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January: The harsh winter upsets the start of recovery in France

After a December 2009 marked by a real inflexion of the activity curve for the hotel industry and a limited drop in the RevPAR (-2.7%), the beginning of 2010 was thrown off course by a harsh winter that upset domestic and international transportation and by the lack of biannual trade fairs. The RevPAR was hit by a cold front, with a drop by 4.2% in January 2009. Whereas they had been regaining on ground lost in 2009, occupancy rates show a sign of weakness and slide by 3 points in January 2010. French hoteliers observed a relative slump in Business activity. Pressure remains high on average daily rates with Corporate contracts being renegotiated down and a permanent quest for the best rate by individual customers. Fortunately, the economy segment is proving to be relatively resistant to these disturbances. The commercial battle is essentially limited to the 3* and 4* categories. But lessons from the past served their purpose and it shouldn’t be necessary to wait 5 or 6 years before regaining levels with realistic prices, which happened in the 90s.

In addition to persistent disturbances, travel was slowed by company travel policies that remain restrictive. But the good occupancy rates at winter sports resorts could not make up for this shortcoming. The proportion of Business activity in the hotel sector of each region acts like a continental divide. Lyon and the Rhône-Alpes region are the first victims of this phenomenon with convention and trade fair activities that have dropped significantly. The region of Lyon was slapped by the absence of Sirha at the beginning of the year. Inversely, the good upscale occupancy of hotels on the French Riviera was benefic. And yet, things must be put into perspective. With exception to a few events in Paris, such as Fashion Week, the month of January is traditionally one of the slowest in the year. Variations in terms of percentage may appear to be significant, but in terms of volume, the turnover for this month will not have any major influence on the year overall. The goal for “zero drop in the RevPAR” for the whole of the year 2010 remains the hypothesis MKG Hospitality prefers.

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