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March 2013, a serious cold-snap on French hotel activity

The upturn in February, due to occasional events, was short-lived and performance trends of French hospitality have turned towards the red for the month of March. The shift from school vacations and winter weather do not explain everything.

After having resisted the decrease in household purchasing power and budgetary restrictions in companies over several months, as well as pressure on distribution systems, average prices end up dropping off. Showing a decline of almost 3% over the entire period, they merely reflect a significant decrease in activity found in the 2.2 point decline in occupancy rates. The multiplier effect generates a fairly dramatic decline in revenue per available room of French hotels last March, more than 6%, a figure reminiscent of the darkest moments of the 2009 crisis.

This cold snap touches all categories without exception, with negative trends in hotel activity from Budget to Luxury chains. Only the trend intensities differ. The economic category just manages to maintain its average prices from one year to the next, while all other indicators across all other segments are globally in the red.

The decline in visits concerns all French regions. Even Paris was depressed despite a well-filled trade fairs and exhibitions schedule, but essentially only affected local clientele. The capital shows a decline of 2.8% in RevPAR, mainly due to its low occupancy. Thanks to the strength of the international market, only the high-end is doing well with an increase of 0.8% of its revenue per available room.

In the rest of France, decrease in activity is accelerating with a fall of 5.3% of RevPAR in Province, due to a joint negative trend in occupancy rates and average prices. Some of the national decrease is explained by the shift from school vacations, the "February vacation" having spread fairly widely over the first weeks of March, reducing activity in the major cities. The winter weather that prevailed over the country also caused meetings cancellations and a decline in business travel. However, it must be noted that the crisis is affecting the living standards of domestic and businesses that are taking economic measures in a challenging environment and growth prospects at virtually nil.

This decline is even more than 22% RevPAR in some areas, such as Marseille, yet a European Culture Capital since the beginning of the year. Marseille hoteliers struggle to capitalize on this title, and quality cultural programming hardly attracts any customers outside of the local sphere, for lack of promotion and the persistence of a tarnished image. The comparison to Lille 2004 is cruel to Marseille, which has seen a 17% drop in average prices.

The first quarter of 2013 ended with relative stability, thanks to the good performance of the first month. These are fortunately relatively low volumes that do not fully guarantee the future. Hope remains of a recovery in the second quarter, marked by major recurring events such as the Budget Airshow.

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