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Covid-19 pandemic strikes tourism strongly... It might also be an opportunity (Part 2)

All over Europe, countries are closing their borders, states are quarantining their populations, health measures are being stepped up to deal with the pandemic... while waiting for a return to normality, governments are also taking steps to support the travel industry, which is under severe pressure in the world's leading tourist destination. However, the impact on tourism professionals is severe with no clear visibility on the crisis duration and strength. Focus on destinations : France and Germany.

Focus France

In France, tourism represents more than 7% of the GDP placing this industry very high in the list of the incoming branches for the country. The tourism Minister Jean-Baptiste Lemoyne stated that each year, tourism represents 60 billion euros of incomes from international tourists, and 110 billion per years from nationals. The crisis costs at least 10 billion euros per month to the tourism professionals and related services. On March 18th, French hoteliers announced closure of 400 properties according to the syndicate GNC following the closing of restaurants and bars and the absence of customers in the hotels.

The upscale segment is the most impacted one by the pandemic, followed by the midscale, the economy and the budget. The situation is gradually deteriorating, forcing independents and branded hotels to close their doors. For instance, the InterContinental Paris le Grand Hotel closed for at least one month facing a nearly cessation of its activity. One of the most famous Parisian place, the Café de la Paix, plus the whole conference and meeting events being cancelled, the few clients sleeping in the hotel weren’t enough to maintain the performances of the 5-stars property. Palaces are also closing in Paris, having no client and many employees to deliver a luxury level service.

Impact Covid 19 France

Impact Covid 19 France

The French capital had yet started the year with growing performances ending February with a +4.2% RevPAR (100.10€ excl. VAT) boosted by the Fashion Week and the Agriculture annual fair. In Île-de-France region (excluding Paris) February was already showing red indicators with a loss of RevPAR by 6.3% (48.2€ excl. VAT) with a -3.4 points decrease of occupation (61.8%) in spite of price decrease.

The French government announced several measures to support the industry:

  • Deferral of tax and social contributions due in March
  • Recourse to short time working facilitated with compensation up to 4.5 times the minimum wage.
  • Creation of a solidarity fund for VSEs and SMEs, including 160,000 restaurateurs. Businesses that have lost more than 70% of their turnover are eligible for a financial aid of €1,500 that can be mobilized within a couple of weeks.
  • State guarantee of 300 billion euros to facilitate cash loans by banks.

Transports are also heavily impacted. Aéroport de Paris announced on Thursday 19th part time activity for 80% of its employees. The sector is drastically slowing down while some French citizens still don’t realize how important the sanitary crisis is.

Focus Germany

In the country, tourism represents 3.9% of the GDP, 30 million tourists visited Germany in 2018.

From the beginning of the year, the situation is negative with a severe drop from the beginning of March, usually a period of events and fairs which are numerous in Germany and support a big part of the hotel industry. As for other European countries, upscale segment is the most impacted, followed by midscale and economy. From March 3rd, performances started to decrease to reach a -70% RevPAR decline mid-March, except for the midscale, which was slightly less hardly impacted by the crisis. Germany is the last country of the panel to have locked down its shops and public venues taking the German hoteliers into the crisis a little after its neighbors. The Federal government announced the closing of all schools, bars, sports venues and malls on Monday to contain the virus. In the meantime, it is also taking actions to help companies to survive the crisis. Rule governing compensation for workers forced to cut working hours because of the crisis will be eased. Berlin is also working on measures to support German companies providing them with liquidities thanks to a global 12.4 billion euros budget, that will be assigned to several companies in order to support the German economy.

Impact Convid 19 Germany

Impact Covid 19 Germany

 

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