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France: May shows activity improvement in the long run

After a long period of expectation, the Business cliente is back in the hotels in both segments: individual clients and participants in meetings and incentives. The MICE expenses were slashed down by companies in the name of tight management and "moral" behaviour. International destinations, among which Paris is leading the way with an increase in RevPAR over 20%, are the first to benefit from the relative weakness of the Euro compared to the dollar. American visitors are back. Besides the capital, the strongest growths in Regions are linked to the constant dynamism of cities like Montpellier and Bordeaux, or to special events such as the opening of the Beaubourg museum in Metz. Such a double digit increase of the RevPAR hasn't been experienced since May 2008, a year that had begun like a rocket just befor the beginning of the financial crisis in the fall. The recovery is thus carried mostly by big spender internationalclients. It is obvious through the performances of the 3* and 4* categories, which both post double digit increases. The budget and economy categories have played their stabilizing role.With five months of datas recorded until the end of May, the trend is very positive as a cumulated increase above 3%. The same exercice on a twelve-month rolling period at the end of May 2010 shows that the gap is filling constantly with a cumulated deficit under the 4% score, compared with 5.9% at the end of April. The stabilization of hotel occupancy in budget and economy hotels goes together with the adjustment of the tariffs in the higher categories.A new cycle is engaged and it is clear, month after month, that the year 2010 will allow French hoteliers to smile again after a terrible year. The strong improvment in OR has allowed to speed up the level of ADR more in phase with the reality of the hotel offerings. Everyone would agree that the new tools in terms of Revenue management have proven their efficiency while permitting a finer adjustment of tariffs to the spending capacity of clients. The economic model of MKG Hospitality has incorporated the new forecasts of GDP growth and the fast correction of hotel pricing. Therefore, it has updated the forecast for the whole year with a predictable increase of RevPAR between 4% and 5%.

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