The French hotel sector is starting the year 2016 the way it ended 2015: with a new drop in its RevPAR, due to the trail effect following November's terrorist attacks, a phenomenon that had been anticipated when reservation were slow to be made. While the downtrend should continue for a while, it is nonetheless necessary to remember that the month of January and more generally the first quarter do not have a significant impact on annual results, and that other dynamics will offset those months in the course of the year.
The French hotel sector is starting 2016 the way it ended 2015: with a new significant drop in its RevPAR. Across all categories, the RevPAR is 39 euros excl. taxes, representing a 5.1% with respect to January 2015. While occupancy rates show a lesser drop in December (-1.4 points in January versus 3.3 points in December 2015), average daily rights fell by about 2.5% (versus -1.5%). Average daily rates are down on all hotel categories. On most hotel segments except the budget segment, the drops in RevPAR are nonetheless smaller than in December; the range is from -3.4% for the budget segment to -12% for upscale.
Two months after the November 13, 2015 attacks, the impact on hotel activity can still be felt. It was to be expected as reservations for the first quarter were slow to be made at the end of November (read our article) and logically could not be fully compensated in the month in between. Observation of similar events in the past (September 11, attacks in Madrid, London...) leaves one to believe that the consequences of November's attacks should continue into the first quarter 2016 (and even slightly beyond on certain markets), while gradually being reabsorbed. Other dynamics will come into play, such as the carryover effects linked to the Euro and then competition itself, and especially economic factors. Moreover, the end of the year 2016 will benefit from comparison to a very weekend 2015. Forecasts for 2016-2017 (read our review) offer a consolidated annual look at all these very contradictory trends.
But for the moment, the activity at properties in Paris and the Paris region continue to be upset by the disaffection of clientele, particularly international and leisure clientele. In Paris proper, the RevPAR remains clearly on a down trend (-13.3%) due to a new drop in occupancy by 7.8 points. Average daily rates are down by 2.2% in January. The Ile-de-France (outside Paris) also shows a new drop in occupancy by 3.8 points which explains the entire drop in the RevPAR (-5.6%), While average daily rates progress slightly (+0.9%).
The pessimistic impression that springs from these results nonetheless deserves qualification. First of all, in provincial areas, the situations depend on the destinations, the RevPAR is generally balanced thanks to growth in occupancy in January, a positive indicator for future demand. In January, the province had already made a comeback despite a not so favorable events calendar at some destinations (no SIRHA in Lyon this year) and late snow at some ski resorts.
While the drop in occupancy rates remains impressive, it is decidedly less flagrant in January than December when it reached 13.8 points in Paris proper and 6.8 points in the Ile-de-France outside Paris. The first trends in February confirm this progressive attenuation in the positive slump in Paris and Ile de France, particularly in terms of price.
Finally, it should be remembered that January, fortunately, has very little impact on annual result , Hotels generally operate at a lower during this month with occupancy rates around 50% on average throughout the country. But the trend at the beginning of 2016 remains solidly negative, which is sure to put French hoteliers (and those in the Paris region in particular) into cold sweats as they impatiently await the next quarters.
France Trends is open-access this month, but is published every month by Hospitality ON in articles reserved for our subscribers.
- France: drop in reservations confirmed at this year-end 2015
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