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France: May 2011: the hotel cycle well on its way up

As we enter the hotel industry’s busiest months, it is important to know if the dynamic underway for the past year will continue at the same rate. Results of around 9% growth in the RevPAR for May 2011 offer a positive answer. The catching up period in the year 2010 gives way to new growth in hotel activity. In major cities, this results in price levels that come close to and even surpass pre-crisis levels in 2008. This year’s calendar was more favorable; there were no long weekends around holidays and this resulted in more intense business for hotels targeting business clientele. Growth in ORs is similar across hotel categories, but the upscale comes out even better. On one month where Business and events activity is particularly dense, Paris and its region came out especially well with spectacular 13% growth on its RevPAR and more than 80% OR throughout the greater Paris region. As the year unfurls the industry feels reassured about the solidity of the hotel cycle that shows strong progress.Even more than in previous months, the upscale hotel industry posts brilliant results, carried by the success of mediatized events such as Roland- Garros, but even more so by the strong occupancy of business clientele and the renewed MICE tourism operations, particularly from the United States. Flirting with 90% occupancy, Paris’s upscale segment posts a score that is usually the preserve of the economy segment. Most major regional cities also surpass ORs of 70%. The second major region in the spotlight is Normandy which also benefited from the effect of the G8 held for just a weekend in Deauville but whose repercussions were more spread out in terms of both time and distance within the Norman perimeter. The French Riviera is also wellpositioned on the list of regions with good results –among the top– at the Cannes Film Festival. The Languedoc- Roussillon is the only region that posted a negative evolution, but that is in comparison with an exceptional 2010. June reservations are already very busy, and all indications for the forthcoming summer holidays are favorable.

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