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February 2020: the French hotel industry slows down its growth

The French hotel industry started to slow down its growth in February. Some properties suffered from the departure of part of the international clientele, while travel restrictions began to appear in Asia. Île-de-France is particularly affected, notably because of its dependence on business travellers, whose sales are slowing especially due to the cancellation of several international events. Regional markets are nevertheless managing to improve their performance, especially due to domestic demand, which is still relatively strong during the school holiday season.

Under these exceptional circumstances, Hospitality ON and its partner OK-Destinations make the hotel performance statistics available for free access so that you can follow the news and keep updated in the best possible way.

After a good beginning of the year, the French hotel industry slowed down slightly in February.  Occupancy stabilised at 59.6%, for a 0.3-point increase in the national rate. The average daily rate rose slightly (+2.4%) to €88.50 excluding VAT, leading to a small increase in turnover, up +2.9%, to reach a revenue per available room (RevPAR) of €52.70 excluding VAT.

Not surprisingly, the upscale hotel industry is losing market share after the departure of its Chinese clientele and the cancellation of several professional events. This drop in demand comes in a difficult health context in Asia, which resulted in many travel restrictions and even the shutdown of several airlines between Asia and Europe, sometimes making it difficult, if not impossible, to stay in France in February.

The occupancy rate (OR) in this segment fell to 60.1% (down -0.1 pt), but still remains the best result at the national level.  To counter these losses, hoteliers decided to raise their rates, with a +4.1% increase in the average daily rate (ADR), which is estimated at €194.70 excluding VAT. On the other hand, they managed to achieve the best growth in RevPAR, i.e. +4.0%, for a result of €117.10 excluding VAT.

In contrast, the Midscale segment, which is less dependent on international demand, achieved the highest growth rate in terms of occupancy. The segment grows by +1.1 pt of OR, which is 59.6%. Its ADR grew at almost the same rate (+1.5%) to €99.90 excluding VAT. RevPAR rose by 3.4%, the second-best increase in this segment behind the Upscale segment, to €59.60 excluding VAT.

The Economy Hotels market is moving forward at a cruising speed. Its OR is stable at +0.5 pt (OR 59.4%), as is its ADR at +0.8% (€67.70 excluding VAT). Its RevPAR is growing at a slower pace than the national rate (+2.9%), at a rate of +1.7%, to reach €40.20 excluding VAT.

Finally, the Budget segment has the highest losses of all segments. It is the segment that experienced the largest decline in sales, with a 0.5 pt drop in OR to 59.3%. Like the Upscale segment, the Budget segment reported a 2.3% increase in sales, to €45.80 excluding VAT. Despite this, its turnover shows the weakest growth for the month, at +1.4%, for a revenue per room of €27.10 excluding VAT.

From a regional point of view, Paris and the French regions (outside Île-de-France) are supporting growth, while Île-de-France is experiencing a decline in activity. The capital and the province each achieved a +1.2 point increase in occupancy, with ORs of 71.4% and 56.3% respectively. On the other hand, rates are rising faster in the other French regions (+3.5%) than in Paris (+2.4%) so that the change in revenue per room is higher in there (+5.8%), estimated at €43.60 excluding VAT, than in the capital (+4.2%), whose RevPAR is €100.10 excluding VAT.

In the capital, and unlike in France as a whole, it is the Upscale Hotels market that is boosting global performance, thanks to a 1.7 point increase in the OR (64.9%), although the best performance in absolute figures was achieved by the Economy segment (+0.4 pt) with an OR of 77.4%, followed by the Midscale segment with an OR of 74.6% (+0.9 pt). In terms of RevPAR, the Top of the range still managed to progress the most (+6.6%) thanks to a nice price increase (+3.9%). The Midscale (RevPAR +2.6%) and the Budget (+1.7%) have a rather stable evolution in ADRs, respectively +1.3% and +1.2%.

The rest of Île-de-France is facing a much more difficult situation. Indeed, all segments are losing market share: the Budget (-2.4 pts), Eco (-3.6 pts), Midscale (-3.9 pts) and Upscale (-4.3 pts). Most of the ORs are close to the regional average (excluding Paris) estimated at 61.8%, down -3.4 pts compared to February last year. ADRs are slowing the decline, with two segments not even experiencing a recession, namely the Bottom (+0.0 pt) and the Top (+1.8%) of the hotel industry. Unfortunately, these measures are not succeeding in preventing regional hotel turnover, which is falling drastically by -6.3% on average, for an estimated revenue per room of €48.20 excluding VAT.

Finally, in the other regions of France, as in the rest of the country, the Budget and Midscale hotel supplies are supporting the sector's development, in line with national performances. The former increased its OR by 1.5 points, estimated at 56.3%, and the latter by 2.8 points, estimated at 56.2%. However, two segments are stagnating, namely Budget (-0.1 pt, OR 56.7%) and Upscale (+0.1 pt, OR 56.7%). RevPARs, on the other hand, have made good progress, averaging +5.8% for all regions and segments combined, and up to +8.3% in the Midscale segment.

Several regional metropolises are driving this growth, with two of them managing to achieve double-digit RevPAR increases: Bordeaux (+14.3%) and Grenoble (+10.0%). These results are obtained by increased market share for the former (OR +6.6 pts) and an increase in rates for the latter (ADR +5.6%). Cities such as Nice (RevPAR +7.5%) or Lyon (+6.9%) also showed a good month of February, unlike others that are facing some difficulties instead, with RevPAR down in Montpellier (-9.3%), Rouen (-5.6%), Toulouse (-1.9%) or Nantes (-0.2%), mainly due to loss of customers, in a context of the beginning of a slowdown in the French industry.

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