Analysis: French tourism counting the true cost of terrorism

Springtime in Paris is not quite as vibrant as usual this year.

Analysis: French tourism counting the true cost of terrorism

With the continued fall-out resulting from the terrorist attacks last November still impacting on travel to the French capital, some hotels have experienced their lowest occupancy rates in 25 years, forcing many to cut their room rates in an effort to stem the shortfall.

A survey by Synhorcat, the French hotel and restaurant operators’ union, reported sales in the city’s cafés and bars down 44% in the weeks after the attacks, with hotels recording a 57% drop in business.

Research by hospitality research firm MKG Group found the sector showing a gradual recovery through the early months of 2016, but still off by 11% compared to 2015.

“We estimate the revenue shortfall for the French hotel industry at €270 million, of which €146m was for Paris alone,” said Vanguelis Panayotis, director of development at MKG.

France is the most-visited country in the world, with Paris hosting well over 32 million tourists last year, worth €21 billion to the economy.

Numbers of American and Japanese visitors have been notably down so far in 2016, a situation exacerbated by Donald Trump’s statement that “Europe is a dangerous place right now.”

As the holiday season approaches its pivotal point, the French tourist authority has joined forces with state railway operator, SNCF, and the Accor hotel group to extend the #ParisWeLoveYou promotion begun in the aftermath of the November 13 attacks.

SNCF is offering over 220,000 discounted tickets on its TGV trains, while Accor is providing up to 30% discounts on all-inclusive stays in 100,000 rooms.

SNCF chairman Guillaume Pepy said: “This initiative led by SNCF with AccorHotels, and the Greater Paris authorities is unprecedented in terms of its format as well as its momentum.”

Valérie Pécresse, Greater Paris Regional Council president, echoed the sentiment: “Greater Paris authorities are working side by side with the tourism industry to reinvigorate this vital sector, which has been struggling since the attacks.”

Fears of another terrorist attack during the upcoming the Euro 2016 tournament continue to garner media comment across France, with Prime Minister Manuel Valls insisting that security precautions at the stadiums will be sufficient.

With eight million fans expected to arrive in France for the tournament, which runs from June 10 to July 10, Mr Valls said: “France is a great, modern country which is capable of assuring the security of its citizens in the face of the terrorist menace.”

Designated fan zones in each of the ten host cities will accommodate various national support groups in large zones ranging from 20,000 to 100,000.

“The strongest answer to terrorists, in addition to the deployment of all intelligence and security measures, is life,” Mr Valls said.

“Security in fans zones will be guaranteed with the same measures and methods as in stadiums”.

Irish fans made 250,000 ticket applications for Euro 2016, with the first match against Sweden on June 13.

Despite increasing concerns around extremist attacks, the number of international tourists rose by 4.4% worldwide in 2015 to reach a record 1.18 billion.

“Last year’s results were influenced by exchange rates, oil prices and natural and man-made crises in many parts of the world,” said Taleb Rifai, head of the UN World Tourism Organisation.

Referencing extremist attacks, he said: “We are facing a global threat, and cannot anymore say this is the problem of Egypt or France or Tunisia or Turkey or Thailand or Indonesia.”

Pointing out that 2015 was the sixth consecutive year of above-average growth in global tourism since the 2009 economic crisis, he added: “The role of tourism is still underestimated and the integration of travel and tourism into national emergency structures and procedures often happens only after a major incident has taken place.”

A 2015 study by Moody’s Investors Service showed that terrorist attacks significantly weaken economic activity, with long-lasting effects on the economy.

The report, Terrorism’s Negative Impact on Economic Activity and Government Borrowing Costs, measured the effect of terrorism on a country’s economic and investment growth, government expenditure and cost of borrowing.

“In 2013, for example, the ten countries most affected by terrorism took an immediate and significant hit to growth, dampening GDP between 0.5 and 0.8 percentage points,” said Merxe Tudela, a Moody’s vice president.

“Even worse is that the negative impact continues for years after the attack, taking up to five years for the effects to peter out.”

The report found that investment growth is also affected.

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