Market Report France

Security Risk Continues to Weigh Heavily on French Hotel Industry

March’s generally positive results led us to believe there was some hope for recovery. Unfortunately, April’s performances dropped in the majority of categories and throughout most of France. The attacks in Brussels at the end of March reminded international visitors of the ongoing security threat in this part of Europe. The school holiday and events calendars were also somewhat unfavourable in April, which accentuated the weak trading activity during this period. 

While March gave us some hope, the accumulation of unfavourable socio-economic factors had a negative impact on French hotel trading in April. The Brussels terrorist attacks at the end of March and the resulting actions of the Belgian and French police were widely discussed in the Media, serving as a reminder that the security threat is still very much present. International leisure travellers were particularly sensitive to this, and French leisure visitors chose not to travel either – given the dismal economic context, safety fears and generally miserable weather. Moreover, in an even-numbered year and during a month that concentrated the bulk of Easter school holidays, business travellers were not particularly present, and could not be relied on to compensate for the absence of leisure guests. Given this, all client segments were affected, which heavily weighed on April’s performances. Within this difficult context, many hoteliers adopted an aggressive pricing strategy, which ultimately had little impact on occupancy rates – the double whammy of lower occupancy and average rates thus drove down RevPAR. 

Paris and l’Ile de France were particularly affected, with a 20% or more drop in RevPAR, making the situation observed at the end of March even worse. In addition, a “new” phenomenon took place in April – regional France was also impacted, and the Côte d’Azur in particular (especially the Midscale category whose RevPAR dropped by 18,1%). In this hostile environment, the regional Luxury category was the only one to keep its head above water, recording positive performances. However, this was in comparison with the very weak results observed at the beginning of 2015. 

The same situation could be observed in cities. With a few exceptions, main French cities rely both on international visitors and business visitors, attracted by a busy events calendar. In this respect, April 2016 was a bad month. Take, for example, Nice and Marseille, or Avignon and Rouen… 

However, looking on the brighter side, certain economic indicators are improving. Furthermore, the fight against terrorism is achieving some tangible results and the Euro 2016 football championships are coming up. All these factors should go someway towards boosting hotel trading at the end of the first semester 2016. 

Table - French Hotel Industry Performance April 2016

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