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Analysis

Coronavirus in Europe, a few destinations impacted

Along with Venice and its famous Carnival, Barcelona and the Mobile World Congress or even Lombardy, several other destinations are impacted in Europe. France, for its part, is experiencing a rather localised impact for the moment.

France rather spared, for the moment

France had a better January than 2019 with an occupancy rate (OR) up +2 points. Indeed, all markets gained in occupancy: +3.4 points in Île-de-France, +7.2 points in Paris and +4.94 points for the former Rhône Alpes region during the first 23 days of February, a period when the ski season is in full swing, benefiting this year from the start of school holidays one week earlier than 2019 for Zone C.

Over the same period, there was no significant impact on most of the Paris Region markets. On the contrary, Disneyland Paris' eastern Paris market saw its OR increase by +1.35 points compared to February 2019.

On the other hand, Paris intramuros lost -1.52 points of occupancy. However, this drop is notably due to the postponement of school holidays, which began a week earlier in 2020.

However, there is a noticeable impact on certain specific markets dependent on Chinese customers. First of all, hotels in the outskirts, which have contracts with Chinese tour operators, have perceived a real impact, according to hotel operators, in terms of booking volumes.

The Première Vision trade show in Paris Nord Villepinte dedicated to fashion and textiles, which usually attracts large numbers of Chinese visitors, has seen a drop in attendance. Hotels in the Paris Nord - Villepinte area saw a 7.7-point drop in attendance between 1 and 23 February 2020 compared with 2019. The decline also impacted the Roissy Charles de Gaulle area with an 8.72-point drop in occupancy over the same period.

To sum up, a very local impact is currently observed in specific markets dependent on Chinese and Asian customers. The coming weeks with the arrival of an active household in Italy will be decisive for the health of the French hotel business. Keeping in mind that the beginning of 2019 was impacted in France by the yellow jackets ("Gilets Jaunes") crisis, the benchmark should therefore not be difficult to exceed.

Italy, the new epicentre of the epidemic in Europe, severely disrupted

On the Italian side, the desertification of the destination has begun. The Quai d'Orsay (Ministry of Europe and Foreign Affairs) recommends its citizens to postpone any stay in Italy for the next few days. The Mediterranean country has experienced difficulties in containing the disease, which has already infected more than 300 people and caused the death of 12 others in total. An emergency meeting was held on Tuesday 25 February in Rome with the health ministers of neighbouring countries to discuss options for limiting the spread of the pandemic in Europe.

The increase in the number of cases of infection in the country, particularly in Lombardy, has led to a wave of cancellations of professional, cultural and sporting events in the country. At the top of the list is the Venice Carnival, which had to be shortened by two days, although it was originally scheduled to be held until 25 February. It had been held since 8 February. To a lesser extent, there are several rugby games (cancelled or postponed) and the cancellation of the Armani public parades in Milan.

In addition, 11 towns were placed under quarantine in the north of the country, in Lombardy and Veneto, where two outbreaks of the disease were identified on Friday 21 February, one in Codogno (Lombardy), the other in Vo'Euganeo (Veneto). The President of the Council of Ministers, Giuseppe Conte, said that "neither entry nor exit will be allowed unless special dispensation is granted" in relation to the isolation of these 11 municipalities. The question now arises as to the repercussions on Milan and Venice, close to which the cities currently under quarantine are located.

As for Milan, the destination is already seeing a significant drop in activity. Maurizio Naro, the president of the Milan hoteliers, Lodi, Monza and Brianza, deplored this:

At this time of the year, Monday to Thursday, Milan usually has 80 to 90% of its hotels occupied and now we are at 20%.

The evolution of the epidemic will be decisive for the Milanese region in the coming weeks, where most airlines have already reduced the frequency of their scheduled flights, such as British Airways, which has cancelled two dozen flights due to a "drop in demand".

In Spain, a quarantined hotel in the Canary Islands and an international congress cancelled

On the Spanish side, while a resurgence of the virus has been observed in recent days although the country has been rather spared so far, a hotel has just been quarantined in the Canary Islands. Hotel H10 Costa Adeje Palace discovered a potential case of Coronavirus in an Italian tourist in its 467-room hotel. The 1,000 or so guests have been told to stay in their rooms until further notice. Reservations and arrivals have been suspended until March 13.

In the Canary Islands, the hotels on site have lost only -0.79 points of occupancy since 1 February, for an OR that remains at 80.61%. But from February 15 to 25, performance has fallen further, by -2.01 points, for an OR that remains relatively very high nonetheless (81.22%).

In Barcelona, the Mobile World Congress, which was scheduled to take place from 24 to 27 February 2020 and welcome more than 100,000 visitors, was cancelled as a precautionary measure on 12 February. Since the beginning of February, the losses are estimated at -12.76 pts (OR 62.45%); but the losses drop to -52.14 pts (OR 40.74%) on February 23, the day before the first day of the event initially, and to -54.61 pts (OR 44.86%) on February 25, the penultimate day of the event.

Overall, the shortfall for the Catalan capital is estimated at almost 500 million euros. To counterbalance these losses, the city council has created "Barcelona Opportunity Week" to promote the destination by offering discounts on hotel nights, restaurants, spas and other services.

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