Following our top French cities 2018 for hotel markets, Hospitality ON's editorial team invites you to a detailed look at each city on the list. Each focus will provide an opportunity to draw a portrait of the destination: analysis of figures, major projects in progress... These texts will also be invitations to reflect on the challenges facing each destination. Next up, the third from the top: Lyon.
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The Top French cities for hotel markets
Key tourism figure: (sources: INSEE/ OTCP / AirDna / ADP)
Key macroeconomic figures: (Source: INSEE, consortium immobilier)
Has Lyon reached a plateau phase? Between 2016 and 2017 the OR rose more than 3 points, between 2017 and 2018 the growth was just +0.7 pts. While the number of rooms and hotels remains stable according to INSEE (262 fewer rooms in 2018 according to INSEE, and just one new hotel). The number of Airbnb listings is still growing, which may partly explain this slight decline. Growth in demand is also slowing, with a 3% increase in the number of overnight stays between 2016 and 2017. That said, the final number of tourists for 2018 is likely to be on the rise, the airport has set a record year and overall France is returning to pre-attack levels, Lyon should also benefit from this. Rather than a plateau phase, it would probably be more appropriate to say the capital of the Gones has reached "cruising speed". Especially since the ADR and RevPAR remain solid and, above all, even on the rise. The average daily rate is up from 82 euros to 85 euros, and the revenue per available room is up to 59 euros. Even if we adjust for inflation, the trend remains upward. The best proof of the good health of this market and its potential is the opening of an InterContinental in 2019 at Hôtel Dieu in Lyon. This opening will be one of the highlights of the year for tourism and hotels, with, among other things, the opening of the Cité Internationale de la Gastronomie. After some fine achievements, such as the Confluences Museum and Groupama Stadium, a new prestigious facility has been added to the city of Lyon. A prestigious past, world-renowned gastronomy, new major projects, solid figures: Lyon simply imposes itself. This is still the French trend, a market that moves little in the classic hotel business, i.e. without Airbnb, demand remains strong and above all resilient. Around 650,000 rooms in 2017, according to INSEE, and in 2018 close to the same order of magnitude, demand is growing: enough to make a solid market, especially in large cities where real estate is an asset in demand. That said, while demand remains on the rise, spending remains a point where changes can be made: Bordeaux's RevPAR is better than Lyon's, while Lyon produces more nights. It's time to make Lyon roar.
Contextual details: the problems, the risks
Obviously the first problematic subject for Lyon is the difficult question of the Lyon-Turin high speed train. Will it happen or not? The dossier is complex: a subject of tension within the Italian government, and between Italy and France, criticism from the Court of Auditors, criticism from environmentalists, criticism of the relevance of the project. In short: it is not easy to get rid of this bag of knots. In any case, it is like the project: it's titanic, immense; 50 kilometres of tunnel, costs that could reach 20 billion euros in the end. In France, only the Grand Paris Express competes in its complexity, and even where the GPE involves the development of several infrastructures, the Lyon-Turin line is just one set of two tunnels. Of course, the construction work was already begun in 2016, but it has slowed to a near standstill. Many appeals have been filed against the declaration of public service, the tunnel is not yet included in the state budget, the 5-star movement in Italy, which shares power with the League, is against it: all reasons suggesting the work will not resume - even if the European Union has already advanced funds. The best response, at least from the point of view of the tourism and hotel industry, is to put this subject on the back burner. It is enough to compare an equivalent project, the Gotthard Base Tunnel in Switzerland: built in 1996 and finished in 2011, the tunnel was opened to customers in 2016. 20 years between the beginning of the construction site and the opening of the infrastructure. Assuming similar figures for Lyon-Turin, since the projects are similar, two tunnels in Les Alpes, break the record for the longest tunnel at its opening. It would then open in 2036. Perhaps at the same time as the Rhine-Rhone Canal?
