What: Paris might welcome less tourists and sport afficionados for the Olympics this year

Why it is important: Are retailers happy when their city is hosting sport events?

Air France-KLM has issued a warning that it anticipates a financial downturn due to a significant drop in bookings to Paris during the Olympic Games scheduled from July 26 to August 11. The airline highlighted that traffic to Paris is notably lower compared to other major European cities, with a considerable portion of international travelers avoiding the French capital. This trend is also reflected in domestic behavior, where French nationals are either delaying their travel plans until after the games or opting for alternative destinations.

The expected negative revenue impact is estimated between €160 million and €180 million for the period from June to August. This represents a 13% decrease from the pre-tax profit forecast of €1.35 billion for the year, according to analysts at Bernstein. Despite these challenges, Air France-KLM remains optimistic about travel normalizing post-Olympics, with promising demand levels anticipated for late August and September.

The airline's share price has also fallen by 2.5% in response to these projections. This financial outlook is contrary to the positive visitor forecasts from tourism officials, who expect around 15 million attendees at the games. Local disruptions are anticipated, with half of Paris's residents planning temporary exits from the city, and a government minister recommending remote work to avoid transport congestion. Additionally, the market faces an accommodation surplus, evident from a significant number of Airbnb listings which are driving down rental prices.

Olympics: Air France-KLM flags financial hit