France Hotel industry perfomances February 2010 | The slump continues for 2 star hotels!

In regional 2 star hotels, although average rates remained constant the category was heavily impacted by a drop in demand. A number of large cities saw 2 star hotel occupancy decline by over 10% in February.

In Ile-de-France, the positive results recorded in Paris were not necessarily experienced elsewhere in the region, since most departments saw occupancy and ARR fall. Declines ranged from 5% in Essonne to over 30% in Seine-Saint-Denis.

In the 3 star market, the trend noted at the beginning of the year continued throughout February – 3 star occupancy and ARR stabilized. However, this was not unfortunately shared by all large cities: Marseille, Nancy, Nantes and Toulouse thus recorded significant drops in business for the second year running.

In Ile-de-France (excluding Paris), results were also somewhat mixed. The departments of Seine-Saint-Denis and Seine-et-Marne saw RevPAR drop significantly (-31% and -14%, respectively), while the Yvelines, the Hauts-de-Seine and the Val-de-Marne posted positive results, with RevPAR growth ranging from 3% to 7%.

Budget hotels picked up in February. With the exception of the North-East, regional hotels experienced increasing or stabilized rooms revenue. However, this category remains fragile, thanks to a continual collapse in demand. Growth is only maintained by rising average rates.

During February, RevPAR in upscale hotels grew throughout metropolitan France. In Paris, superior 4 star hotels – a category that suffered greatly during 2009 and that had recorded mixed results during January – started picking up in February. Superior 4 star hotels recorded growth of over 11% in occupancy in February – one of the highest rates in the Parisian market.

However, this result hides a number of disparities. On the Riviera, for instance, Cannes was visibly shaken, with declines in RevPAR of up to -44% for standard 4 star hotels. Lille and Marseille also experienced significant drops in performance, recording double-digit decreases in rooms revenue. Avignon, Lyon and Toulouse recorded more moderate declines (2% to 8%). However, this second consecutive year of falling activity is beginning to impact hotel results – it was a rare city in February who recorded occupancy of 50% of more, not to mention the deterioration in average rates.

Aude de Mauvaisin
Senior Consultant | Deloitte TH&L
33 (0) 1 58 37 90 37
In Extenso Avocats