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Analysis

Gloomy results for France’s hotel industry in 2013

France’s hotel industry closed the year 2013 with an average drop by 0.7% in its room revenue across the year. After resisting well throughout the crisis years, in 2013 France is seen lagging behind a recovery that is underway in Europe, while most of the other countries show growth in their indicators - the United Kingdom and Germany in particular, but also Italy where hotel occupancy has improved after difficult years.

In France, graphics for hotel growth in the year 2013 were characterized by a saw-toothed line across the entire period, alternating periods of slump and recovery. The year's overall performance is driven down by a difficult first quarter and September/October, with decreases in results that were not compensated for by increases in other periods, particularly in the spring. At the very end of the year the trend stabilized, without resulting in any clear inversion of the curve. Across the year 2013, the drop in the RevPAR was the result of a slight drop in occupancy of properties (-0.2 points occupancy) but also average daily rates (-0.4%). In a generally morose context, certain major cities such as Strasbourg and especially Marseille, European Capital of Culture in 2013, came out with important growth in their room revenue.

In 2013, major balances between institutions remain steady: Accor, Groupe du Louvre, Best Western and B&B Hotels continue to lead the classification. Nonetheless we see the entry of the Anglo-Saxon groups IHG and Marriott International, which are much more dynamic in terms of development than the national leaders.

Bleak hotel performances in 2013 invite us to question the competitiveness of France's hospitality industry: among the major European countries, France is the country where the average daily rates grew the most between 2000 and 2013, particularly due to stagnation and then drop in room supply since 2008. The penetration of online booking sites and their commission rates exploded in recent years, putting pressure on hotel margins, which are already limited by the size of payroll in an industry that continues to use high volumes of labor. Hoteliers also had to make investments in the recent period to adapt to the new regulations (disabled accessibility, reinforced safety codes...). In 2013, they thus invested more to adapt to the standards than to renovate rooms or introduce other innovations to their product, while many others were restrained by doubts regarding the business outlook or had difficulty financing their projects. In a hurry to invest in an unfavorable market context and while online players are capturing a growing share of their added value, French hoteliers nonetheless put their rate increases on hold in 2013 (-0.4%). Unsurprisingly, hoteliers for the most part feel that the increased VAT must be passed on to consumers: 52% say in full and 37% say partially.
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