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Analysis

Development: Chains expand cautiously in France

While 2014 is marked by a return to growth in the independent hotel supply in France, growth in the chain supply was moderate and slowed slightly with respect to last year. The leading players on the sector nonetheless held their course.

In 2014, the chain hotel supply in France grew once again, to reach 3,780 hotels and 296,392 rooms. A total of 2,921 rooms were added to the inventory, representing 1% growth across the year on a like-for-like basis. This evolution is the result of a new slump in growth in the branded hotel supply, where the growth rate had reached 2% in 2012, followed by 1.5% in 2013, whereas France’s global supply receded. While the independent hotel supply was able to post an increase by 3.1% in 2014, chains, for once, were not the primary growth engine for the hotel supply.

This moderate evolution nonetheless attests to a supply that is already well developed on French territory. The penetration rate of hotel chains is higher there than in other European countries. In 2014, it reached 45.7%, meaning close to half of the national hotel supply. A few years ago the branded supply began to restructure its inventory which it continued to do through last year. 



Growth in the hotel chain inventory in France occurred once again on the Budget segment, where the supply increased by 3.1% in 2014. The market attracts investors seduced by the new budget hotel concepts that are emerging and fall somewhere between hotels and youth hostels, increasingly meeting the expectations of today’s travelers with moderate budgets. Today, the Budget segment represents 28% of France’s branded hotel supply. The Economy segment remained stable in 2014, after 2% growth the previous year.

Together the two categories account for close to 60% of hotel chain rooms in France.
On the midscale segment, the number of branded rooms available on the market increased slightly on the period (+1.1%), and now represent 26% of the global supply. On the other hand, after accelerating the growth rate of its supply in 2013, the upscale and luxury category shrank by 0.6%. The apparent paradox between this temporary slump in the supply and the dynamism of this segment in terms of performance may be explained by temporary closings of very large properties for renovations that take several years. These offset the openings of luxury hotels (such as the Hôtel Peninsula Paris mid-2014, operated by Hong-Kong & Shanghai Hotels) so that the impact of the new chain inventory is not felt on the market yet. Considering the (re)openings expected in 2015, the upscale and luxury supply should grow significantly by January 1, 2016, particularly since “boutique hotels” have already accelerated their growth.

In terms of operators present on the market, the change in supply does not change the ranking of the primary hotel groups in France. The five heavyweights have kept control over the supply with 226,503 rooms, or more than three-quarters of the entire branded supply. While the leaders in the ranking remained the same from one year to the next, a few changes may nonetheless be observed in the Top 10. B&B Hotels climbed a rung to stand on the podium of the leading groups in France, after Accor and Louvre Hotels. Best Western fell back to 4th place, and Marriott International climbed to 9th place after joining the Top 10 in France last year.

Accor, unarguably the leader on the market, represents close to 45% of the entire branded supply on the territory. The group’s supply progressed by 1.8% in 2014, with an additional 2,405 rooms added to its network to reach 133,026 rooms (excluding Adagio). Its development took place through its Ibis brands, and an interest in the “boutique” segment thanks to growth in its supply under the brand MGallery and its share deal with Mama Shelter. Accor’s growth efforts in France continue: the group has recently announced the signature of contracts to open 360 new rooms near Paris-Orly, thanks to the expansion of an existing ibis hotel and the construction of two new properties.

While it should officially shift under the control of the Chinese group Jing Jiang International in 2015, Louvre Hotels Group confirms its second position in the French ranking. With 54,280 rooms, the group concentrates close to one-fifth of the branded French supply. The 1.5% growth in its supply in 2014 was boosted by the accelerated growth of Golden Tulip and Tulip Inn in France. In fact, the chain recently reached 16 hotels in its portfolio, or twice its available supply at the time of the merger between Golden Tulip and Louvre Hotels Group. Growth under the brands Kyriad and Première Classe have also led to the group’s growth.

This year, B&B Hôtels stole third place from Best Western. The French hotel group was able to increase its supply by no less than 8% in 2014, to reach 16,965 rooms. B&B announced the opening of its 230th hotel on the territory, the B&B Hôtel Bayonne, and inaugurated its highest capacity property to this day in the capital, B&B Hôtel at the Porte des Lilas with 265 rooms. 

In addition to B&B’s development, the loss of a rung in the ranking of Best Western may also be explained by the 4.1% drop in its French supply in 2014. 569 rooms thus exited its network that now has 15,236 units. The hotel group concentrated primarily on the rise in range and the renovation of its member properties through the implementation of two financing levers: the creation of an internal investment committee to accompany its members in their procedures and the signature of a partnership with Bpifrance to create a new guarantee fund to support hotel bank lending. The InterContinental Hotel Group reported several openings or conversions that allowed it to grow its supply by 2.3% across the year: Hotel Indigo in Paris (52 rooms), Holiday Inn Express in Dijon (85 rooms), Crowne Plaza in Lyon – Cité Internationale (164 rooms), Holiday Inn Express Strasbourg Centre (148 rooms), and Holiday Inn in Cannes (100 rooms). Backed by the Holiday Inn family, the group’s development allowed it to reach a portfolio of 6,996 rooms in France.

Choice Hotels saw its supply leap by 8.4%, through the openings of hotels under the brands Comfort and Clarion. With 6,874 rooms, it gets closes to IHG but remains 6th in the ranking. Dynamique Hotels Management (DHM) with its brand Balladins posted a slight decline in its supply (-339 rooms). With 5,573 rooms in France, the group concentrated on the viability of its supply after reaching a settlement agreement with its creditor to guarantee its durability in 2013. It remains ahead of the Walt Disney Company, which supply remains stable.

After joining the Top 10 in 2013, Marriott International strengthened its positions in 2014 and climbed a rung in the ranking. Its French supply progressed by 18.8% across the year and by a thousand rooms over the past two years, to reach 4,828 rooms on January 1, 2015. It is now on the heels of Walt Disney.

Finally, Brit Hotel ended 2014 with 4.5% growth in its supply. A dozen new members joined the network for net growth by three hotels. At the end of 2014 the group opened two new-build properties in Dieppe and Montargis. Several properties were also renovated in Belfort, Saint-Jean-de-Luz and Perpignan.



This article is an extract of the 2015 European report

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