Paris Attacks have resulted in loss of billions of dollars for many European travel companies as their shares are facing a steep fall in price. Thomas Cook and Air France are two confirmed victims in this scenario.
When it comes to the shares of European hotel and travel companies, more than €2bn disappeared after the Paris attacks. Investors are worried that the tourism industry is going to face tough times ahead. The confidence of the consumer is low at the moment and that can really eat into the shares of European travel and hotel companies.
Travel and Hotel Companies
The latest news suggests that travel giant Thomas Cook and airline company Air France are the worst hit. They were dealing with a sharp decline on Monday. People are scared of another attack in Paris or any other European city. Also, tighter border control has made things worse. This has really affected the confidence of the travelers and shoppers, resulting in the present crisis. The Eurozone is Going through a Financial Lull and we have discussed about it here.
How much did these companies suffer? Well, Air France witnessed a 6% decline in their shares. London based Thomas Cook faced 4.8% fall whereas hotel giant Accor recorded a 4.7% fall. At the end of the day, €2.3bn has disappeared from these shares. The value of these shares is calculated by Stoxxx Europe.
The European Central Bank said that consumer spending might be affected by the Paris attacks. In turn, luxury brands are also trying to deal with the scenario as they fear a drop in visits. Rich foreigners might stay away for a while until the fears are alleviated.
Stock market loss was recorded in the case of many other companies too including:
- Hermes International and LVMH
- Home of Louis Vuitton
- Christian Dior
- Bulgari (jeweler)
When it comes to luxury spending, Paris is one of the most preferred cities in the world. Since the timing is not good, shares are getting affected. As we all know, we are in the pre-Christmas phase during when retailers make maximum profit. So, all are worried since the uncertainty still persists.
However, European stock market indices refused to see too much into this. According to them there is no need to panic yet as far as the early losses are concerned. Except for shopping and tourism sector shares, nothing much seems to be affected by the current scenario.
No Need to Panic Yet
Economists had the opinion that though these attacks led to lack of confidence in consumers in the tourism sector, it’s too soon to declare trouble across Europe. According to them the scale of impact is not that huge as of now.
Of course, travel and tourism services are facing trouble at the moment. We can see that many opting for safer destinations as a result of these attacks. But this has happened only in the case of Paris and France as of now. The impact is minimal as far as other capitals across Europe are concerned. In fact, other European capitals must benefit from this scenario. So far, the phenomenon hasn’t spread to several other countries in the Europe.
In fact, some stocks witnessed a rise as well. We can see that defense companies saw a growth. This can be attributed to the growing military activity in Syria. In short, except for few tourism and hotel companies, not too many are affected by Paris attacks.