Paris, 21 June 2004 - Last May, all French chain hotel performance indicators, in all categories, were on the rise, with the sole exception of a price-stabilisation in the 3-star category. With a +8.5% rise, revenue per available room (RevPAR) saw its strongest growth since the crisis following September 11th 2001. 

The return to normal activity partly explains the recovery over May 2003, which was marked by a significant drop. But more than ever, the reduced number of vacation days off ("ponts") allowed hotels to better profit from active workdays. 

The budget hotel categories continued their constant increases in average room rates, though this time managed to combine it with an improvement in occupancy rates, which had recently been drawn downwards.

The midmarket hotel industry clearly improved occupancy, though at the expense of a stability in average room rates at the national level. The situation is quite different between the suburbs of Paris, Paris and the provinces. In the suburbs of Paris, hotels post very attractive rates to attract customers from the capital. Activity was satisfactory in Paris, and results were strongly up in the provinces.

The aggressive sales policy of upmarket hoteliers has been fruitful, with the successful replacement of customers that are still absent. The drop in rates, systematic since last summer, seems to be held in check, which has had a highly beneficial effect on RevPAR.
 
 

Official statistics of hotel groups

The month of May continued the recovery trend in activity in the hotel sector, with a rise of +8.5% in revenue per available room. This result continues the trend with a clear improvement observed since last March. This performance is all the more telling of a veritable pick-up in activity, since May 2003 was not as strongly affected by international events as much as was March and April 2003. The bank holidays on May 1st and 8th fell on Saturdays, and so Business activity was less perturbed than was the case last year, with the additional vacation days taken. This strongly benefited urban chain hotels. The rise in RevPAR in May 2004, +8.5% was the strongest since the tragic events of September 11th 2001. It was mainly held up by the two growth engines: improved occupancy rates, average room rates.

Over the first five months combined of 2004, indicators also improved significantly, though displayed differences between the budget hotel sector and the higher segments. The former still underwent a drop in occupancy due to negative effects of the 35-hour workweek, though it nevertheless did not lower rates. For its part, the upmarket hotel industry was commercially more aggressive and gave preference to a rise in occupancy and miscellaneous hotel income, therefore sacrificing its average room rate even more.

At the national level, all French Regions recorded more or less a rise in RevPAR. Only seven French Regions did not post a two-figure rise: Ile de France (+5.8%), Rhône-Alpes (+5.3 %), Brittany (+4.6 %), and Burgundy (+2.6 %). Concerning Ile de France, the situation was rather evenly split between the capital, which pulls in customers to the city centre (+4.6 points in occupancy rate) since availability is still high there, with prices that remain low in comparison with other European capitals, and the suburban departments around Paris where hoteliers are obliged to accept drops in rates in order to maintain their customers.

MKG Consulting indicated last March that the growth in revenue per available was expected to rise for all of 2004 within the bracket of 2% to 4%. The first five months, strongly marked by a pick-up in activity over 2003, hints that this forecast is correct, by being in the very high end of this bracket. The conclusion of MKG Consulting is that this trend shall continue, despite a lack of visibility denounced by all operators for the months to come, and the incertitude concerning a rate of economic growth beyond 2%.

Methodology
The activity results of this survey cover a sample of 2,950 corporate chain hotels in France representing 232,000 rooms. The results, gathered monthly and per hotel, are redressed by the categorical breakdown of the chains. MKG Consulting has the largest hotel database in the world outside the USA, with the best coverage of all hotel segments.