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1st quarter 2007 Sends The French Hotel Industry
Towards New Heights
May, 2007

Results of corporate operated hotel chains by category in France
Cumulated results from January to March 2007

 

Occupancy rate03/07
Change

OR (pts)

Avg. Daily

Rates 03/07

ChangeADR %
RevPAR 03/07
Change RevPAR %
0*/1*
64,8%
0,7
36,1
4,5%
23,4
5,6%
2*
61,9%
0,6
61,7
4,7%
38,2
5,7%
3*
57,1%
3,0
90,5
4,7%
51,7
10,4%
4*
62,8%
4,0
177,9
5,9%
111,7
13,0%
GLOBAL
61,5%
1,7
77,8
6,4%
47,9
9,5%
Source: MKG Consulting Database – official supplier to hotel chains – May 2007
Average daily rates and RevPAR expressed in euros IVA incl.

Overall growth on all segments… but the prize goes to 3* and 4* categories

  • The French hotel sector posts excellent results in the first quarter 2007 with growth in revenue per available room (RevPAR) by 9.5% over the first quarter 2006.
  • These results are perfectly in keeping with the last quarter 2006 (+9.7%) that punctuated a year marked by acceleration of hotel performance from one quarter to the next.
  • Mid and upscale hotels (3* and 4*) bring results up. On these segments, the growth of average daily rates accompanies significant improvement in the occupancy rate.
  • With the World Rugby Cup in September and October 2007, MKG Consulting’s forecast at the beginning of the year announces growth by 8 to 10% of the RevPAR in 2007. The 9.5% growth in the first quarter places hotel results right on target for this trend.


 In France, 2006 closed with the strongest annual growth in the RevPAR since 2000. Quarter after quarter, progress was increasingly strong. The first quarter 2007 followed this trend. Progress in the rate of change for the RevPAR stays at levels of around 10%. This performance is higher than that reached on the level of the European Union (+9.1% in the first quarter) and places France on a par with the major European countries (+11.2% in the United Kingdom, +9.4% in Germany) and ahead of Spain (+5.2%) and Italy (-7.5%).

The 3* and 4* segments deserve special mention, with respective growth rates for the RevPAR of 10.4% and 13%. The dynamism of business segments and international clientele ensures a significant increase in occupancy rates and overall growth in average daily rates. This observation illustrates the solidity of the demand towards French hoteliers. The current context for hotel activity in the 3* and 4* segments shows, as MKG Consulting has already pointed out, real operating margins allowing continued growth for prices.

On the super economy segment, the occupancy rate posts slight improvement. The uptrend of the RevPAR is due to growth in the average daily rate.

Favorable changes in most French regions

Nearly half of France’s regions post growth by nearly 10%. We may also observe the remarkable performance of the Rhône-Alpes region (+14%) for the quarter. The agglomeration of Lyon hosted many trade fairs and corporate events, a certain number of which are held every two years. For example, the organization of the exhibition SIRHA (Salon International de la Restauration, de l'Hôtellerie et de l'Alimentation held in January 2007, the previous edition of which was held in 2005) certainly boosted business, but it must be noted that this trend had already begun. Growth in the RevPAR in the first quarter 2007 is in fact stronger than in the first quarter 2005: +14% versus +8.5%. More generally, all French regions have indicators on an uptrend in the first quarter 2007.

 

Quarterly rate of change in the RevPAR for French hotels


T1 = 1st quarter; T2 = 2nd quarter, etc. 

Encouraging outlook for the end of 2007

The period that precedes a presidential election is traditionally characterized by a wait and see game on the behalf of companies. This behavior generally causes less business at hotels. In 2007 as well, hotel performances seem to have been slowed by the electoral calendar. The first estimations for April declare growth in the RevPAR down to 6%. Moreover, the first indications for May 2007, calculated thanks to the daily statistics observatory for hotel performance at MKG Consulting offer a glimpse of stability for the RevPAR with respect to 2006. The impact of a less favorable calendar for business travel due to many holidays compounded the effect of the elections.

Nonetheless, the year 2007 is characterized by major events offering particularly favorable perspectives. Paris’s hotel industry will profit from salons that generate very high volumes of nights and turnover: Airshow at Le Bourget at the end of June and Batimat in November. Finally, with the Rugby World Cup being held in France In September and October, the expected arrival of journalists, officials and fans will give a strong boost to the demand for accommodations at the end of the year, particularly in those urban areas that will host the event: Paris, Marseille, Lyon, Toulouse Bordeaux, Nantes, Saint Etienne, Montpellier and Lens. These considerations fully justify MKG Consulting’s forecast for growth in the RevPAR by between 8% and 10% for the whole of the year 2007.

Methodology

Created in 1985 by Georges Panayotis, MKG Consulting is the European leader in consulting for the hotel, tourism and restaurant sector and has the largest hotel database in the world outside the United States, with good representation of all hotel segments. The monthly observatory of MKG Consulting’s Database is based on a sample of 10,000 corporate chain hotels, accounting for 1,000,000 rooms.

Since September 2004, MKG Consulting’s Database offers a program that makes it possible to monitor activity indicators hotel by hotel on a daily basis. This program includes 1,500 hotels and 125,000 rooms in France making it the largest daily statistics observatory in Europe.

Results of corporate operated hotel chains by category in France Cumulated results from January to March 2007

Source: MKG Consulting Database – official supplier to hotel chains – May 2007

 
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Contact: 

Georges Panayotis
+ 33 (0)1 56 56 87 90

georges.panayotis@mkg-group.com

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Also See: Accor Driving Economy Hotel Revolution in Asia; Signs Agreement to Operate 6 New Ibis Hotels in China, to Be Developed at a Cost of US$150 million / March 2006
France Hotel Supply Drops Slightly for Second Consecutive Year; The Market Share of Corporate Hotel Brands Gaining on Independent Hotels Supply / March 2005
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