French Hotel Market Statistics January 2004 - 2005: on the way to growth? | BDO Reports

2004's performances being far below expectations, 2005 is representing hopes for recovery in an economic context that remains distressed however and that could easily spoil the optimistic picture.

The year 2004 has been mitigated for the French hotel markets. RevPAR performances were globally on the rise but they were still below the hotel keepers' expectations.

Will 2005 be the year of recovery, adding occupancy growth and better average rates ? This perspective seems highly uncertain as long as the economic situation - to which hotel markets are extremely sensitive - has not changed. The Euro-Dollar exchange rates are still penalizing exports from the Euro zone and this is not expected to change during the coming year. At the same time, INSEE (National Institute for Statistics) forecasts a GDP growth of less than +2% shattering hopes of real economic recovery. The result for the hotel markets could be a year much alike 2004, with moderate growth in all segments.

In Paris during January, RevPAR was up for the 4 star segment. The growth rate varies from more than +2% for First class and Large capacity hotels to over +5% for Palace & Deluxe hotels. The Boutique hotels remain in between with an average growth of their RevPAR of almost +3%. The increases in RevPAR observed in the market are a direct consequence of both improved occupancy and higher Average Daily Rates (ADR) for this segment.

The situation is slightly different for the 2 and 3 star categories. These segments did not post major variance in RevPAR performances compared to the same month last year. Only the 3 star superior establishments managed a RevPAR progression of almost +2%.

The low occupancy rates in this first month of the year correspond to a drop of around -2% for both 3 star categories and little variance compared to last year for the 2 star units (+1%). The lack of demand this month has chipped off the ADR gains registered by 3 star hotels; up by +4% for 3 star superior hotels and +3% for 3 star standard hotels. While the 3 star units are progressing, 2 star hotels remain stable compared to last year with quasi-identical ADR's

In the French Regions, as opposed to Paris, the performances were rather good during the month of January. RevPAR's were sensibly up, from +4% for the 2 star category to +11% for the upscale hotels. RevPAR performances for the 3 star category increased by +8%.

The high RevPAR's can be explained by the strong growth in Average Rates: +9% for the 4 star category and +6% for the midscale category.

Even though the occupancy growth is moderate (3 and 4 star) or even negative (2 star hotels), the general trend is positive especially compared to current occupancy performances of Parisian hotels.

Are the hotel markets in the French regions (excluding Côte d'Azur) benefiting first hand from a light recovery in 2005 ? This could definitely be the case if the continuous growth of average rates since several years, is to be considered a structural change reflecting a higher quality of supply, growing presence of international brands and increasing importance of main regional centres such as Lyon and Marseille for instance.