Another subject that is closely tied to the city of Lyon: risks, whether chemical, industrial or technological. In Greater Lyon, 10% of jobs are industrial. This figure is unique in France, and Lyon is the world's leading vaccine production centre (source: website of the Greater Lyon metropolitan area) but also the host city of the WHO centre for cancer research. The city is therefore marked by industry and chemistry, and for a long time at that. This subject has direct consequences on real estate: housing must adapt to the prevention plan for technological risk, and this obviously has a cost. That said, there are ways to adapt real estate assets, financing facilities, tax credits. The Lyon City Hall website explains about toxic risks and how to comply with the TRPP (Technological risk prevention plan) in terms of these specific risks: "making a room airtight. One room is enough. You have to be able to hold on for about two hours before help arrives. This essentially involves a system to block the CMV (emergency switch) or the installation of air intake devices that can be shut off. There is a whole program including areas to be protected around the chemistry valley", south of the city (see map below).
A recurring theme in this focus on the cities in our top metropolitan areas: municipal elections will take place in early 2020 and campaigning will begin in 2019. As elsewhere, ongoing political recomposition raises fears of harsh, mudslinging campaigns. All the more so as Lyon is the territory of a major political force: Gérard Collomb, who has already announced his candidacy. He is currently Mayor of Lyon, but also President of the Greater Lyon metropolitan area. The political year was rich in anticipation, and the city was not spared violence during the yellow vest crisis, and there was a long debate about a ZAD to counter the construction of the Grand Stade de Lyon, which has now been completed.
The price of real estate has risen 20% in two years (source: meilleursagents.com), the number of visitors to the Musée des Confluences has been steadily decreasing since it opened in 2015 with 723,583 visitors in 2017 against 880,596 in its first year in 2015, the figures for the fête des lumières have not increased for several years with 2 million people in 2016 and 1.8 million in the following two years
Contextual elements: positive points, the projects
The aim, undoubtedly achieved, is to become a city that has some weight on the European stage, and is at least among the top 15 metropolises, in terms of tourism, but not only. Today, Lyon still has 5 million overnight stays, and around 7 million tourists (figures from the Lyon Metropolitan Area's balance sheets): these figures are comparable with destinations such as Madrid and Bruges. In terms of GDP, Lyon is ranked by the think tank Brooking among the top 300 cities worldwide with a GDP equivalent to that of Turin or Berlin. Growth seems to be slowing down a little, and this is what tourism figures also showed. In any event, Lyon can rely on very solid assets: a city centre listed as a UNESCO World Heritage Site, world-renowned gastronomy, led by famous names, Bocuse and Troisgros, a proximity to the Alps....
This growth, these ambitions, are nourished by a policy of major projects and infrastructures. First of all, the creation of the Musée des Confluences, which opened at the very end of 2014. The first year surpassed expectations with more than 800,000 visitors. Since then this number has declined, but this phenomenon is known, normal, once the novelty effect has worn off after. However, the figures remain quite good, above initial forecasts; this also makes it possible to offset the Museum's balance sheet, which had seen its construction costs slide. 2019 will see the arrival of the exhibition Hugo Pratt and Yokainoshima, esprits du Japon: two fine exhibitions that should support attendance figures. The festival of lights is also steady with 1.8 million visitors. For the nights of Fourvière, the figures are slowly rising again after a bad year in 2016. A gentle recovery after the terrorist attacks in the past years. Here too, the phenomena are known: after major events, and uncertainties, there is a backlash before tourists return.
Returning to the Confluences district, projects are reaching completion on the peninsula, marking the southern part of the city. The region's headquarters are open, the museum is open, the tram lines have been extended: only a few buildings remain to be opened and a few worksites completed. Certainly, some ongoing projects are still of importance, such as the Girard Hall, which will become a start-up incubator and is expected to be delivered in April 2019. And Hotel 71, which should become a hub for companies focused on culture. A second phase is beginning: life, appropriation of space, companies setting up. Moreover, the Confluence district has already won the government eco-neighborhood label and the WWF eco-neighborhood label. This is a moment that may well be important for the hotel industry. It is worth noting the opening of a MOB hotel in 2017, not far from the future Halle Girard and the museum.
