KUALA LUMPUR, Nov 5 (Bernama) -- Bursa Malaysia closed higher, buoyed by Bank Negara Malaysia’s (BNM) decision to maintain the Overnight Policy Rate (OPR) at 2.75 per cent, alongside positive cues from Wall Street. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 19.30 points, or 1.19 per cent, to 1,635.86 from Wednesday’s close of 1,616.56. The benchmark index opened 6.72 points higher at 1,623.28, and fluctuated between an intraday high of 1,642.44 and a low of 1,622.62 during the trading session. However, market breadth was negative, with losers outnumbering gainers 723 to 497, while 466 counters were unchanged, 1,075 untraded and 10 suspended. Turnover rose to 3.74 billion units valued at RM3.61 billion compared with yesterday’s 2.81 billion units valued at RM2.57 billion.
As the Paris 2024 Olympic Games approach, hotels and airlines are scrambling to fill rooms and seats, facing unexpected challenges that could impact their bottom lines and investor confidence.
Local vs. International Visitors
Paris is gearing up for an influx of 11.3 million visitors during the Olympics, but only 1.5 million of these will be international tourists. This lower-than-expected international attendance has left hotels and airlines grappling with lower demand from abroad, contrary to their optimistic projections.
Struggling Travel Firms
Travel firms that specialize in sports events are experiencing a significant shortfall in sales. Alan Bachand, owner of sports travel firm 14sb, reports an 80% decline in sales compared to previous Olympics. "This is the first time in 25 years that we will accept less money than we paid for hotel rooms that we contracted 30 months ago," he says.
High Costs and Price Cuts
Initial hotel prices for the Olympics were exorbitantly high, prompting many travel firms to slash rates to attract last-minute bookings. Despite the price cuts, many are still struggling to break even. Bachand notes that hotels originally set prices at $1,000 per night for rooms that would typically cost $400.
Airlines' Financial Impact
Airlines are not immune to these challenges. Delta Air Lines estimates $100 million in losses due to unsold seats, while Air France-KLM reports a revenue loss of at least €180 million in July and August. Both airlines have resorted to cutting prices, particularly for reward point bookings, to mitigate the impact.
Lower Than Expected Occupancy
Paris hotel occupancy levels are hovering around 80%, significantly lower than the 88.6% and 94.1% occupancy rates seen during the London 2012 and Rio 2016 Olympics, respectively. The scramble to boost occupancy has led hotels to decrease nightly rates and eliminate minimum stay requirements.
Market Adjustments
Hotels that kept their rates reasonable from the start are faring better. For instance, Generator, which offers a mix of hostel and traditional hotel rooms, has seen rates for its cheapest category double from €38 to €76 per night. Private rooms have also seen a 72% increase compared to last year.
Lack of Last-Minute Surge
Despite the discounts, there hasn't been a significant last-minute booking surge. Many travelers are cautious, waiting to see how geopolitical events and the French election play out before finalizing their plans. This cautious approach has further strained hotels and airlines.
Conclusion
The unexpected challenges faced by hotels and airlines ahead of the Paris 2024 Olympics underscore the importance of adaptive strategies and realistic projections. Investors should closely monitor these developments, as they could significantly impact the financial performance of travel and hospitality sectors in the near term.
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