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Will this crisis open up opportunities?

As with any crisis, there will be winners and losers. That certain projects may come to a halt is not necessarily bad news for some markets. The slump in development could relieve the pressure on existing hotels during a very competitive period.

 But the current situation has certain unknowns that may be transformed into opportunities in the short or mid term if certain weakened real estate investors needed to accelerate their exits and put choice properties on the market. One last question must be raised after the mergers of large banking firms: for example, what will happen to the real estate assets previously held by Lehman Brothers if they are not a part of the financial strategy of the new owner, Barclays? For investors with enough financial reserves, now is a proper time for good deals.The information collected at this stage in the year leaves room to believe that phase 2 has begun. This situation will naturally stimulate in-depth considerations about the commercial strategy that should moderate, or stop, the progress of average daily rates recorded in recent months. There is every reason to believe that average daily rates will begin a "slackening off" phase which we saw in the years 2002 and 2003, in the upscale categories in particular, which are more affected by the drop in occupancy.Hotel cycles an inevitable drop in average daily rates The hotel rate policy is sensitive to the indicator of the occupancy rate, the steady drop of which prefigures a more tense situation. This is the case since the beginning of 2008. In France, the phenomenon was marginal until last July (1.3 point drop), thanks to the good overall resistance of the hotel business in the Paris region. The drop becomes more evident in August 2008 (- 3 points) and the acceleration of the phenomenon may be observed in September (-2,8 points).The hotel business follows a four-phase cycle, analyzed during the Global Lodging Forum and presentations by MKG Hospitality: -# Vigorous and promising market: increase in occupancy rates leading to an increase in average daily rates -# Stabilization of demand: drop in occupancy rates parallel to the increase in average daily rates -# Commercial war in a period of low activity: drop in average daily rates and drop in occupancy rates -# Phase for recovery and reconquering clientele: increase in occupancy rates and drop in average daily rates.The change in the cycle is all the more important as we rise in range in the hotel categories. The economic hotel segment is naturally more resilient as it relies on the local market.The information collected at this stage in the year leaves room to believe that phase 2 has begun. This situation will naturally stimulate in-depth considerations about the commercial strategy that should moderate, or stop, the progress of average daily rates recorded in recent months. There is every reason to believe that average daily rates will begin a "slackening off" phase which we saw in the years 2002 and 2003, in the upscale categories in particular, which are more affected by the drop in occupancy.

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