France’s hotel results were sluggish again in July: -1.9% RevPAR VAT excl. Weather, the FiFA World Cup, Ramadan, increased VAT, economy: these factors all joined forces against the hotel industry. And while Paris and the Greater Paris region held up, in the Provinces the hotel industry experienced difficulties with occupancy rates down with respect to last year.
If we divide France's hotels by range, from hard budget to upscale, only the latter reveals an occupancy rate on an uptrend, by 1.2 points to 76.6%, because it benefits the most from the improved dynamism of international clientele. At the same time, upscale properties experienced the biggest drop in prices (-2.2% to 187.4€), and its RevPAR also dropped by 0.7% in the end. The shift of Ramadan had a strong impact on July's results, but not on August, which it affected last year. From hard budget to midscale, the other segments experienced drops in occupancy with nearly stable prices excl. taxes.
It may also be observed that the month was more complicated outside the capital and more generally the Greater Paris Region. In the provinces, all occupancy rates were down in July except for the upscale where they remained stable: -0.1 point, to 67.4%. Across all segments, the Provinces saw its prices and occupancy rates grow by 1.4% and 1.3 points respectively, and saw a not so glorious RevPAR at 51.5€, down -3.2% with respect to July 2013. Once again the VAT was entirely absorbed by professionals rather than transferred to clients.
Paris is hardly the only place that posted positive results: the capital experienced occupancy rates similar to last year's, thanks in particular to the upscale segment (+2.3 points) and an increase in average daily rates by 1.2%, to 144.8 €. If figures are expanded to the Greater Paris region, they are pretty much stable with occupancy rates down slightly (-0.4%) that are compensated for by a slight increase in average daily room rates (+0.5% to 99.1€), for a RevPar of 79.5€, that is the same as July 2013.
In July, several factors combined to bring about this change that was not very favorable to hotel indicators:
- the economy remained difficult, forcing hoteliers to absorb the increase in the VAT rather than increase final consumer prices,
- oft-unpleasant weather and the FiFA World Cup at the beginning of July caused vacationers to postpone travel,
- Ramadan shifted the calendar so it was unfavorable to July's results due to the absence of Middle Eastern clientele at palaces as well as of Europe's Muslim population at properties in other categories.
The good news in this gloomy setting is that the month of August benefits from the absence of Ramadan and slightly better weather. On the first 18 days of the month, the RevPAR posts a double-digit increase. The industry's outlook for August should (finally) be decidedly better.
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