Bilan 2014: the economic situation in France is rubbing off on the hotel industry

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Published on 20/01/15 - Updated on 17/03/22

La Défense

The Revenue per available room, a benchmark for the hotel industry as it synthesizes the change in occupancy a well as in arrivals, dropped by 0.2% excl. taxes in France across 2014. The occupancy rate settled (+0.1 point), while the average daily rate excluding taxes fell slightly (-0.4%).

Like 2013, 2014 was characterized by uneven monthly hotel performances with monthly rebounds and drops alternating, with no possibility of a sustainable dynamic. Despite increases recorded in some months, and more particularly at the end of the year (from August to October and then in December), France remains behind in the recovery that is underway with its European neighbors.

All the other countries on the continent have shown significant growth in their hotel activity in 2014: the RevPAR rose by 4.1% in Germany, 4.6% in Italy, 7.0% in the United Kingdom, and 8.0% in Spain. While the United Kingdom and countries in Northern Europe are currently enjoying their best economic dynamic, the recovery of sector in Southern European countries relies primarily on the rebound of international clientele.

In France, the dynamism of international arrivals allowed for results to improve in 2014 on the upscale and luxury segment (+0.5% RevPAR), the Greater Paris region (+0.9%) and Normandy, thanks in particular to the 70th anniversary of the Normandy Landing in  June and the hosting of the World Equestrian Games in September. Inversely, economy hotels and those located in areas with less international clientele are the ones that suffered most from the France's weak economy. On average, French clientele represent 64% of htoel demand, while business stays  (weekdays outside the summer season) represent two-thirds of the annual turnover at hotels.

This context means that in 2014, unlike 2012, French hotels partially absorbed the increase in the VAT (which rose from 7% to 10%) rather than transferring the additional cost to rack rates, resulting in prices excluding taxes that fell by 0.4%.

Expressed in euros VAT incl., the RevPAR grew by 2.6%, which could have meant a slight rebound in hotel results from 2014, if this growth had not been too weak to produce growth in prices excluding taxes. The French hotel market is currently less dynamic than in other European countries Europe, but not as structurally depressed as the trend for 2014 could lead one to believe.
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