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French RevPAR Drops More than 8 Percent

September 2, 2009 By: Jena Tesse Fox

According to MKG Hospitality's market monitoring database, HotelCompSet, France has recorded a revenue per available room (RevPAR) decrease of 9.1 percent in August, while July dropped by 7.3 percent; the decline for July and August together reached 8.1 percent. This decline is lower than the first eight month's average of -9 percent.

Occupancy rates (OR) have fallen by over five points in both July and August, compared to 2008. Following a diminishing business segment, decline in international clients has been noticed as well in the leisure segment.

Most notable in July is the good performance from international upper upscale clients, with luxury establishments in Paris and the French Riviera benefiting from this activity. In contrast, August is mainly driven by local clients on more affordable and family-oriented packages to French coastal destinations, subsequently benefiting the three-star hotel segment.

Midscale hotels managed to stand out with a satisfactory OR (-2.5 points). Attractive business practices have allowed usual economy hotel clientele to move upmarket. In turn, the two-star hotel segment faced a difficult situation in July and August, with a decaying OR: -7.1 points compared to a -5.4 point average since the beginning of the year.

Results in the four-star category are different between July and August. In July, upscale hotels, especially palaces benefited from a more favourable environment, while August collapsed (almost -20 percent in RevPAR). With an early Ramadan this year, beginning August 22, Middle Eastern/Arab clients arrived earlier than usual and left beginning to mid August.

In August, coastal destinations along the Atlantic and Golfe du Lion recorded better performances than in July. Meanwhile, RevPAR in all categories declined by almost 15 percent along the French Riviera and 17 percent in Paris. However, OR in Paris remains at a satisfactory level (almost 75 percent on average in July and August).

MKG's HotelCompSet sample includes 2,000 hotels in France, representing more than 200,000 rooms in all categories.

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