A European Summer Without Americans Threatens Already Struggling Luxury Hotels

The European Union’s temporary ban on American travelers due to the swelling coronavirus count in the U.S. will particularly hurt American-based chains and the upscale end of the European hotel industry.

Nearly 18 million Americans traveled to EU countries in 2018, the most recent complete year of data provided by the U.S. National Travel and Tourism Office. More than a third of the annual volume went to Europe during the peak summer travel season. Americans traveling to Europe accounted for just over 20 percent of Marriott’s European room nights in 2019, a company spokesperson said to Skift.

A summer in Europe sans American tourists may not be a collective wipeout for hotel operators, but it will likely be further bad news for high-end properties already grappling with low occupancy from the pandemic.

“The American chains will take a hit, but other brands in the midscale or budget segments won’t be affected at all or only just a little,” said Nicolas Graf, associate dean at New York University’s Jonathan M. Tisch Center of Hospitality.

U.S.-based companies like Marriott and Hilton will likely feel the biggest sting from the EU’s closed borders to America because these brands rely more on American travelers through their loyalty programs, Graf said. The bigger American brands also tend to operate in the luxury and upscale segments of the European hotel market.

Those sectors are already taking a hit from coronavirus shutdowns, as they tend to attract more group business and convention travel — two segments of the market effectively on hold due to social distancing guidelines. European-based companies like Accor have a greater foothold on the midscale and budget sectors within EU nations, Graf said.

Hilton does not report American-specific travel data for Europe, but 10 percent of its entire global business comes from inter-region travel, a Hilton spokesperson told Skift.

Companies like Accor, Choice Hotels, and IHG declined to share specific inbound travel data from the U.S. to Europe.

The American travel ban may not negatively impact Accor as it does other companies. Eighty percent of Accor’s European business comes from travel within EU nations, the company’s CEO Sebastien Bazin said during an NYU webinar last month.

“What I can say is that whilst the U.S. is an important market for inbound travel to Europe, our business in our key European markets such as the UK, Germany, and France is still more weighted to domestic travel,” an IHG spokesperson said via email.

Money Talks

The EU’s decision Tuesday will almost certainly have an initial negative impact on revenue streams.

Americans are the top non-European spenders within Europe, accounting for about 8 percent of the $570 billion European tourism industry, according to the United Nations World Tourism Organization.

“Completely closing Europe off for American travelers is going a cripple an already severely damaged European tourism industry,” said Chekitan Dev, a professor at Cornell’s School of Hotel Administration. “Clearly, public health has to be the number one priority. But, there’s got to be a better, smarter way to screen American travelers to allow them to travel to Europe.”

Given the ongoing pandemic, Dev estimates American travel to Europe was likely to be low this summer even if borders had remained open. Rather than a ban, other protective measures like heightened screenings, contact tracing, and border checks could have been a more economically viable option for the European tourism industry, Dev said.

“Once tourists that used to travel to Europe find other places to travel and have a good experience, they may shift some of their future travel away from Europe,” he added.

An Occupancy Pivot

Even if some companies rely less on Americans to fill hotel rooms, European travel organizations aren’t denying the crucial role the U.S. plays to their business models.

“I’d like to add the future doesn’t look great, especially if you consider the U.S. is Europe’s largest source market and the second-largest tourism spender after China,” said Jennifer Iduh, head of research and development at the European Travel Commission, at Skift Forum Europe on Tuesday.

The ETC does not expect inbound international travel from the U.S. in the coming months, leading travel companies to look for alternatives to fill that void.

That means an even greater emphasis on domestic travel, said Karin Shepard, senior vice president and managing director of Europe at IHG, during a different Skift Forum Europe panel.

Travel analysts have already predicted Germany would lead other European countries during the recovery due to its stronger domestic traveler base than countries like France. But even Gdansk, Poland, posted strong occupancy numbers last weekend, Shepard said.

“We’re all discovering new places on our doorstep,” she added. “We’ll see the passion for travel and exploring will allow people to travel within Europe. It is a region that could not be not more diverse.”