The first month of summer saw a continuation of the despair that has been weighing down the French hotel industry over the past few months. In July, luxury hotels in Paris and on the Côte d’Azur suffered from the 'Ramadan effect'. However, beyond this phenomenon - which affects fewer than 1% of French hotels - it’s the Super-budget and Budget segments that are posting worrying declines in trading month after month.
As was the case last year, luxury hotels had to do without their Middle Eastern guests in July. In Paris and on the Côte d’Azur, occupancy rates in this segment did nevertheless increase. However, the most lavish suites remained unsold, which evidently penalised average rates.
More generally, French hotel industry performances remained gloomy in July, particularly in the Super -budget and Budget segments. Although occupancy stood in excess of 80% in Paris, OR dropped by 4% compared to July 2013. A proportion of guests appeared to favour similarly-positioned yet much cheaper hotels on the capital’s outskirts – these properties welcomed more guests in July (+2,2%), but to the detriment of average rates (-2,5%).
The same pattern can be found on the coast, where Budget hotels slashed prices – sometimes because the weather was not really helping. In regional France, the Budget and Super-Budget segments continued to look glum, both in terms of occupancy and ARR: RevPAR thus fell by -5% in July. Catering more to a domestic clientele, these establishments are suffering from an overall climate that is not encouraging consumer spending. In addition, they are increasingly facing competition from alternative types of lodging (residences, etc.), which partly explains the sharp drops in occupancy observed in Grenoble, Lyon and Montpellier.
Occupancy in the Aix-Marseille region was also in free-fall, although this was more the result of a comparison with last year, when Marseille was enjoying its status as European Capital of Culture. On a more positive note, despite the threats to its organisation, the Avignon Festival – as is the case every year – contributed to the excellent occupancy results in July (over 85%, on average).
As the back to school bell rings, only a resurgence in trading in September and October is likely to reverse the trend, which – although far from catastrophic – is delaying the long-awaited recovery for French hotel professionals.
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