Over the months the situation has deteriorated. The French hotel industry is in a full-.edged recession. The RevPAR is down by 10.5 % last February. This is the strongest drop since the shock of 911. The scenario of a crisis that is as intense as the one experienced between 1993 and 1995, after the first Gulf War, is increasingly probable. According to forecasts made by MKG Hospitality, the RevPAR for all of 2009 should show a 6 to 9% drop for the economy supply and 10 to 15% for more upscale segments. Whereas the economy segment shows a capacity to resist by continuing to grow their average room rates, the upscale segment is sinking into the red, reviving memories of the darkest hours for France’s hotel industry. Paris reacts brutally. The leverage effect of foreign clientele, which is profitable during auspicious times, acts like a return swing of the pendulum. It makes the RevPAR for the capital dive by nearly 25% across all categories, and up to 35% for the most luxurious properties.
With an occupancy rate close to 60%, 0-2* categories are feeling the blow without getting KO’d. The segment is supported by a domestic market that still has a bit of tonus and sources part of its clientele from higher categories. The drop in OR, instead, is significantly more evident in the 3 and 4*. Upscale hotels showed a sharp drop by 11 points from one year to the next. The absence of individual clientele in the 4-star betrays prices that were negotiated down. The conjunction of this combination of drop in prices and OR pulls the RevPAR down to the abysses (-26.7% with respect to February 2008). The real difference in behavior lies in the possibility of being able to continue growing average daily rates. In the economy hotel segment, the improved product and the solid strategy of hotel groups allows them to gain a few euros through average rates, which remain very accessible compared to prices throughout the rest of Europe. RevPARs are kept afloat with respect to 2008, which is a fine performance in and of itself. Between the two the midscale experienced a stronger drop in occupancy than in the economy segment but is still able to maintain a voluntarist rate policy that limits the segment’s decline to– 8,4 %.
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