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American tourists: 2008 or the black year

Transatlantic economic crisis, unfavorable euro-dollar exchange rate, fuel surcharges at their highest… American tourists have deserted France this year. The result was a loss of earnings for the French tourism sector that was fortunately compensated by the arrival of new tourism clientele. A recovery on this key market is nonetheless hoped for in the year 2009.

“The desire for Paris is still alive,” assures Paul Roll, director of the Office of Tourism and Congress of Paris (OTCP). But this year fewer Americans have been wandering the streets of Montmartre and Saint-Germain des Près, to visit our museums and shop in the luxury and souvenirs boutiques in Paris and the French Riviera. These destinations suffered from a weak dollar against the euro and fuel surcharges combined with the economic crisis that began in the United States already at the end of 2007. To add insult to injury, the American presidential elections tended to slow travel making many Americans prefer to stay at home to follow the campaigns of Barack Obama and John McCain.In the end, USA-France tourist relations resemble a rollercoaster ride marked by regular crises such as in 1993-1995, after 9-11 and, more recently, in 2003 with the second Gulf War. It is now up to professionals to brace themselves until better days come along, hoping that the new markets will resist so that the tourism sector on the whole doesn’t fall ill in 2009…According to the figures at the OTCP observatory, the monthly decrease reached 20% until the end of August in comparison with 2007. Only September –one of Americans’ favorite months in Paris- held up better, dropping by “only” 11%. The number one foreign clientele in Paris until 2007, Americans were dethroned by the British this year. “We should come close to 1.2 million American hotel arrivals versus 1.5 million in 2007,” estimates Paul Roll. The record figure in 2000 with 2 million tourists from Uncle Sam’s country now seems like a distant dream. “Paris has become expensive for Americans, and the wealthy East Coast clientele are not the only ones who visit our country,” analyses Jacques Alonso, general manager France for American Airlines, which has seen a 15% drop in USA-France passenger traffic in 2008. In fact it is the cost of the stay in Paris, at the châteaux in the Loire Valley, in Burgundy and on the French Riviera that make it hard on American travel budgets because the travel portion is paid in dollars. All the more so since hotel rates on the mid and upscale segment did not drop du-ring this period, as other tourists occupied the vacancies such as Brazilians, Russians, Indians and rich Middle Eastern visitors.The disgrace of Paris and Europe overall to the benefit of other more affordable destinations located in the dollar zone was watched carefully by Parisian hoteliers and more particularly American brands such as Best Western, Hyatt or Hilton, which suffered a greater impact. “The Tour Series that travel to Europe on circuits are still around but today the groups have 20 tourists versus 25 previously,” observes Claude Jumbert, director of Holiday Inn République in Paris. “According to our properties the drop was by 6 to 7 points, with Americans representing 35% of our clientele,” observes Thierry Torrente, sales manager of Marriott hotels on the Champs Elysées, Place Vendôme, Trocadero and Arc de Triomphe (opening in March 2009). “However, we have not lowered our rates or done any promotions on this market. The policy was to diversify our clientele which also made it possible to be less dependant on the American market.” For the same reason, Best Western, which has 80 addresses in the capital, decided to limit American clientele to 20% of its arrivals.Some groups have nonetheless tried to make a difference by promoting the product’s assets or, like Accor on the French Riviera, adopting room rates in dollars that are the same as those posted in euros. Sales managers for the French hotel group also brought their sales pitch to their distributors in several large American cities. Professionals outline the complexity of the American tour operating market. “We are not on a classic TO market in the United States. Distribution is very fragmented, not easy to reach and clientele are more difficult to capture,” outlines Sylvie Ernoult, sales manager of Exclusive Hotels. Internet sales are widespread there which makes it possible to compare rates in London, Rome or Berlin.Museums, department stores, restaurant owners, cabarets and other Parisian excursionists were not spared this air pocket in the American market. “The slump in US clientele could be felt starting in May and went hand in hand with a drop in average spending”, specifies Michel Madec, marketing director at Paris Vision, “it is a significant loss because Americans – 25% of our clients are big and quality consumers who buy full tours, upscale services with guides and minibus trips rather than motorcoaches.”While these tourists have continued to favor hotels located in the capital in order to take full advantage of their stay, hoteliers are observing a drop in annexed spending, particularly those through concierge services: reservations of restaurants, cabarets, airport transportation, cars with drivers … “Americans have discovered public transportation and are walking more than before,” summarizes Thierry Torrente. A result of the strong euro, change in buying behavior is also evident in duty-free figures. With 44,000 transactions recorded in the first nine months, Global Refund, which manages reimbursements in Europe has observed a 28% plunge in revenues from these tourists bringing it down to 44 million euros. This phenomenon is not unique to Paris since the drop in spending is by 20% in London and Berlin, 29% in Madrid, 36% in Milan… The only positive element: average spending grew by 8% in one year, to 893 euros (858 euros for the national average). “Americans have not spent more. Small transactions have disappeared to the benefit of upscale spending. Well-to-do tourists continue to have a strong presence in Paris, the shopping capital,” analyses Jean-Marc Leroy, general manager of Global Refund France. The 8th district in the capital with its luxury boutiques on Avenue Montaigne and the Champs Elysées concentrates 57% of purchases, which are essentially related to fashion (80%) and then watches and jewelry (14%).Although visibility remains weak, professionals hope for a rebound in 2009. While business tourism has been weakened by plans for savings implemented by American companies, the operations in portfolios will be realized. The same is true for congresses scheduled a year or two from now. “Paris will remain a leisure destination,” estimates Claude Jumbert. A more favorable exchange and the drop in the price of oil should lower the rates of packages sold in dollars and have a positive effect on the desire of individuals to return to France. Moreover, American tour operators have begun to bank on the competition between hotels in order to obtain the best rates. “We can estimate the drop in prices for packages at 20% next year,” considers Paul Roll,. “The drop in hotel occupancy rates is synonymous with a return of promotions to re-launch the market.” France in general and the capital in particular conserve all their power of appeal to Americans. A “romantic” capital, Paris remains a favorite destination for a 4-day city break for Valentines Day or Thanksgiving. Particularly since a selection of clientele, with strong purchasing power, was less affected by the subprime cri-sis. While for the others there is a great temptation to cut out leisure spending, the desire to travel could also return quickly if business picks up in the United States. “The great unknown is what economic policy Barack Obama will implement. It is also necessary to consider psychological factors, which are very important,” considers Jean-Marc Leroy.To accompany this recovery expected in 2009, Maison de la France will invest 7.5 million dollars – including 25% in professionals- in a vast promotional program. This offensive policy will first consist of direct communications operations via e-marketing with the campaign My France, the website and e-mail campaigns. Maison de la France will multiply familiarization trips throughout the country (such as the recent Red White and Blue in the Bordelais), tour the USA and participate in fairs: French Affairs at the end of October in Chicago, Luxury Travel Expo beginning December in Las Vegas… In order to reach different clientele niches, more guides will be published like the new Franceguide Prestige 2009. “The ambition with the new brand France is to give Americans the image of an innovative and seductive France. But also to say that there is a France for all budgets thanks to a good quality/price value of our products,” explains Jean-Philippe Pérol, director USA of Maison de la France.In the end, USA-France tourist relations resemble a rollercoaster ride marked by regular crises such as in 1993-1995, after 9-11 and, more recently, in 2003 with the second Gulf War. It is now up to professionals to brace themselves until better days come along, hoping that the new markets will resist so that the tourism sector on the whole doesn’t fall ill in 2009…

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