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January 2020: a good start of the year for the Paris Region

The French hotel business is once again in full swing in January. After a month of December affected by the longest transport strike of the country, the number of hotel guests is back up throughout France. The Upscale and Midscale businesses in Paris are particularly driving growth.

The national occupancy rate (OR) is up +2.0 points at the beginning of the year, which augurs well for growth in the French hotel industry in 2020. It thus rises to 57.8%. The average daily rate (ADR) is rising at a slower pace, which is a first in months when results were moslty driven by rate increases. Indeed, the ADR has risen by +1.8% to reach €92.80 excluding VAT. Revenue per available room (RevPAR) rose by +5.5% across France, to €53.60 excluding VAT.

However, these strong increases should be put into perspective. Indeed, as in December, the comparison is made with January 2019, which was heavily impacted by the Yellow Vest ("Gilets Jaunes") crisis. This explains, partially, the very low benchmark, and consequently a rather impressive recovery this month.

In fact, however, if we compare with the previous January, in 2018, we still see a slight increase in the indicators. For example, the OR of January 2020 is 57.8% compared to 56.3% in January 2018, indicating an increase of +1.5 occupancy points over the two-year period. This is therefore a real upward trend, observable over the long-term.

Moreover, all segments are progressing in January 2020. However, the record was set in the Upscale segment, with OR up +3.6 pts (63.0%) and RevPAR up +8.7% (€126.90 excluding tax). In this respect, it is mainly Parisian hotels in this category that outperformed: +9.1 pts (OR 72.4%) and +19.1% in RevPAR (€172.50 excluding VAT). The other Upscale properties in Île-de-France (Paris region) and the rest of the French regions only held steady, with no real growth, or even a slight decline, just as the +0.4 point increase in the French regions (OR 53.2%) or the +0.3 point decline in Île-de-France (66.6%) confirmed.

The second-best national growth, the Midscale hotel business is developing even more homogeneously throughout the country. Overall, it gained +3.3 points in occupancy (OR 59.1%), and even increased by +6.4 points in Paris (OR 76.9%); in the rest of France, it grew, but at half the pace, by +3.7 points in Île-de-France (OR 62.2%) and +2.0 points in the other regions (OR 52.1%). It is even the only segment with a positive RevPAR trend in the other regions, with a +1.6% increase (€47.20 excluding VAT). RevPAR for the Paris region Midscale rose by +6.0% to € 63.20 excluding VAT, while RevPAR in Paris Midscale outperformed by +12.0% (€ 96.20 excluding VAT).

The Economy segment is experiencing slower growth, with +1.3 pt of occupancy throughout France for a national OR of 56.7%. On the contrary, its ADR is slightly down (-0.4% for € 69.30 excluding VAT) for a relatively stable RevPAR, with a +1.9% increase for € 39.30 excluding VAT. In the Paris region, hotel occupancy rose by a good +4.1 percentage points in Paris (OR 77.7%) and by +4.2 percentage points in Île-de-France (66.7%). In the rest of France, it was stable: +0.1 pt of occupancy in the other regions (OR 51.1%). RevPAR is therefore positive in the Paris Region including Paris (+7.5%) while it is negative in the other regions (-1.5%).

Unlike the previous month, the Budget is no longer the growth driver as it was in December 2019. It held steady at +0.8 pt (OR 55.1%) nationwide, down -0.5 pt (50.9%) in the other French regions, which was offset by +3.8 pt (68.3%) growth in Île-de-France. On the rate side, ADR is only slightly higher (+1.3%), so RevPAR is growing at a cruising speed compared to other segments, an increase of +2.8% to reach a national average of €25.20 excluding VAT per available room.

Overall, the regions of France are thus slowing down their growth, unlike the Ile-de-France region. They have a stagnant OR (+0.4 to 51.5%) and falling ADRs (-1.0%), leading to a slight decline in revenue per room (-0.1%), set at €39.50 excluding VAT. Only a few regional cities show this gloomy picture, with increases in occupancy: Nice (+4.6 pts), Toulouse (+4.0 pts) and slightly Strasbourg (+2.1 pts).

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