Balanced customer mix in France

The French hotel industry benefits from demand that is well balanced between the business and leisure segments, as results from an industry survey by Hospitality ON, with Olakala suggest.

Hospitality ON and OlaKala did a study of French hoteliers to understand national demand. Survey results show that the market has a good balance of leisure and business clientele: almost 50/50.

Customer mixes vary from one hotel category to the next. The budget segment thus stands out for strong demand from the business sector (construction, logistics, commercial in particular) which represents 77.8% of its clientele. Most - 70.5% - are individual travelers. The share of corporate clients under contract is 7% on average and for seminar clientele it is lower than 1%. Nonetheless, independent hoteliers continue to dominate the budget and economy segment, whence a lower share of these clientele under contract who generally represent a more important share for chain hotels. Leisure demand, meanwhile, only accounts for an average of 22.2% of the customer mix at French hotels serving moderate budgets.

On the other hotel segments, the breakdown between business and leisure clients is closer to the national average. The economy hotel segment thus has a customer mix with a good balance between the two clientele profiles that is close to 50/50. Nonetheless there is a weaker presence of seminar clientele in this category, with a modest share of 1.1%.

While demand is well balanced in higher categories, results of the study also show that these properties benefit the most from groups, whether they are leisure or seminar groups. Together, the two group segments generate an average of 12.5% of nights at French mid- or upscale hotels. Leisure clientele are slightly dominant on these categories, with 55% on average, although there are important differences depending on the type of territory.

Across the country, results of the study show that the market is largely dominated by the presence of individual travelers on both business and leisure segments. They represent close to 82% of all demand in France, 42% of which is on the leisure segment and 38.9% is on the business segment. The rest of demand is divided among corporate clients under contract (8.3%), leisure groups (6.7%) and seminar clientele (3.1%).

The customer mix in French hotels thus shows a good balance between business and leisure activity throughout the country. Leisure clientele support national results particularly during periods when other activities are slow. This is particularly true during school vacations and on different public holidays that impact activity for businesses (read our article), and inversely during seasons that are propitious to the organization of professional events.

The well-proportioned demand in France's hotel industry thus constitutes a competitive advantage for the destination France.

On the other hand, the moderate share of clientele under contract shows that in these times when OTAs (booking.com, Expedia, HRS...) are gaining market shares and impacting operating accounts at hotels through increasing commissions, there is still room for hoteliers to regain distribution market shares through direct sales. History eternally repeats itself...