Market Report France

Troubles Continue For The French Hotel Industry

September saw a decline in occupancy and average rates for all categories, with all major areas in France affected. Ile-de-France, the Côte d’Azur, and even Regional France, recorded lower RevPAR in all segments, with the exception of Luxury. However, given the solid performances recorded since early 2016, year-to-date results for Regional France are still up on last year’s performances. Yet given the underlying trend, certain hoteliers have been forced to scale down their Q4 forecasts. 

Parisian hotels are still suffering, with Q3 finishing on a negative note. RevPAR dropped over the past month, given the absence of international visitors, with the Luxury segment logically the most affected (RevPAR declines of -22% at the end of September). However, some hoteliers operating in business districts or close to major headquarters are starting to see the green shoots of recovery, with the return of loyal corporate guests present at large-scale events (e.g. Maisons et Objets, Salon des Véhicules de Loisirs, La Biennale, Fashion Week, etc.). That said, the events calendar is quieter in an even-numbered year, with performances that are naturally lower. For example, Upscale hotels in La Défense recorded an occupancy rate of 75% in September 2016, compared to 90% over the same period in previous years. The security threat has taken a strong hold, and the tendency for both business and leisure guests to book at the last minute creates uncertainty. As a result, hoteliers are finding it difficult to forecast, but do anticipate deteriorating performances for the end of the year. 

In contrast to Paris, Luxury hotels in Regional France (excluding the Côte d’Azur) achieved encouraging results in September, finishing Q3 with RevPAR growth of +12%. All other categories, however, posted lower rooms revenue in September, but have nonetheless recorded positive RevPAR growth at the end of the quarter. The respectable performance of hotels located on the French coastline can also be noted, with hoteliers making the most of autumn, achieving significantly higher results. 

On the Côte d’Azur, business appears to be slowly getting back to normal, with the return of business visitors who are boosting mid-week occupancy, even if weekend trading is still quieter. Given this, the Luxury segment benefited from several events, notably the Monaco Yacht Show and the Cannes Yachting Festival. The presence of business guests can go some way towards making up for the lack of leisure visitors, and Q4 could finish on a positive note thanks to the events calendar – assuming events still go ahead. The opposite complicates the job for hoteliers, as illustrated in Lille, for example, by the cancellation (in early August) of the Grande Braderie. 

Table - French Hotel Industry Performance September 2016

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