The Paris 2024 logo, representing the Olympic Games, is pictured near the Eiffel Tower three months before the start of the Paris 2024 Olympic and Paralympic Games on April 21, 2024 in Paris, France.
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For more than 10,000 Olympic athletes, travelling to Paris this summer is a dream come true. Thousands of potential tourists think otherwise.
Delta airlines says travelers are avoiding the city this summer and booking destinations elsewhere, representing a $100 million hit to the airline during an otherwise busy summer for European travel, Chief Executive Ed Bastian said.
Delta's third-quarter earnings and revenue guidance fell short of Wall Street expectations after airlines flooded the market with additional flights. The airline reiterated its full-year guidance on Thursday.
“Unless you're going to the Olympics, people aren't going to Paris… very few are,” Bastian told CNBC. “Business travel, you know, other types of tourism, is potentially going elsewhere.”
Delta is the U.S. carrier with the most flights to Paris and has a joint venture with Air France. Together, the two airlines have about 70% of the market for nonstop flights between the United States and France, according to the consulting firm ICF.
On July 1, Air France-KLM, the parent company of Air France, forecast a revenue hit of up to 180 million euros ($195.5 million) between June and August due to the Olympics.
“International markets are showing a marked tendency to avoid Paris,” the company said. “Travel between the city and other destinations is also below the usual June-August average, as residents in France appear to be postponing their holidays until after the Olympics or considering alternative travel plans.”
Bastian said demand for flights to Paris after the Olympics, which run from July 26 to August 11, was likely to be strong. “During that period there is a bit of hesitation,” he said. Air France-KLM had a similar projection.
Delta Airlines check-in counter at Paris-Charles-de-Gaulle Airport.
Bertrand Guay | AFP | Getty Images
One clear obstacle to travelling to Paris in the middle of summer: hotel room prices will skyrocket.
Hotel data firm STR said revenue per available room at luxury hotels in the City of Light will rise by as much as 45% in July and August compared with the same period last year. Meanwhile, it forecasts a rise of between 3% and 5% in the metric in London and between 2% and 4% in Rome for the same months.
Many travelers were already moving their European vacations beyond the traditional peak travel season, Delta President Glen Hauenstein said on an earnings call Thursday. That gives airlines the opportunity to earn more revenue outside of traditional peak seasons.
“We see the season being extended for a whole group of people, whether they're retired or not, whether they're dual-income earners or no kids, who don't have school concerns,” he said. “It's actually a better time to travel to Europe in September and October than potentially in July and August when it's so hot and everything is so crowded.”
He also said Delta is seeing a boom in travel to Japan, thanks in large part to a favorable exchange rate for American tourists.
“When the yen was at 83 [per U.S. dollar]”It was very difficult to afford to go see Japan and all the wonderful things Japan has to offer. With the yen at 160, it's a very different world for American travelers and they seem to be taking advantage of that,” Hauenstein said.
Disclosure: NBCUniversal, the parent company of CNBC, owns NBC Sports and NBC Olympics. NBC Olympics holds the U.S. broadcast rights to all Summer and Winter Games through 2032.
