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Analysis

Paris: terrorist attacks continue to raise concern in the hotel industry

Although the negative impact on hotels of the attacks in Madrid and London was reabsorbed in just a few weeks, hospitality professionals show heightened concern for the consequences of the recent terrorist attacks in the French capital as the impact continues to be felt.

[February 15th update] After the attacks in Paris on January 7 and the assaults on the terrorists, tourists have been deserting hotels in the capital and are not returning. Data released by MKG Hospitality show a year-on-year drop in occupancy rate by 1.7 points over the month of January. The lack of clients immediately resulted in lowered daily rates, although by the end of the month several major events ("Maisons & Objet", Fashion Week) drove up hotel rates, partly compensating for earlier losses.



Daily change in
occupancy rate, average daily rates and
RevPAR in Paris (January 2015)



The affects of terrorist attacks on Paris's hotel industry could get closer to those observed in Madrid in 2004 and London in 2005. The unfortunate events that took place in the Spanish capital on March 11, 2004 led to a 3.6 point drop in occupancy rate at hotels and 2.2% drop in average daily rates across the month. While the drop was smoothed over in just a few weeks,  the RevPAR fell by 7.1% over the month. In London hoteliers suffered a similar decrease in occupancy just after the attacks on July 7, 2005, nonetheless, they were able to maintain their average daily rate, attenuating the impact of attacks on their RevPAR (-3.8% over the month). It should be noted that in the case of London and Madrid, terrorists had attacked the train and the subway, leading to a paralysis of transportation in the days that followed. Las minute nights caused occupancy rates to rise to 90% on the day of the attacks.



Monthly change in hotel performances
in London, Madrid and Paris following attacks





In Paris, professionals of the hospitality industry are under pressure. Several weeks after the attacks, a feeling of insecurity continues to deter tourists. Georges Panayotis, CEO and founder of MKG Hospitality, sounds the alarm: "When images of burnt French flags are broadcast on the international news channels, it is not reassuring for tourists as far as concerns the risk of attacks in Paris. I believe that France's image has fallen, the country is being boycotted, and that if tourists do not feel safe they will simply go elsewhere". Although he expresses this worry, MKG's CEO still believes that the effects will remain of limited amplitude, as they were in London and Madrid.

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