Coronavirus: what impact will it have on the French hotel and restaurant industry?

Since its appearance in December 2019 at a Wuhan market, the coronavirus, renamed Covid-19, has infected more than 40,000 people worldwide and claimed more than 1,000 lives. Information on the disease linked to the virus is accumulating. While the epidemic is having a direct impact on human health, it is also affecting industry on a global scale, with the shutdown of numerous production lines, as well as the restaurant and hotel industries. China counted 150 million departures abroad in 2018, according to the World Tourism Organization (UNWTO). But since the spread of the virus, the world's most populous country has advised its citizens not to travel abroad, before simply suspending several international flights, a considerable impact since France is the leading European destination for Chinese tourists (2.2 million in 2018). Paris Île-de-France is the sole destination for more than half of all visitors (52.4%). 2.4 million tourists were expected for 2019. "They consume over 4 billion euros during their stay in France," points out Jean-Pierre Mas, President of Entreprises du Voyage. The weight of Chinese tourists in tourist flows is colossal, significantly increasing the economic impact for the hotel and restaurant industry. Fewer stays and therefore fewer customers: hotel sales for the month of January are down. At the same time, Asian businesses based in France are also experiencing a decline in sales.

Flight suspensions (Shanghai, Beijing, Wuhan), cancelled stays, restaurant desertions, prejudice against the Asian community, especially the Chinese: how is the CHR (Café Hôtel Restaurants) sector coping with this international epidemic?

I) Economic consequences for French tourism

In 2018, Chinese tourists consumed over 4 billion euros in France. This represents 7% of overall tourism consumption in France.

A clear loss of earnings for the hotel industry

More than 9 out of 10 stays are in market accommodation. The main type of accommodation booked was hotels, at 75.6% (49.1% 3-star and 43.6% upmarket). With the widespread spread of the virus, "the cancellation rate reached 80% in January and almost 100% in February for Chinese group customers" reveals Jean-Virgile Crance, President of the Groupement National des Chaînes Hôtelières (GNC). A first for hotels in the Paris region, which are beginning to suffer from the virus. According to Didier Arino, director of Protourisme, "the situation is likely to continue until July, which would mean at least one million Chinese visitors". This is a worrying situation, since "for some establishments, this can represent up to a third of sales, because they have developed a significant business with this clientele". As Jean-Virgile Crance points out, the financial impact on the hotel industry "could amount to over a billion euros in lost direct revenue". In the short term, the GNC recommends "making commercial conditions more flexible for these customers" by imposing no charge for cancelling or postponing their trip. This unexpected backlash is also spreading to the catering sector. According to theOffice du Tourisme et des Congrès, 56.3% of tourists devote themselves to discovering French gastronomy. The cancellation of their trips means a drop in sales for restaurants.

A double impact on catering

Traditional French establishments, acclaimed by travel guides and blogs, have lost some of their clientele since the coronavirus crisis. Already weakened by the yellow vest protests, then by the December strikes, they are struggling to get back into a sustainable rhythm of business.the desertion of Chinese and French customers within Asian restaurants is prompting delivery sites such as Uber Eat to offer discounts to its customers.

Indeed, Chinese establishments in France are experiencing a drop in patronage : "There's been a drop in the number of customers over the last few days, around 40%. [...] But right now, there's no one left at 9.30pm," says Chee-Minh Chow, chef at the Fleurs de Mai restaurant.

II) Distrust of Chinese and, by extension, Asian restaurants

January 25, 2020, the launch date of the Chinese New Year and synonymous with festivities, has been postponed until spring. For restaurants that generate a large part of their year-round sales during this period, this desertion has a major economic impact. As witnessed by Pascal Corlier, manager of a Vietnamese restaurant in the 13th arrondissement of Paris, who lost 40% of his sales in the middle of the Chinese New Year, between the phobia of Western customers linked to the idea of contamination and the psychosis of the Chinese community, the restaurant industry is feeling the pinch at the start of 2020.

Unfounded prejudice penalizes establishments

Since the start of the epidemic in China, the French have been boycotting Chinese products, starting with restaurants. From preconceived ideas to paranoia about Covid-19, the disaffection with Asian restaurants is in full swing. Chez Riz, a Chinese restaurant in Toulouse, has lost over 35% of its sales, according to its manager, Monsieur Diao, while the Japanese community is also complaining of racism. Recently, the Japanese restaurant Yuki, located in Boulogne-Billancourt, found its frontage vandalized by the tag "Coronavirus, dégage".

Chinese restaurants in the Belleville district have been deserted, for fear of contamination with the virus, which is impossible through food. However, the most surprising news comes from the Chinese community itself, who are confining themselves to their homes: "The Chinese are quarantining themselves, they're not going out any more, they're shutting themselves in at home, they're suffering the news coming from China", explains restaurateur Alexandre Xu, owner of WenZhou.

Asian restaurateurs in solidarity

These targeted restaurateurs are speaking out in the media through press, radio and TV interviews. Baoyan Zhao, head of three Chinese restaurants(La Taverne de Zhao, Mr Zhao, Little Zhao) criticized and insulted on social media spoke out against racism on Jean Jacques Bourdin. Xenophobia, mistrust and ignorance have led to a 60% drop in sales.

social media also provides an effective forum for raising awareness and challenging preconceived ideas. Joohee, a particular victim of such prejudice, created the hashtag #JeNeSuisPasUnVirus on Twitter to denounce this rise in racism. This # allows all those affected by this wave of discrimination to list the various forms of racism displayed targeting Asians. Picked up on Instagram by several chefs, including @yannouze, the #JeNeSuisPasUnVirus movement aims to put an end to misinformation and support Asian shopkeepers/restaurateurs.

III) How can we limit the economic impact of the virus on the hotel and restaurant industry?

Strengthen local roots, especially in the hotel business

Beyond the decline in Asian tourists to France, competition from Airbnb and other accommodation alternatives has already been weakening the hotel industry for some years. One solution? Strengthen your local roots to generate sales with people close to you. Staycation, for example, by offering hotel nights on Sunday evenings at knock-down prices, offers an alternative way for hoteliers to reach customers who would not have come otherwise. The F&B (Food & Beverage) offer is also a great opportunity. We studied the potential of hotel catering in an infographic. These trendy concepts allow us to reinvent ourselves while remaining profitable. Whether it's classic catering, brunch or tea time, hotels have everything they need to benefit from a local, profitable and sustainable foothold.

Educate and mobilize on social media

Through their own social media, Asian and especially Chinese restaurateurs are trying to bring their customers together and raise awareness through messages of support. With content specific to their establishments, they are engaging their communities and defusing this touchy subject. Like the Petit Baho restaurant, which is spreading the word and spreading the good news.

Using influencers allows restaurateurs to reassure consumers while communicating about their products. Thanks to a competition promoted by no_diet_club, the Hong Kong restaurant Panda Panda is encouraging consumption and breaking the wave of panic caused by the spread of this virus.

In brief

The tourism industry, already affected by the Gilets jaunes and strikes, has been hit hard. Covid-19, meanwhile, is having a sudden impact on the hotel and catering sector. To offset this drop in visitor numbers, communication solutions and promotional offers can be put in place. A complicated period, to be sure, but one that is tending to run out of steam as the French and the Asian community become more aware of this viral epidemic. If you have any questions, or if you'd like us to assist you, please don't hesitate to contact us!