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Analyses

France : January 2011 prolongs the momentum of recovery

No bad surprises this past January, the recovery begun at hotel chains last year was not affected by the confectio­ners’ truce. The base effect is still evident because January 2010 showed only a slight improvement over the terrible months of a black 2009. It is nonetheless healthy that the hotel industry regained a few points in OR, even if traditionally it is one of the weakest months in terms of activity. It is a confirmation that the hotel cycle has entered a virtuous cycle, average daily rates are progressing overall, and no category needed to renew discounting efforts to sustain occupancy. On volumes that remain modest, growth is fairly uniform for 2- to 4/5-star categories, with relative stagnation on the 2-star category in terms of occupancy. It must be remembered that this is the one that benefited from clientele that shifted down from higher categories and that its challenge will be to keep this new clientele. In fact, Paris’s Fashion Week in January was received as a very good edition that brought im­portant international clientele to the upscale hotel categories.Growth of the Revenue per available room on 12 sliding months somewhat accelerated the global trend for 2010, which saw a 6.5 to 7.1% increase. All indicators are in the green, with exception to at hard budget hotels which are stable. We may observe the classic schema that characterizes the physio­gnomy of very good years: resistance of the economy hotel sup­ply and more significant fluctuations for upscale categories. The average occupancy rate across all categories flirts with 66%, which is relatively satisfactory, but must be put into perspective. An analysis of this rate over the long term reveals an erosive trend due to a lack of renewal of the quality hotel supply. It must not be ignored that a share of clientele may be found in new forms of secondary residences, including serviced apartments. The breakdown of activity between Paris-Province is still largely to the benefit of the region around the capital which benefits more from the international recovery and the flux of foreign clientele. 2011 has the advantage of a calendar rich with international events, which is what has motivated MKG Hospitality’s fairly optimistic forecast including a 6.5 to 8.5% increase in the RevPAR on twelve months.

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