In 2016, French hotel performances are once again characterized by a decline in performances on a national scale. However, there are important disparities between the results recorded in region and those recorded in Paris, in the Ile-deFrance and in the PACA regions, which were significantly impacted by the security context and the caution expressed by international and wealthy clientele. Outside the budget category, all hoteliers recorded a drop in their performances in 2016, especially on the upscale segment.
After three consecutive years of stagnation, the French hotel industry recorded an important drop in activity. Occupancy rates were at 64.3% in 2016, corresponding to a -1.2 point drop in comparison to 2015. As for the average daily rate, it fell by -3.3% to 87.9€ (excl. taxes). The combined drop of these two indicators led to a -5.1% drop in the RevPAR (revenue per available room) against 2015. Only budget properties reported a fairly stable RevPAR against 2015 (+0.3%). High-end hotels had the strongest drop with their RevPAR down by -9.1%, as their occupancy and average daily rates fell by -3.4 points and -4.6% respectively. This situation is due to a slump in arrivals of wealthy international customers following the terrorist attacks in November 2015. Concerns about security in the destination is particularly visible in performances of hotels in Paris (and more broadly the Ile-de-France) and PACA. The capital’s RevPAR plunged by -14.3% against 2015. This outcome is the result of -6.0 points drop in Paris’ occupancy rates, together with a -7.1% fall in the average daily rate to 157.1€ . The Ile-de-France region, where activity relies more widely on corporate guests, recorded decreasing performances as well. Pulled down by the drop in the occupancy rate (-5.0 points) and the average daily rate (-2.1%), the RevPAR fell by -9.0%.
On a national scale, performances were thus brought down by results in the Paris region and in the PACA region, further to the terrorist attacks that occurred in July 2016. In the provinces, the hotel industry had a good track record overall. Hoteliers recorded 2.8% growth in their RevPAR, led by the rebound of both occupancy (+1.1 points) and average daily rates (1.1%). This momentum can be explained by a favorable events calendar, notably driven by the Euro 2016 competition (held from June 10 to July 10). Cities in the provinces that hosted the event enjoyed improved indicators. Moreover, the smooth functioning of the games – especially in the fan-zones– conveyed a positive image of host destinations. The city of Saint-Etienne, for instance, recorded a +14.6% increase in arrivals while in Toulouse it grew +10.9%. Generally speaking, all the agglomerations showed a clearly positive turnover. It must be noted, however, that the shared accommodations website HomeAway was UEFA’s leading partner during the competition, and was thus one of the major beneficiaries of the event. Elsewhere, the Sables d’Olonne registered sharply increasing performances thanks to the start of the Vendée Globe last November. However, the International Car Show 2016 in Paris did not manage to attract as many people as expected: Paris hotel performances fell short of 2014’s on the same period (they were even below 2015’s results, without the Car Show). In the first nine days of the event, the RevPAR plummeted -27% against 2014. Also, the fact that the Paris Air Show (which usually is the Greater Paris Region’s driving force during odd years) did not take place and that Lille’s “Grande Braderie” was cancelled contributed to the slowdown in French results.
In Paris, hoteliers experienced a major slump in arrivals in comparison to 2015: the RevPAR dropped by 14.3% to reach 125.4 €. Several factors contributed to this fall: terrorist attacks, poor weather conditions (downstream flood risk of the River Seine), social tensions and the poor international events schedule (such as the Salon du Bourget). The occupancy rate thus slipped -6.0 points, while the average daily rate dropped by -7.1% compared with 2015. On the first three semesters of 2016, the decline in international arrivals against the same period in 2015 was particularly significant, especially for Japanese (-45.2%), Italian (-35.3%), and Russian (-33%) guests. It must be noted that structural features need to be taken into account: the development of the sharing economy has an important long-term impact on Paris’ hotel prices.
