Market Report France

French Hotel Industry Recovery Derailed in May

Deloitte French Hotel Industry Performance May 2014

Deloitte After a slight upturn in April (leading to great hopes for a recovery), May finished on a negative note, with most destinations recording a drop in performance. Trading was affected by an unfavourable agenda for business tourism. The numerous bank holidays reduced business demand, and the leisure segment – still cautious given the economic climate – remained insufficient to offset this decline. 

April saw slightly better performances, with occupancy rises recorded for the first time in many months. Although modest, the upturn was sufficient to raise hopes throughout the country that recovery was imminent. At least we emphasised last month that a little blue sky does not necessarily mean spring has arrived, and that May was going to be tricky! 

May (a traditionally complicated month) did, in fact, see almost all French hotels record a drop in trading. However, some destinations and categories resisted better than others – Marseille’s hotels recorded RevPAR increases in almost all categories, for instance. However, this was an exception. 

Occupancy rates, in particular, penalised hoteliers, as most recorded declines compared with last year. Depending on the destination, occupancy drops were partly offset by a rise in average rates, but when this was not possible, the impact on RevPAR was heavy. 

So why did all this happen? An unfavourable calendar for business tourism. In contrast to 2013, when almost all bank holidays fell on a Wednesday, May this year saw three holidays fall on a Thursday – a blessing for employees wanting a long weekend, but a disaster for hoteliers. Business guests were few, and leisure guests not present in sufficient numbers to compensate. In an on-going difficult economic climate, the leisure segment is still not travelling much – which reminds us that French cities are still predominantly business destinations. 

Let’s hope that May was just a blip, and that recovery will not be jeopardised by strikes and social unrest (train, entertainment industry, etc.), with repercussions for the hotel industry. 

Table - French Hotel Industry Performance May 2014

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