TOURISM INDUSTRY

Challenges

For the tourism sector, the Covid-19 pandemic has resulted in a general drop in demand, linked to traffic bans and the cancellation of a number of events. The loss of activity could amount to 25% of tourism GDP in 2020.

In this context, the cash flow of tourism companies is deteriorating sharply: they account for more than 10% of loans guaranteed by the State (€1.3 billion) and their profitability is likely to drop by 64%.

For mountain resorts, while overall activity appeared to be slightly growing at the end of February 2020, with good forecasts for the spring holidays, the National Association of Mayors of Mountain Resorts estimates the loss of turnover (all resorts combined) by Ski Areas of France at around €1.5 billion. Hosting providers and domain operators would incur more than 50% of these losses.

However, more than 80% of tourism professionals seem to have reacted quickly by mobilizing government measures (unemployment, deferral of charges, assets) and renegotiating their debts. While 83% are satisfied with these measures in the short term, many question their effectiveness in the longer term (three years).

Professionals are expecting a very gradual recovery, driven over the summer by French customers. Many expect a return to normal (pre-Covid situation) in 2023. They also believe that this crisis will have a strong impact on future value propositions and on the economic models of tourism and leisure businesses.

This exceptional situation could significantly reduce investment capacity or postpone it for up to three years and subject to favorable health, economic or weather conditions.

For a seasonal activity such as tourism, the catch-up effect could be thwarted according to the modalities and constraints of de-confinement and limit the revival of activity in businesses if the summer holidays were shortened. Tour operators estimate that 20% of their turnover will be permanently lost.

The recovery will depend first and foremost on household trust. If the crisis lasts into 2021, it will have structural effects, resulting in a reconfiguration of the competitive landscape and a better consideration of health and environmental issues.

In the long term, the crisis would also have a strong impact on the value propositions and business models of tourism and leisure businesses: this would involve rationalizing and restructuring costs, changing the product offer, seeking a real tourist experience, implementing innovative partnerships and overhauling the tariff system.​

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