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March 2020 : French hotels sink into the crisis

2020 was shaping up to be a successful year for French professionals. The arrival of Corona Virus in Europe at the end of January sounded the death knell for tourist activity in the first half of 2020. France went into lockdown on March 17, depriving accommodation providers of their customers.

The figures are indisputable, -66.2% of RevPAR in March 2020 compared to March 2019. RevPAR is €19.80 excluding VAT for all hotel owners. The French government is providing support for professionals in the sector who will benefit from support after 11 May, as their business is not expected to resume on that date.
Hoteliers have maintained their prices at a maximum, -7.8% to reach €83.4 excluding VAT, but occupancy, which plummeted by -40.9 points, painfully reached 23.7% for the whole month of March. Many properties have closed their doors due to a lack of customers placing their staff on short-time working. On 25 March, only 23% of the hotel portfolio was open to the public. Some of them have kept an activity that accommodates care staff for example.
Year to date, the balance sheet is now negative with a 22.3% drop in RevPAR for all segments combined, i.e. €41.5 excluding VAT.



It is the upscale segment that shows the strongest decline, with a drop in OR of almost 50 points to 18.1%. Upscale hotels were the first to suffer from the departure of foreign clientele following the progressive containment of European countries and the world. While rooms in the properties could remain open, all additional services were de facto closed. This problem did not allow the profitability of the operations to be maintained and led to numerous closures. In March, the PM reached €197.3 excluding VAT, stable compared to March 2019, but the extremely limited occupancy of the properties led to a loss of RevPAR of -73.2% for an available income per room of €35.6 excluding VAT.

The midscale segment lost 67.1% of RevPAR (€21.6 excluding VAT), with occupancy declining by 42.8 points (21.6%). The economy segment loses -40 points of OR for a slight price drop of -2% to generate RevPAR at €16.8 excluding VAT (62.4%).  The budget suffers slightly less with an occupancy loss of -35.8 points, prices up +3.9% for a RevPAR at €13.1 excluding VAT.

From a geographical point of view, it's no surprise that Paris is suffering the most with its concentration of luxury hotels and luxury hotels. The capital is losing -56.6 occupancy rates (21.2%) although establishments have lowered their prices by -2%. RevPAR reached €31.1 excluding VAT compared to €116.8 excluding VAT in March 2019.

The Île-de-France region (excluding Paris) lost 41.6 points of occupancy (21.6%) with a 9.9% drop in ADR. RevPAR barely reaches €25 excluding VAT, a loss of 69.4% compared to March 2019.

On the Province side, OR has lost 37.2 points, average prices have fallen by -4.2% and RevPAR has dropped 63.3% to €32.7 excluding VAT, compared with €42 excluding VAT in March 2019.

At the time of writing, the terms and conditions of the takeovers have not yet been fixed and will be fixed in the first ten days of May. But if there is a takeover, it will be gradual and not the amount of losses incurred over the year 2020 or even 2021 according to the forecasts of certain hotel owners.

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