(BFM Bourse) – The holding of the Olympic and Paralympic Games in Paris obviously raises questions for the tourism sector. But the impact is difficult to quantify, potentially negligible, or perhaps already integrated into stock prices.
This will be the big event specific to France this year: the organization of the 2024 Olympic Games which will take place mainly in the Paris region from July 26 to August 11 (and from August 28 to September 8 for the Paralympic Games ).
These major sporting events obviously constitute an important image issue for Paris, France or even the numerous partner companies, including many listed groups such as Air Liquide, Fnac Darty, Atos, Carrefour, LVMH, Orange, Sanofi and many others. others still.
Beyond this aspect, can the Games provide stock market support for the major French tourism companies, that is to say Accor and Air France-KLM?
“Much of this impact is probably already integrated into the prices of companies in the tourism sector affected by the Olympic and Paralympic Games,” estimates Frédéric Rozier, manager for Mirabaud France.
Towards ripple effects?
“However, it is possible that ripple effects may take place, that is to say that operators may want to play and even overplay the theme of the Olympic Games on the stock market shortly before the event,” he adds. . “The period could well lend itself to this because other subjects will not come to the fore in the summer: we will be stuck between the European elections and the American presidential election. There will therefore not be much to focus on. the tooth. These ripple effects were observed during the Rio Olympics in 2016 or Athens in 2004”, notes the manager.
“Moreover, I am surprised that, to my knowledge, specific products, such as an “OJ 2024” ETF have not yet been launched to play on this theme, if only for marketing reasons,” he continues. -he.
However, this stock market support could prove to be quite limited. “Afterwards, you have to know how to maintain reason: when you play on this theme, you often leave the values concerned too late. And the boost that the Olympics can bring to an action remains very secondary compared to the fundamentals of the society concerned,” warns Frédéric Rozier.
Accor winning in the short term
Especially since the financial impacts are difficult to quantify for large groups, particularly in the hotel industry. When questioned, Accor had no data to communicate to date on the repercussions in terms of turnover, RevPAR (“revenue per available room”, the income per available room, a major indicator of the sector) or results.
In a note, Yi Zhong, analyst from the independent research firm AlphaValue, underlines that 15 to 20 million visitors are expected in France during the period of the Olympic Games. She recalls that a study from the Paris Tourist and Convention Office reported in the fall an increase in average rates per room of 314% over the period concerned, to 699 euros, “while the two -third of hotels had not launched linked reservations. However, the addition of the future capacities of hoteliers (and individual accommodation providers) should bring this inflation down.
For Accor, whose market share in France is around 29% in terms of number of rooms, Yi Zhong expects repercussions, certainly, but not of great magnitude. “The parallel with the London 2012 Games suggests a moderate impact on a fraction of the percentage of annual RevPAR, following the three positive Olympic weeks,” she explains.
In November, Barclays downgraded its advice on Accor from “overweight” to “online weighting”, which amounts to going from buy to hold, while the British bank nevertheless cited the Olympic Games as a positive element on the stock. The British establishment noted that during the 2012 Olympic Games in London, the RevPAR of London hotels had increased by approximately 25% to 30% over one year during the period of the sporting event.
But other elements led the bank to be cautious about the evolution of Accor shares: the increase in geopolitical tensions in the Middle East and the surrounding area, where the group is two to three times more exposed than its peers. , or even a potential increase in the risks of terrorist attacks in France.
Air France-KLM in uncertainty
In the case of Air France-KLM, it is not even certain that the short-term impact will be positive. For air carriers, the Olympic Games can attract a certain clientele but also repel another, more local one, even if the event will undoubtedly have a “showcase effect” for Paris and its region, with a number of tourist places highlighted during sporting events.
Air France-KLM has not quantified the potential repercussions on its activity. “On the airline side, the impact should be reflected much more on prices than on volumes, because capacities are already close to 100% of their 2019 level, i.e. pre-Covid,” judge for his part Frédéric Rozier.
IAG, parent company of British Airways and Iberia, was in a fairly comparable situation during the 2012 London Olympics. In its 2012 annual report, the British airline group said very little about the impact. “The London market remained strong for most of the year, although, as expected, it experienced some weakness during the Olympic and Paralympic Games,” we can nevertheless read in this document.
“Possible explanations (for this weakness, Editor’s note) include, but are not limited to, a reduction in the MICE program (Meetings, Incentives, Conferences and Exhibitions, professional events to simplify, Editor’s note) and a reduction in business travel during the period of the Olympic Games,” explains Yi Zhong.
“In addition, local people may change their vacation plans and stay longer in the city or country to attend competitions in person, host their friends and relatives from other areas or follow locally organized competitions more closely on audiovisual media, because the host country tends to win more medals than usual thanks to the support of the population”, she continues in a note dedicated to Air France-KLM.
Thus, the analyst judges, on the basis of IAG’s experience, that the profits for Air France-KLM are “uncertain” and that it is complicated to count on an improvement in the group’s profitability during the Olympic period. . In the long term, however, the increase “in brand awareness should promote the acquisition of new customers and revenue prospects”, believes Yi Zhong.
Around 80 million euros for Sodexo
Groupe ADP, the operator of Paris airports, is likely facing a similar situation.
“The message from ADP since last summer is that the impact would be neutral or slightly negative, with a negligible impact on turnover, but also with more costs (like security). So normally it should be already in the price and the 2024 consensus”, relates a financial intermediary. “Afterwards ADP is always cautious, so we have to see what the final impact will be,” he adds.
Sodexo, which will provide catering for athletes – 40,000 meals per day for around 15,000 athletes – and visiting fans, has for its part assessed the additional turnover linked to its contracts.
The company controlled by the Bellon family arrives at a total amount of around 80 million euros, at the rate of 60 million euros for the 2023-2024 financial year, ending next August, and 20 million for the following one. Which remains very modest: Yi Zhong expects total revenues for the group of more than 24 billion euros for 2023-2024 and 26 billion for the following financial year. In other words, the impact in terms of income represents less than 0.5%…
Julien Marion – ©2024 BFM Bourse
Are you following this action?
Receive all the information on ACCOR in real time: