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French Hotel Industry Enjoys Best July Since 2001; 
Occupancy Reaches 72.9%
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Paris, 28 August 2006 - The summer season confirms the recovery noted in the first half of 2006
• The upward trend of the French hotel industry is confirmed by the final data of the first half of 2006

• The summer season strengthens this upward trend and the return of foreign guests boosts the activity and stimulates the average room rate. Preliminary results show a 10.2% rise in RevPAR in July and a 6.1% growth for August.

• All segments benefit from this growth – the 4* category registers the best results with an outstanding improvement of + 17.1% in RevPAR for July. 


Results of Corporate Chains by Category 
in France in July 2006
- Final Data -

 
0R 07/06
Variation OR (pts)
ADR 

07/06

Evolution ADR %
RevPAR 

07/06

Variation RevPAR %
0*/1*
78.3%
0.1
37.1
5.2%
29.1
5.4%
2*
71.4%
1.5
60.7
4.2%
43.3
6.4%
3*
67.7%
2.1
82.5
2.6%
55.8
5.8%
4*
73.9%
5.7
189.2
8.1%
139.7
17.1%
Overall
72.9%
1.8
76.9
7.4%
56.1
10.2%
Source : MKG Consulting Database – official supplier to hotel chains – August 2006
Average daily rates and RevPAR are expressed in euros inclusive of tax


The best July since 2001

The summer season’s preliminary results show excellent performance for the French hotel industry. In July RevPAR rose by 10.2% and occupancy rates rebounded strongly with +1.8 point to reach 72.9%. This is the highest occupancy rate that has been registered in five years (the 4* segment registered a six point rise). Overall average daily rates increased significantly (+7.4%), while the 4* category registered the highest growth in RevPAR (+17.1%).

Several factors explain these good results.

First of all the excellent performance in the leisure segment can be named. Last year’s summer season was already great for the French Riviera but a bit disappointing for the Atlantic coast. This year the results of the Atlantic coast were far better with a RevPAR increase superior to 10% in Biarritz in July. July’s heat wave undoubtedly contributed to the improvement of the performances of the hotels located on the coast. Big cities and in particular Paris also benefited from the growing number of city travellers: the week end of the 14th July (bank holidays) ended with a 7.5 point increase of the occupancy rate in Paris.

The acceleration of the economic recovery in France impacted the business segment in July. The second quarter’s strong GDP growth, among the highest in Europe, boosted the hotel activity.

Also, international clients are more present in France than they were last year, confirming one of the big tendency of the year 2006. The upscale segment in particular benefited from this growing presence. The Parisian luxury hotels for instance boasted outstanding performances with RevPAR gains of almost 20% in the first half of 2006.

In spite of a difficult international geopolitical context, in particular due to the Israel-Lebanon conflict, long-haul clients did not cease to come to France. France even benefited in the detriment of the Middle-East by spill over of guests.

The growth in average room rates add to explain the good summer season. Rate increases clearly contributed to the improvement of revenue per available room (RevPAR) but have marginal impact on the competitiveness of the French hotel industry as hotel rooms remain quite affordable compared to the other European destinations. From 1988 to 2006 average room rates of the French hotel industry raised by only 1.2% per year whereas inflation amounted to 2% per year in the same period.

The first trends captured for August seem to confirm July’s results. During the first 2 weeks of August, the occupancy rate slightly increased (+0.2 point), the growth in average room rate is more significant  at +5.8% and RevPAR rose by 6.1%. Despite the unfavourable weather, August’s seems to follow July’s upward trend.

The third quarter confirms the acceleration of recovery

The final results for the first half of 2006 show a 4.4% increase in RevPAR. The acceleration of the recovery observed primarily in the last months of the first semester, continued in July with a 5.2% year-to-date increase in RevPAR. At the end of 2005, MKG Consulting forecasted a RevPAR ranging between 3% and 5% for the whole of 2006. At the end of July, the French hotel industry is already above this forecast.

Methodology

MKG Consulting is the European leader in consulting services in the hotel, tourism and catering sector and has the largest hotel database in the world outside the United States, with good representation of all hotel segments. The monthly program of the MKG Consulting Database is based on a sample of 10,000 corporate chain hotels, accounting for 1,000,000 rooms (the sample increased by 10% in 2005).

Since September 2004, the MKG Consulting Database has proposed a program that enables activity indicators to be monitored hotel by hotel on a daily basis. This program includes 1,500 hotels and 125,000 rooms in France, making it the most developed program charting daily hotel results in Europe.

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Contact:

MKG Consulting 
Georges Panayotis
+ 33 (0)1 56 56 87 90
georges.panayotis@mkg-group.com

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Also See: Results for Hotel Chains per Category, in France in 2005/ January 2006
Increased Average Rates and Improved Occupancy Continue Through First 9 Months of 2005 for European Hotel Industry; Business and Leisure Tourists Have Adapted to the Uncertain Environment / November 2005

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