hotels.

And it also comes amid a year of record tourism in Europe, where international visitors-driven by Americans-are poised to contribute €800 billion to the region’s economy.

“To stay competitive with other Parisian hotels, we are forced to lower our prices because many properties initially set very high prices and have been continuously lowering them for months,” says Orso Hotels’ Director of Operations Gilles Le Bras.

The boutique group’s four-star rated Wallace, which offers rooms for around €410 ($446) per night, has been among its best performing, likely due to its proximity to a variety of Olympics sporting venues, he said. On Priceline, its rooms have been discounted further, recently selling for $340 during the first week of the games.

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Another four-star hotel, Hôtel Dame des Arts, located in the Latin Quarter, is offering a 15% discount code for any stays between July 26 to August 11-and telling potential guests that they can redeem the promotion anytime before August 8 in hopes of converting the most last-minute trip planners.

All told, Paris hotel occupancy levels during the event are hovering around 80%, according to CoStar data released on June 26. That’s markedly below hotel occupancy during London 2012 and Rio 2016, which shook out at an average of 88.6% and 94.1%, CoStar data shows.

Not everyone is cutting prices-and the winners on the hotel front are those who never charge exorbitant rates to begin with. Take Generator, which offers a mix of hostel and traditional hotel rooms: Its CEO Alastair Thomann says the gross rate for its cheapest category, a bed in a large dorm room, is currently around €76 per night, double the €38 that it charged this time last year. For private rooms, the gross rate is €205, a 72% mark-up on 2023.

With months of planning generally required to secure tickets to the most coveted events, such as track-and-field and swimming, a sudden influx of spontaneous tourists is unlikely to pile into the City of Lights to fill vacant rooms. And the families and friends of athletes who secured coveted berths on national teams-some as recently as the past month-have, by now, made travel plans.

“We are not seeing a last-minute boom,” Orso’s Le Bras says.

Bachand has already chalked up the event as a “miss,” with business pivoting to next year’s Super Bowl. But he hasn’t fully closed the door on Paris yet. “We’ll break even if we can sell just 100 more hotel rooms, and the last-minute deals are really good.”

©2024 Bloomberg L.P.

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