The Strategist

Tourism in France is under attack again

07/18/2016 - 16:44

Hotels in Nice are faced with a massive outflow of tourists after the attack. Hoteliers have already reported cancellation of about a quarter of reservations. Losses of hoteliers and transport companies now can compete with the losses after the terrorist attack in Paris in November 2015. Then, the general economic damage amounted to € 2 billion.

Tobi 87
Tobi 87
Terrorist attack in Nice caused another blow to the tourist industry in France, which is still reeling from the attacks in Paris last November.

The tourism sector "will have to feel the brunt of the consequences of a terrorist attack in Nice, which is a very popular tourist area in the summer season," warned French investment broker Aurel BGC in the morning bulletin at July 15th.

Tourism accounts for more than 7% of French GDP. The tourism sector, directly or in related areas, employ about 2 million people. In 2015, the country was visited by about 84.5 million people from all around the world. Annual number of tourists in Nice is about 4 million tourists.

Nice is the second most popular tourist destination in France after Paris. Annual revenues of the city’s tourist industry amount to € 1,5 billion - or 40% of total tourism revenue of the Côte d'Azur.

Friday trading at the Paris Stock Exchange opened with a general decline in prices.

Share of transport and logistics and tourism companies fell lower than others. Thus, securities of AccorHotels global network decreased by 4%; shares of Air France-KLM Airlines fell 2.11%, Europcar car rental company - 3.9%.

After last year's terrorist attacks in France, especially after the terrorist attack in Paris in mid-November 2015, the country’s tourist industry was faced with a decrease in demand. Since the beginning of 2016, number of passengers arriving at airports in France fell by 5.8%. Number of arrivals in the airport of Paris shirked the most: the figures decreased by 11% compared with the same period a year earlier. Losses of the French hoteliers from the fall in demand caused by the terrorist attacks in Paris in November 2015 are estimated at € 270 million. Air France-KLM airline incurred further € 70 million of losses, according to data presented at the beginning of the year.

General economic loss, suffered by France because of the attacks in Paris, amounted to about € 2 billion, according to the French Government.

Paris terror attack still continues to have a negative impact on the tourism industry in France. Number of nights that foreign tourists on average spend in Paris this summer season is likely to be reduced by 20% compared to 2015, suggested Minister of Tourism of France Matthias Fekl in a recent interview.

The situation has somehow been corrected during the European Football Championship, which took place in France in June and early July of this year. Thanks to the event, number of passengers arriving at regional airports in France jumped 11% in the first ten days of July. However, the attack on July 14 made demand for holidays in France plummet once again.

"We have got a lot of cancellations since last night," - confessed Head of the Association of Hoteliers in Nice Denis Cippollini. 

Representatives of the French tourism industry do not expect a quick recovery in demand in France. "It is no longer a classic situation where a couple of months after the attack is enough to restore economic activity" - warns Head of the hotel chain and consulting company MKG Georges Panayotis.