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November: RevPAR accelerates decline

November was a rough month for the French hotel business. The RevPAR at French chain hotels underwent a new drop (-7.1%), after those registered in September and October. “Bad luck comes in threes”: the drop in November may be explained first by a significant drop in occupancy (-6.4 points), experienced by all hotel segments. Despite hoteliers’ efforts to increase their average daily rates, the 2.6 % climb does not compensate for this drop in activity. Little by little chain hotels in France are seeing their progress slow with respect to the previous year. Growth in Revenue per available room is now only 2.5% on twelve rolling months. This situation is not likely to turn around in December. Continuing along this trajectory, French hotel chains overall should maintain slight growth in 2008 with respect to 2007, which remains an exceptional year in all aspects.

No segment eludes this down trend. While not spared by the slump in activity, the 2* category proves to be more resistant with a slighter drop by 3.4 %. Even the hard budget segment (0*/1*), traditionally not very affected by fluctuations of the world economy, saw its RevPAR drop by 3.6 %. The significant drop in occupancy at 0-1* properties attests to a cautious approach adopted by a number of business sectors, starting with construction whose employees make up much of the clientele for these properties. The big loser is incontestably the upscale segment. With traditional sources of clientele affected by the difficult economic context, 4* posts a double-digit drop in its RevPAR. Paris in November was affected by the lack of last year’s record-breaking Batimat trade fair. Nonetheless, this fact is not the sole cause of overall bad results. Paris’s hotels no longer have the same maneuvering margin for its rates, despite occupancy rates higher than 75 %. In comparison, the provinces experienced a more moderate month of November with a less significant downturn in occupancy and a greater increase in average daily rates.

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