For greater than 10,000 Olympic athletes, collaborating in Paris this summer is a dream come true. Thousands of potential tourists see things otherwise.
Delta Airlines According to CEO Ed Bastian, travelers are avoiding town this summer and booking destinations elsewhere as a substitute, representing a $100 million loss for the airline during an otherwise busy summer for European travel.
Delta's third-quarter earnings and revenue forecast fell in need of Wall Street expectations after airlines flooded the market with additional flights. The airline reiterated its full-year outlook on Thursday.
“If you don't go to the Olympics, people aren't going to Paris…very few,” Bastian told CNBC. “Business travel and other types of tourism may migrate elsewhere.”
Delta offers probably the most connections to Paris of all US airlines and has a three way partnership with Air France. Together, the 2 airlines have a market share of around 70 percent for nonstop connections between the US and France, in response to the consulting firm ICF.
On 1 July, Air France-KLM, the parent company of Air France, forecast Due to the Olympic Games, sales losses of as much as 180 million euros (195.5 million dollars) occurred within the months of June to August.
“International markets are clearly avoiding Paris,” the corporate said. “Travel between the city and other destinations is also below the usual June-August average, as French residents appear to be postponing their vacations until after the Olympics or considering alternative travel plans.”
Bastian said demand for Paris would likely be strong after the Olympics, which run from July 26 to August 11. “During the period itself, there is a slight reluctance,” he said. Air France-KLM had an analogous forecast.
A transparent obstacle to traveling to Paris in midsummer: hotel room prices will skyrocket.
Hotel data firm STR said revenue per available room at upscale hotels within the City of Lights will rise by as much as 45 percent in July and August in comparison with the identical period last 12 months. At the identical time, it forecasts the metric to rise by 3 to five percent in London and a couple of to 4 percent in Rome for a similar months.
Many travelers are already planning their European trips outside of the standard summer travel season, Delta President Glen Hauenstein said on a conference call on Thursday. This gives airlines the chance to generate more revenue outside of the standard peak season.
“We're seeing the season extend for a whole group of people, whether they're retired or not, whether they're people with dual incomes and no kids, who don't have school worries,” he said. “September and October are actually a better time to travel to Europe than possibly July and August when the weather is so hot and everything is so busy.”
He also said Delta is experiencing a boom in travel to Japan, largely as a result of the favorable exchange rate for U.S. tourists.
“When the yen reached 83 [per U.S. dollar]it was very difficult to afford a visit to Japan and all the good things the country has to supply. With the yen at 160, the world is a complete different place for U.S. travelers and so they appear to be taking full advantage of that,” Hauenstein said.
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