Summer 2016: A first assessment of France’s hotel industry

While summer 2016 logically presented a downturn for the hotel industry in the Paris region and on the French Riviera due to security concerns, other seaboard areas, the provinces and certain new regions in particular brought a welcome ray of sunshine. This summer’s first overview including all the figures by sector in our infography.

Considered on the whole, the French hotel industry recorded a drop in Revenue per available room (RevPAR) by -9.4% between July 1 and August 20, 2016. This negative result is particularly the outcome of the terrorist attacks in the capital and along the Mediterranean shorelines, particularly on the upscale segment which has a strong presence in the two destinations. And yet, the Paris Region and the PACA region are the leading tourism destinations in France: across the year, alone they represent 50.4% of the French hotel industry’s turnover according to data from the Observatory at MKG Consulting / OlaKala_Destinations.

In hotels in shoreline towns in the French Riviera along Mediterranean coast From July 1 to August 20, 2016 (compared to the same period in 2015), the occupancy rate fell 5.7 points while the revenue per available room fell by 15.2%. The terrorist attack on July 14 in Nice discouraged a share of the international clientèle, who were already sensitized by the previous attacks that had bloodied European news. As it happened at the beginning of summer, curing a crucial period when leisure clientèle  –on the upscale segment in particular – is the primary engine for activity, this terrible event clearly drove hotel performances down. But it is also necessary to remember that the French Riviera had experienced a particularly good summer 2015 (+22.3% for the RevPAR between July 1 and August 24), thanks to favorable weather in July, the shifted dates of Ramadan and the King of Saudi Arabia’s sojourn. The attacks thus simply returned the the coastal hotels to performance levels comparable to those produced in 2014: it attests to a certain resiliency  of the local market if it is to be compared to geographic sectors in areas such as Turkey where results from activity are don 30 to 40% for the past several months.

Moreover, if the French Riviera is receiving all the attention, the rest of France’s coastal areas posted generally positive results, while many observers had anticipated a significant drop in arrivals throughout the country. In comparison with last summer the Atlantic coast posted increases in its RevPAR (Revenue per available room) by +4.8%, the Breton shoreline +2.2%, Languedoc +2.0%, and Manche +1.8%. These results are all the more positive since these shoreline regions had already shown significant improvement in their results last year.

Outside the shoreline areas, the other provinces posted a positive change in RevPAR this summer: +3%. Among the “new regions”, three in particular did well. Auvergne-Rhône Alpes did the best in terms of tourism growth, with a RevPAR up by +7.5% (from July 1 to August 20). While arrivals increased only slightly (+0.2 points for the occupancy rate, or OR), the average daily rates progressed by close to 7.1% in the hotels in the region between Cantal and Savoy. the Loire Valley was another favorite: the Center–Loire Valley and Pays de la Loire posted occupancy rates that were up by +2.5 points and +2.2 points respectively, producing RevPARs (Revenu par Chambre Disponible) up by +5.4% and +7.8%.

The difficulties continue in Paris, the other destination particularly affected by the terrorist attack in Nice due to its heightened exposure to international clientèle and the security risks. With occupancy rates down by 12.2 points and average daily rates down 8.3%, Paris proper saw its RevPAR drop by -21.2% from July 1 to August 20, 2016, while hotels in the region around Paris posted a drop in their RevPAR by -11.5%. According to the tourism authorities of the Paris Region, which just published its results for the tourist season, these trends may be explained by the drop in arrivals of international long-haul clientèle (Japan, China, USA, Russia…), which is paralleled by the resilience of domestic travelers.

Georges Panayotis, president and founder of MKG Group, remarks: “It is important to realize that France has moved into a new dimension since the series of attacks that affected the capital and the French Riviera. We have gone from dramatic economic upheaval to a state of structural insecurity. this leads to a new consideration of the emergency measures that need to be taken to guarantee the survival of many enterprises on the sector, while developing a communication strategy and a new approach to “products” and “experiences” so that France remains the leading tourist destination worldwide. Today its position is sought after by destinations that have made an effort to renew their supply and strengthen their appeal.”


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