2019 will also be a year of major works for public spaces in the Presqu’île de Lyon: completion of the renovation of the Place des Terreaux, de même pour la rue et la Place de la République. Works will continue in 2020 with the delivery in two years of Place Louis Pradel and Place Ampère. This area will be more pleasant, planted, pedestrian, in the middle of the Unesco listed neighborhood, where major new structures such as the Opera and City Hall may be found: which are perfect for tourists. The center of Lyon will also see the international gastronomy center open in 2019 (with an idea to using the registration of the French meal as immaterial Unesco World Heritage as a springboard) in Lyon's former Hôtel Dieu.
The new major project of the city of Lyon is no longer Confluence, however; Lyon Part Dieu is now the focus of all attention. First, the Gare de Lyon Part Dieu, should be expanded and have a new platform added by 2023. In keeping with this ambition to welcome more tourists, Lyon airport will also be expanded, with a new runway for 2019 and refurbished terminals for 2020 (after the opening of a new terminal in 2017). Near the station, a new tower, the To-Lyon tower, is expected to be delivered in 2020, including a hotel and 66,000 m2 of office space. This Lyon Part Dieu project confirms a shift in the city' s centre of gravity towards the east, with the Grand Stade de Lyon and the extension of line 3 of the Tramway. There will also be work on Lyon's highway network to finally get rid of the A7, which intersects the city, by transforming it into an urban boulevard and shifting traffic to a bypass to the east. In addition to all this work, the stadium delivered in 2016, almost in the open countryside, should become the centre of a vast business park. The idea came from the head of Olympique Lyonnais, Jean Michel Aulas, who aims to create a real Smart City OL: a 3-star hotel with 140 rooms, under the Kopster brand and 11,000 square metres of office space have already been delivered. Other projects are expected to be completed in 2019, a 3,000 square metre medical facility and a large indoor park. The whole is something to dream about: what if Olympique Lyonnais, in a league in full boom like the L1, made this new space a world famous place, like Camp Nou or San Siro? The ball is in center field, the attack is in the hands of the Lyon's players: the result will be seen at the end of the game.
Finally some information: Pollutec will return in 2020 (the exhibition takes place every 2 years), the contemporary art biennale will take place in 2019 (and the figures continue to grow from year to year) … In 2017 Lyon was number two in France in terms of conventions and exhibitions, just after Paris, with a hundred events. When results for 2018 are published we will see if these figures held and offer optimistic things for 2019.
A few subjects for the destination's future
ONLY Lyon: ONLY Lyon is one of the finest successes in terms of regional branding in France. One of the oldest as well as the brand was created more than 10 years ago. With advertising campaigns in Milan, Paul Bocuse's face on the sides of Milanese taxis has left its mark on minds, campaigns on social networks, advertising in Paris airports, 1.5 million people reached via Linkedin…. The ONLY Lyon sculpture, which took its inspiration from the now famous I AMSTERDAM, is one of the most photographed monuments in the city to grace social media.
The Olympique Lyonnais football club: France's football championship is changing.Arrival of the Qataris to PSG was followed by good results and record transfers for Monaco, a new investor in Marseille and Bordeaux. The French championship, which is lagging behind its European neighbors, makes it possible to dream with growth research, as there is so much to do. And with regard to this little game of future prognosis, Lyon has some arguments to put forward. In addition to its history and fan base, the club is the only one in France that owns its own stadium. Compared with Marseille where the rent the club pays for the Velodrome Stadium is a perpetual melodrama: owning your own stadium is an advantage. Especially when this is combined with real estate projects and hotels, where the club and its owner are involved. To this strong point must be added the club's training facility. The newspaper L'Equipe wrote in February 2014 that Olympique Lyonnais ranked second in terms of the number of players trained at the club and playing in the "five major European leagues". Enough to ensure outreach and transfers. Of course, the outlook is not so clear: the club's debt remains high. But it is still possible to dream.
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