The Ile-de-France region tends to follow a similar trend, although the drop remains less important there. The area posted an average daily rate in 2016 down by -2.1% compared to 2015. It saw a decrease by -5.0 points in occupancy rate to settle at 65.4%. Since 2005, at 3.1 points, the delta between occupancy rates in the greater Paris region (excluding Paris itself) and in the provinces has never been so low. In addition to the attacks, the lack of events with international reach (such as the COP21 in 2015) strongly impacted Greater Paris’s hotels performances. Let’s not forget that Greater Paris’s hotel supply is not uniform and includes specific markets in its area such as Paris’s ring road, Roissy & Orly airport areas or the Disneyland Paris zone. Thus, only Porte de Versailles’ hotels recorded a rise in their RevPAR against 2015, mainly thanks to an 8.7% rise in average daily rate (the occupancy rate decreased by -4.7 points, however). The airport zones in the region were particularly impacted by the drop in long-haul arrivals. This change can mainly be observed in the Roissy CDG area, where the RevPAR fell -10.4% (while Orly’s fell by only -6.2%). This phenomenon also affected the La Défense neighborhood, where the RevPAR fell by -14.4% (as in Paris proper).
In the provinces, hotel occupancy has continued its favorable trend since 2013. In comparison to 2015, the occupancy rate rose by 1.1 point. As for the average daily rate, it increased by 1.1%, driving the RevPAR up by +2.8%. The market is not yet uniform and this growth is more favorable to big cities than rural areas or smaller towns. In the Mediterranean region, cities did not benefit from this deep-rooted positive trend. It should also be mentioned that the cities that hosted
2016 ranking of major French agglomerations
Contrary to Paris and Nice, where performances were impacted by the security context, some big provincial cities managed to record a rising RevPAR.
Lille shows the strongest RevPAR (+8.8%) and average daily rate (+5.8%) increase, despite the cancellation of its famous “Grande Braderie”, a major event in the city that usually drives Lille’s hotel activity. The city benefitted from the Euro 2016, and increased its hotel turnover by 70% during the event.
Toulouse ranks second in terms of growth in turnover in 2016. The Pink City grew not only in terms of occupancy, but also average daily rates thanks to the rebound in occupancy already recorded in 2015 (+1.2% points, and especially in the previously underperforming high-end segment , that recorded +4.8 points growth). It should also be noted that the Spanish group NH announced its arrival in the city with a new hotel in the Toulouse-Blagnac airport area, opening in 2018.
The city of Nantes also recorded significant growth in its results in 2016, and shows the third most significant increase in RevPAR for France’s major cities. This is primarily a result of its 3 points increase in occupancy rate. The Loire town, which lagged behind other major French cities in terms of occupancy for a long time, is now climbing well beyond national levels, which should, with time, pull prices up. Lyon’s performances rose as well. Even though the Fete des Lumières did not recover its pre-attacks “cruising speed”, the fact that it was held again in 2016 had a very positive effect on hotel activity. Besides Pollutec, the traditional driving force in even years, the city also largely benefitted from the Euro tournaments. The hotel supply, which developed considerably in the Lyon area in recent years paused its growth, while the Radisson Blu Hotel, located in the famous “pencil tower”, reopened after October’s refurbishment works.
Bordeaux’s indicators have been on the rise for three years now, buoyed by major tourism and urban development projects. As evidenced by the rise in occupancy rates and the latest ranking from Lonely Planet – which called Bordeaux “the trendiest city in the world” – tourist demand is high. This trend should continue in 2017, while the high-speed train between Tours and Bordeaux will enter into use by the middle of the year.
Results are mixed for the city of Marseille. Various causes for this are conceivable: the strong development of the hotel supply over the last two years (+9.5% rooms) and the fact that the city was leading growth with Marseille Provence 2013, which lastingly enhanced the city’s activity levels. In 2016, although the RevPAR for hotels rose in comparison with 2015, the occupancy rate dropped.
At the bottom of the ranking stand Nice and Paris, for which 2016 was dramatic. The terrorist attacks combined with the absence of major exhibitions such as Bourget Airshow and Batimat in the capital. Indicators collapsed: the RevPAR fell by more than 14% in Paris and by 6% in the Nice area. This drop remains quite mild for the latter, however, considering the breadth of the tragic events that hit the city in the heart of the tourist season.
The abyss that has always existed between Paris and provincial cities is now shrinking, which is a proof of their growing appeal. Al though Paris and Nice are still in the lead in terms of RevPARs (despite the significant drop in 2016), provincial cities are keeping pace.
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