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Economy + budget = more than 60% of France's hotel supply

The economy and budget segment is enjoying a new impetus with the arrival of new concepts, renewal of old ones. Results in 2018 and the beginning of 2019 are positive, giving the French fleet a boost.

Slight rebound for the economy hotel supply 

After three years of uninterrupted growth between 2015 and 2017, 2017 marked a halt, but the economy and budget hotel supply is back on a growth track in 2018. The economy supply suffered the biggest losses in 2017 with a -3.4% decrease in supply (more than 9,000 rooms left the circuit) and the number of rooms regained +1.9% in 2018. As for the budget segment, whose fleet had suffered less in 2017, its number of rooms increased by 3.3% in 2018.

In the budget segment, hotel chains post a penetration rate of 65.6%, the highest across all categories.

Results are positive 

2018 ended with a RevPAR up by +5.2% on the budget segment and + 6.1% economy segment. The results are different for very different reasons. For budget segment, prices (+5.5% in 2018) drove the RevPAR up, while the OR stagnated with a slight drop by -0.2 point. For the economy segment combined growth in OR by +1.5 points and average daily rates by +3.8% boosted results performances.

2018 performance indicators

 

2019 is off to a good start for the economy and budget supply, with these two categories producing the best results.

Performance indicators year to April 30, 2019

 

A supply undergoing major changes

Akéna, B&B, Balladins, Eklo, Hôtels F1, ibis Rouge, Jo&Joe, Logis, Mama Shelter, Meininger, Motel One, The Originals Human Hotels & Resorts, all have been in the news in recent months as the older ones are repositioned and the younger ones are developed in France. A look at the latest news from them.

After merging with Fasthotels, Akéna launched AKEFAST eco-responsible properties for under 45,000 € per room.

After a takeover in June 2018 by two executive directors, brands in the Balladins group have been repositioned with a goal to growing their readability with the general public. New digital strategy, increased attention to the quality of properties, the new directors want to recenter the supply and improve results. As a direct consequence, the supply shrank significantly in 2018 (-1215 rooms), banking on the future?

B&B has the wind in its sails and is maintaining its quality standards to meet its customer expectations reinvesting in the CAPEX of its historic supply while establishing its brand in more and more destinations. Mixed-use projects enchant its CDO Laurent Bonnefous who sees opportunities to develop virtuous circles, a good way to satisfy more and more clientele.

From the height of its 8 years, the French brand Eklo has announced ambitions for solid growth in France and Europe. After rethinking its model in 2017, Emmanuel Petit wants to deploy its ecolo-economy concept. "My main idea when I created Eklo was to bring lifestyle to the budget hotel, to rehumanize the budget segment while offering reception 24/7. Eklo is also about multipurpose common areas that allow more conviviality."

2017 was a bad year for hotelsF1, several properties in suburbs were sold to provide emergency lodgings. With some properties that had become obsolete the brand was reinvested in by the Accor group which gave it a younger image in order to reach new targets.

Accor repositioned ibis rouge giving it three powerful identities in tune with the times. This is a double hitter for the group and addresses both its end customers and, above all, its franchisees, who now have the opportunity to invest in concepts that are more in line with their properties. A global approach for the French group that will progressively reposition each of its historic brands.

Launched in 2017, the brand Jo&Joe has two properties open to this day and 5 others in its pipeline. A partnership with REIM boosts Accor's ambitions and the latter announced 630 new beds between Paris and London within 5 years.

Mama Shelter loves France and is growing gradually in its native country. Of  9 properties open, 5 are in France. Of 3 announced in the pipeline, two are in France. A strong concept that makes an impact and stands out, the key to success for its co-founder Serge Trigano: "Mama's job is to bring people happiness".

Having come to Paris in September 2018, the brand Motel One offers rooms for 98 € a night regardless of the dates of the reservation. The brand had 19,623 rooms as of January 1, 2019. Growth in its supply by + 28.5% of rooms in Europe in 2018 suggests new addresses in France are on the horizon.

With the opening of its first property at Porte de Vincennes in October 2019, Meininger will take its first step in France. Lyon (spring 2020), Marseille (2021) and Bordeaux (beginning 2021) are also in the pipeline. The group aims for a presence with 5,412 rooms in Europe by 2021, a challenge that is likely to be surpassed since the group's pipeline is full. No fewer than 14 properties are forecast in Europe. 

The Originals, Human Hotels & Resorts, the new name of SEH United Hoteliers. Repositioning brands, new digital tools, new services for hoteliers, the network wants to strengthen and maximize profits of its members.

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