Americans can travel to Europe this summer. But will they want to?
Our mission to make business better is fueled by readers like you. To enjoy unlimited access to our journalism, subscribe today.
It was the word Americans and Europeans had been awaiting for months: Vaccinated Americans will be able to travel to the Continent this summer, so long as they are fully inoculated with one of the vaccines approved by the European Medicines Agency.
Those people will be welcomed in the EU’s 27 countries “unconditionally,” the European Union Commission president Ursula von der Leyen told the New York Times on Sunday.
The prospect of Americans starting to book vacations to Europe—after being blocked from traveling there for the past year—sent European travel stocks slightly higher on Monday, as the industry glimpsed a possible end to the economically disastrous 15-month shutdown.
But now comes the hard part: persuading Americans to return.
The U.S. State Department still strongly advises Americans against visiting heavily touristed countries like France, Italy, and Portugal, coloring those countries in red on its safety map with “do not travel” advisories. In addition, some in Europe’s travel industry fear that Americans could opt to delay their European vacations, so long as cities and countries retain a patchwork of lockdown restrictions that could put a crimp in their holiday plans.
‘A dream city for Americans’
Take, for example, one of the most favorite destinations for Americans: Paris. On Monday, those in the city’s tourist industry cautioned that it could take years for this sector to fully recover. Tourism accounts for about 11.7% of Paris’s economy, and Americans represent by far the biggest number of foreign visitors, with about 2.2 million in 2019, before the pandemic hit, according to the Paris Tourism Office.
“Paris is a dream city for Americans,” says Serge Cachan, president of Astotel, which owns 17 three-star and four-star hotels in the French capital, with a total of 1,000 rooms. “There is that French way of life, but it cannot exist, even if there are beautiful buildings but there is no street life,” he says. “The way of life is the restaurants, the museums, the Louvre, the sidewalk cafés.”
All those have been closed for months under COVID-19 restrictions, as have 11 of Cachan’s 17 hotels. And while the French government has said that the country’s restaurants and cafés can reopen in mid-June, officials could potentially push that date back if COVID-19 case levels remain high.
Cachan estimates that even if the EU declares the Continent open for vaccinated Americans, “we will get back 25% to 35% of Americans in the best of cases, and in 2022, perhaps 60% to 65%.” He says he bases his prediction on his own experience: He and his wife travel every year to New York City, where they see two Broadway shows and three operas; without those performances, he says, there is little point in going at all. Asked what he thinks of von der Leyen’s optimism, he says, “I am wary of these announcements.”
Crucial to the economy
For some smaller EU economies, reopening for the cherished two-month summer season is a matter of economic survival.
Until the pandemic hit, the EU’s 27 countries earned about €787 billion (about $952 billion) a year from tourism—about 4% of the 27 countries’ economic activity. Nearly a third of all hotel nights for the year were booked just for July and August. About 3.1 million people in Italy and another 2.3 million in Spain work in the tourism industries, according to the EU’s statistics agency Eurostat. The industry represents closer to 10% of the economies of smaller EU countries like Greece and Portugal.
Of the EU’s total travel industry, American tourists represent just about 10% of that. In that respect, von der Leyen’s announcement on Sunday that Americans can return to Europe is not likely to spur a major recovery.
“It is not a great savior, but it of course helps,” says Holger Schmieding, chief economist for Berenberg Bank, speaking from his home office in Berlin. He expects “a significant rebound in tourism in July.” But he estimates that Europe’s tourist industry is about 60% lower than before the pandemic hit in March last year. Full recovery could take more than one summer.
“We are not quite there yet,” he says.
More must-read finance coverage from Fortune:
- “Seductive charm”: There’s a surprising thread linking Ponzi, Madoff, and today’s brazen crypto scammers
- How a cultural anthropologist embraces finance
- How much Bitcoin comes from dirty coal? A flooded mine in China just spotlighted the issue
- The price of lumber is up over 200%—and pre-COVID levels might never return
- Venmo app adds cryptocurrency trading for the millennial set
Our mission to help you navigate the new normal is fueled by subscribers. To enjoy unlimited access to our journalism subscribe today.