Market Reports

Still No Sign of Recovery for the French Hotel Industry

Difficult to say whether January’s dramatic events continued to have a major impact on Paris as a destination, but hotel demand lost steam – a situation perhaps more to do with the on-going gloomy economic context where French clients were less present in Paris during the holidays. The situation was similar throughout regional France, where January’s encouraging results failed to carry on into February.

Deloitte Difficult to say whether January’s dramatic events continued to have a major impact on Paris as a destination, but hotel demand lost steam – a situation perhaps more to do with the on-going gloomy economic context where French clients were less present in Paris during the holidays. The situation was similar throughout regional France, where January’s encouraging results failed to carry on into February. 

Sharply impacted in January by the terrorist attacks, Parisian hotels are finding it difficult to get back up to speed. All categories recorded a drop in occupancy in February. Although certain segments managed to compensate by posting higher average rates (Luxury, Standard Midscale), a large part of the market stagnated or declined. However, Philippe Gauguier, Associate at In Extenso TCH, argues that we shouldn’t be too quick to conclude that January’s attacks are to blame for tourists staying away – February is traditionally a month  where French clients are present, particularly during the holidays. The effects of the recession are still being felt, and as with last year, clients are making themselves scarcer. 

At the same time, regional performances – rather encouraging in January – stagnated or even declined, depending on the area observed. The Côte d’Azur and certain cities (Bordeaux, Lille, Lyon, Toulouse, etc.), posted better results than this time last year, confirming January’s trend. However, others (Marseille, Strasburg, etc.) suffered, recording significantly lower results. 

It should be stressed that certain destinations and professionals are taking advantage of this quiet period to close

– to use up holiday time or undertake maintenance works. This phenomenon is particularly present on the Côte d’Azur where hotels that usually stay open have adjusted capacity or opening dates to reflect the slower business. 

More upscale categories confirmed the decline throughout France. Conversely, although 2014  was difficult for budget segments (particularly Super-budget), given the rise in VAT, average rates are slightly better this year. The budget sector was the only one to see RevPAR progress during February, although time will tell whether the VAT hike has finally been digested.

Table - French Hotel Industry Performance February 2015

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