Market Report France

The French Hotel Industry in the Red at the End of the First Trimester 2014

Deloitte French Hotel Industry Performance March 2014

Deloitte After an uncertain beginning to the year, March amplified the drop in French hotel industry activity. The first trimester 2014 thus finished on a worrying note: rooms revenue in general dropped by 1% to 5% depending on the category. Occupancy continued to drop, while the 3 point rise in VAT could not be passed on to professionals.

As in February, the French capital could not escape the gloom, with almost all indicators at half-mast. Although occupancy remained high in Paris, downward pressure on prices could be felt. Boutique hotels – the only category to post higher occupancy in March – saw average rates decline (-7%). The economic climate and the municipal elections clearly had an impact on business activity, and the school holidays in zones A and B, which finished in mid-March, also limited business trips to the capital. Conversely, hotels in the Yvelines and the Seine-et-Marne did slightly better, thanks to the presence of leisure guests. 

The Côte d’Azur did not start the year off much better. Drops in occupancy in March (over 10% for certain categories), accentuated the drop in RevPAR over the first trimester: this was even the case in Cannes, despite the city hosting MIPIM. However, this event did enable Cannes to resist falls in average rates. 

In the regions, indicators were generally negative in all categories. Although the drop in activity in Marseille was logical (compared to 2013 and the numerous cultural events held in the city), the decline in occupancy observed in other cities was more worrying, particularly as this often exceeded 10%. Furthermore, in an economic climate where consumers are more sensitive to price than ever, hotel industry professionals could not recuperate any benefits from the 3 point rise in VAT. 

Amongst the rare exceptions in March, Bordeaux can be mentioned: a congress in the city helped boost hotel activity, particularly in the Upscale category. 

Lastly, the three main coastal areas also succumbed to the national despondency. The French coastal market thus begins 2014 on a difficult note, which might be difficult to overcome. However, if the weather during the May bank holidays is good, things could improve before summer.

Table - French Hotel Industry Performance March 2014

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