As France Slowly Opens, Paris Prepares for a Summer Without Tourists
PARIS — With many countries worldwide economically shut down for the past two months, businesses have been struggling to weather the storm. But with COVID-19 social distancing measures potentially lasting until 2022 and international travel at a standstill for the foreseeable future, those in the tourism industry stand to be especially hard-hit. The struggle could be especially apparent in Paris, France, which relies heavily on international tourism.
On Thursday, May 14, French Prime Minister Edouard Philipe announced a major $19.4 billion (18 billion euros) stimulus package for hotels, restaurants and other businesses in the tourism industry. "What is good for tourism is often good for France, what strikes tourism strikes France," he said.
Dubbed a "Marshall Plan" for the tourism industry, the package includes a solidarity fund through the end of 2020; more funds for larger government-backed loans to businesses; and an extension of government-paid partial unemployment for workers as long as companies are forced to remain closed.
While travel in France is currently restricted to within 100 kilometers (about 60 miles) of home, Philipe also announced that French people will be allowed to travel inside the country beyond that distance for vacation in July and August. He also said that the amount of restaurant vouchers, a preexisting government-funded program paying for all French workers to buy restaurant meals during the work week, will be doubled and extended to holidays and weekends.
Tourism: A Pillar of the French Economy
France set a new tourism world record in 2018, welcoming nearly 90 million foreign tourists, according to the French government. With 19.1 million foreign visitors, Paris was the second most-visited city worldwide, according to Mastercard's 2019 Global Destination Cities Index. Revenue from international tourism was a record $60.7 billion for the year, or roughly one-sixth of France's gross domestic product.
The current year is shaping up quite differently. All non-essential businesses including restaurants have been shut down since March 15. A progressive plan of deconfinement began on May 11, but plans for cafés and restaurants won't be announced until the end of May. Borders will remain closed until at least mid-June.
Even when businesses do reopen, workers in the tourism industry say no one is sure how many businesses will survive the next year without international tourists.
Paris-area restaurants have been in trouble since the 2015 Charlie Hebdo terrorist attacks, says Alain Fontaine, president of the French Association of Master Restaurateurs. In the past year, "yellow vest" demonstrations and nationwide strikes against pension reforms further slammed businesses. "Things were already bad before. We will have aid from the state, but for certain restaurants it won't be enough," he says.
Fontaine's Paris restaurant Le Mesturet has been fully shuttered since March 15. He estimates that foreign tourists account for 30%-40% of business revenue at Paris-area restaurants. "When tourists come to see the Arc de Triomphe, they also come to discover and experience the art of French living that are bistros, restaurants and cafes," he says.
More than one-third of French workers, including those who work part-time in restaurants and hotels, are currently on temporary unemployment. The program, established by the French government at the start of the coronavirus epidemic, pays businesses all or most of the salary of temporarily inactive employees (up to 4.5 times the minimum wage) to keep workers on the payroll. "Many of us will survive thanks to the organization that the state put in place," says Fontaine.
Re-opening to slow foot traffic will put these businesses in danger of closing. Fontaine estimates that around 20,000 establishments – 20% of all traditional sit-down restaurants in France – will disappear by the end of the coronavirus epidemic; he believes double that number would have closed without help from the French state.
Kevin Machefert, the recently named CEO of Machefert Group, an independently owned company with 22 hotels and more than 450 employees across France and in Marrakech, Morocco, says that normally about 50% of clients at his French properties are foreign travelers, mainly from the United States, United Kingdom, Germany and China.
Since the start of the coronavirus lockdowns, 20 of his properties have been shut down and 92% of his payroll has been on temporary unemployment. Two hotels remain open to host Moroccans stranded in France following border closures. A third Paris hotel has been open on a volunteer basis since the end of March; 15 employees are working for free to host doctors and caregivers battling the coronavirus through May 25.
Machefert says the Machefert Group has been through tough times before since it was launched by his parents 28 years ago. The company was hit hard by the subprime recession in 2008 and 2009, closing five hotels and struggling financially until 2016.
The coronavirus crisis is unprecedented. European businesses are facing an economic crisis not seen since World War II. While some European tourists have already made flexible bookings at his hotels for June and July, Machefert expects tourists from outside of the European Union won't begin returning until September, with more cautious tourists waiting until May 2021 to book their vacations. "We're optimistic. Others don't see business coming back before September 2021," he says.
For now, many restaurants and hotels are getting creative to streamline costs and make up for lost international revenue by focusing on the French market. Machefert says his company will begin delivering breakfast directly to customers' doors instead of offering buffets to cut back on waste, charge for daily room cleaning and refinance its debt.
Machefert is also at the helm of a collective of more than 150 hotels French businesses collaborating on Sauve Ton Hôtel, a platform offering perks to clients for booking directly through hotel websites. "I came up with the idea when I realized how badly we were going to be hurt. For the first time in France's hospitality history, hoteliers would need to rely on the French, and that French would need to rely on domestic hosts," says Machefert.
Most hoteliers pay a 15%-25% commission to reservation websites like Booking.com, says Machefert. These savings can be passed along to customers through benefits such as discounts, free meals and experiences. He says many other hoteliers and regional tourism offices have expressed interest, and he hopes to recruit more partners before officially launching the platform in the coming days.
Restaurants are taking a similar approach. The marketing agency HEMBLEM launched Sauve Ton Restaurant in early April to aid mostly French restaurants, allowing clients to book meals with vouchers that can be used when businesses reopen. Paris-area restaurants will also focus on attracting French tourists with gastronomic events and discounts, says Fontaine.
The industry will still face a big deficit, since 90 million foreign tourists come to France but French people make only about 24 million trips abroad every year. Fontaine believes tourism may not be back in full swing until this time next year. "The losses will be considerable," he says. "We hope sincerely that tourists who planned to come this year will come in future years."
The question for all businesses remains how long it will take for the French and global economies to return to quasi-normal. Tomasz Michalski, an associate professor of economics and decision sciences at the HEC Paris business school, predicts that the French tourism industry is likely to miss out on an entire year of revenue and expects the government to put in place additional policies to aid to the sector.
"Most tourism happens in big cities," he says. "How long it takes international tourism to resolve will be the big question. There's going to be a lot of tax relief and social security contributions [in France]. But a lot of businesses will unfortunately have to fold."
