Market Report France

Parisian Hotel Industry Under Pressure

The French hotel industry experienced a difficult month in October, with rooms revenue generally down. While certain destinations managed to resist (regional hotel activity remained mostly stable, for instance), many cities saw a drop in trading. These included Paris, where hotel occupancy has been crumbling over the past few months. The capital’s hotels are thus faced with an additional pressure. However, the high levels of occupancy in Paris do give the city’s hoteliers the means to maintain ambitious pricing policies.

Deloitte The French hotel industry experienced a difficult month in October, with rooms revenue generally down. While certain destinations managed to resist (regional hotel activity remained mostly stable, for instance), many cities saw a drop in trading. These included Paris, where hotel occupancy has been crumbling over the past few months. The capital’s hotels are thus faced with an additional pressure. However, the high levels of occupancy in Paris do give the city’s hoteliers the means to maintain ambitious pricing policies.  

Once again, the French hotel industry had a hard month. October saw RevPAR declining in almost all categories. The drop ranged from -1% for Super-budget hotels to almost -5% for Upscale hotels, primarily due to the fall in both occupancy and average rates. The only exception to this was the Luxury segment, where rooms revenue rose by over +6% - essentially thanks to an increase in average rates, since occupancy remained stable. 

Concretely, the situation is a lot less uniform than it first appears. For instance, regional France resisted better than in previous months, although the picture varied greatly between cities. Dijon, Lille and Marseille generally did well, with Bordeaux, Grenoble and Montpellier having a tougher time. 

October was not a good month for Parisian hotels. All segments saw a decline in rooms revenue – down -5% to 

-6%, depending on the category; a result of the drop in both occupancy and average rates. Given the capital‟s general vitality, it is tempting to put this down to a temporary slump caused by the school holidays or the absence of trade shows. 

However, as Philippe Gauguier, associate at In Extenso Tourisme, Hôtellerie et Restauration, affirms: “if rooms revenue in Paris is progressing, this is mostly due to average rates, since occupancy is frequently falling. Since the start of the year, for instance, Paris‟ hotels – depending on the category – have recorded stagnating or falling occupancy in seven to ten months out of ten. We can, therefore, consider this a general trend that illustrates a growing pressure”. On the other hand, Olivier Petit, associate at In Extenso Tourisme, Hôtellerie et Restauration, emphasises the high levels of occupancy in Paris‟ hotels: “Paris remains a market where occupancy rarely falls below 70%, and is often over 80%. For example, over the past ten months, Budget hotels have recorded an occupancy rate of 80% or higher in seven months. Six of these saw occupancy in excess of 85% and three close to or over 90%. Yes, occupancy in Parisian hotels is coming under pressure, but there is room for manoeuvre, allowing many hoteliers to maintain ambitious pricing strategies”. 

Table - French Hotel Industry Performance October 2013

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