The arrival of the fifth wave and the new sanitary restrictions are once again freezing the recovery of the hotel business. Following the government's announcements, professionals are concerned about the impact of the reinforcement of sanitary protocols on their activity as the end-of-year period approaches. Number of visitors, bookings: what is the state of the French hotel market, and what are its short-term prospects?
In the wake of the announcements of the Health Defence Council held on Monday 6 December 2021, professionals in the hotel sector are once again worried about a significant volume of cancellations. Indeed, the fifth wave that has been descending upon France for the past few weeks is not reassuring the sector's professionals. And for good reason: in 2020, the month of November marked by the second confinement had stated a 82% drop in the hotel industry's turnover compared to normal.
But after a decent summer season (-20.4% in July-August compared to summer 2019), this first autumn without lockdown has so far shown rather encouraging results for the French hotel industry: in October and November 2021, business performance was "only" -16% below pre-crisis standards. The beginning of autumn was marked by a gradual return of business customers who had begun to return to their habits, and the school holidays also benefited hoteliers.
Nevertheless, yesterday's announcements (including the encouragement of working from home and the limitation of events in the professional and private sphere) could once again delay the recovery of the sector. And hoteliers are right to be concerned. Indeed, as early as 24 November, the press conference of the Minister of Health Olivier Veran announcing a tightening of the health system resulted in a drop in bookings.
A NEW FALL IN ATTENDANCE LEVELS
Business picked up in November with occupancy rates reaching 61.1% for the week of 15 to 21 November at national level and, for the first time, 70.6% in Paris. The capital had previously suffered more from the health crisis than the rest of the country due to its greater dependence on business and international clients. But since September, thanks to the generalization of the health pass in particular, the business events sector had recovered, allowing the region Ile-de-France to boost again its hotel business.
Although the first week of December saw a slight drop in occupancy following the new announcements, occupancy rates are still good despite the resurgence of the epidemic (57.3% nationally and 65.3% in Paris in the week of 29 to 5 December). It is usual that this period shows lower occupancy rates than the previous weeks due to a lower number of business customers.
VOLUME OF CANCELLATIONS OFFSET BY YEAR-END BOOKINGS
Hotel reservations for the next 30 days (D+1 to D+30), as of December 6 + comparison with the previous 4 Mondays
Weekly change in hotel bookings* since mid-November for the period December 13th to 31st
* net bookings = bookings – cancellations
While the occupancy rate has not yet fallen significantly since the last announcements, net bookings for the last week have fallen sharply, driven by a large number of cancellations. In fact, weekly bookings fell from +14% for the week of 15 to 21 November to +9% for the week of 29 to 5 December.
The same applies to Strasbourg, whose future prospects for the month of December had already been excellent for several weeks, thanks in particular to the Christmas markets and the parliamentary calendar, but which has been particularly affected for the past two weeks by the wait-and-see attitude of customers in terms of bookings.
The rest of France, which has lower booking rates at the end of the year than the region Ile-de-France, has seen its bookings fall progressively each week, as the number of cases of contamination and the new restrictions increase.
Lyon, which hosts the famous Fête des Lumières on the weekend of December 11th, had recorded strong booking volumes during the week of 22-28 November, before also recording a strong wait-and-see attitude for the second half of the month.
Overall, the effect of the slowdown in French hotel activity should therefore only be felt more strongly from the week of 12 December. But if a slowdown is indeed observed, it is by no means a collapse comparable to the situation in the autumn of 2020, when cancellations exceeded bookings and activity collapsed to less than one fifth of its standards. The current trend is more of a slowdown, marking a pause in the momentum of recent weeks.
Vanguelis Panayotis, CEO MKG Consulting, outlines the outlook for the sector:
The latest announcements and new health issues will again delay the recovery of the French hotel industry until the end of the first quarter of 2022. However, the underlying situation is much better in terms of recovery and the constraints should not be as strong as last year. Thus, at the end of the year and in the first quarter, the French hotel industry will face a slowdown, it will by no means be a new hibernation.