• The RevPAR of chain hotels in France rose by 8.1% in March 2004, which allowed recording a high of 3.6% by the end of the first trimester. One must look back to June 2001 to find such a high monthly increase.

• These results confirm MKG Consulting forecasts for 2004, which forecasted a rise in RevPAR between 2% to 4%.

• The occupancy rates were on the rise in March 2004 in all categories combined: 2.2 points versus March 2003. The most impressive increase was that of the 4* category, which gained 4.2 points.

• The budget categories essentially use the price lever in order to lead to an increase by 7% to 8% in their RevPAR.

• By the end of the first semester of 2004, all categories posted a positive evolution in their RevPAR: from 0.3% for the 4* to 5.1% for the 1*.

All activity indicators for the French hotel industry were on the rise in March 2004, only the 4* category underwent a slight drop in its average room rate.

Compared to the month of March 2003, which was tainted by a drop in occupancy rates due to a combination of negative elements that affected the flow of international tourists (war in Iraq, increased unemployment rate, SARS), the revenue per available room gained 8.1% in all categories combined. The last increase of this magnitude dates back to September and October of 2002, where RevPAR rose by 13.5% and 16.7% respectively, this evolution must however be placed within a particular context that is due to the consequences of the attacks of September 11 on the 2001 figures, as well as the highly satisfactory level of the months of September and October 2002. It is thus necessary to go back to June 2001 (+10.7%) before finding a rise that is comparable to that of the month of March 2004.

The 4* category, the most affected by the unfavourable economic conditions in March 2003, is today recording the best performance in terms of occupancy, and has reached the threshold of 60%. This segment gained 4.2 points at the national level (59.8%) and 8.7 points in Ile-de-France (62.1%).

The 3* category also surpassed the 60% bar, for a rise of 2.7 points. This category reconquered a share of its customers, which for purely budget reasons sometimes switched to the 2* category for which the quality/price ratio corresponded perfectly well to cost-reduction plans.

This being said however, we notice that this rise in occupancy rates in the upmarket segment is done so at the expense of a slight drop in the average room rate  (-0.9%); in fact, within a context of increased competition, the beginnings of a price war made itself be felt as early as mid-2003. On this point, the Ile-de-France Region stands out, with a drop of 7% in the average room rate in the 4* category, which explains the simultaneous very high rice in the occupancy rate (8.7 points). 

Despite this slight drop in the average room rate, the increase in the occupancy rate was rather strong, leading to a positive evolution of 6.6% in RevPAR in the 4* categoryL. Remembering that in March 2003, the drop in RevPAR in this category reached 11.3% versus March 2002.

While the rise in RevPAR in the midmarket and upmarket categories was essentially due to the increase in occupancy rates, the budget categories based the increase in their activity on rate changes. In the 0*, 1*, and 2* categories, the occupancy rate rose by 1, 1.7, and 2 points respectively, while in terms of average room rates, the various changes progress from 4.7% in the 2* category to 5.5% in the 0* category.

In the Paris Region, the rise in the average room rate varied between 4.5% in 0* and 7.4% in 3*.

Consequently, the budget categories saw their RevPAR rise from 7% to 8%. The 1* category stood out by a more pronounced rise than the 0* and 2* categories, notably in Ile-de-France, where RevPAR grew by 17.6%.

MKG Consulting forecasts a rise by 2% to 4% in RevPAR by the end of 2004 versus 2003 ; these results of the first trimester of 2004 corroborate perfectly with these figures, the rise in RevPAR reaching 3.6% (table 2).

The provinces have done very well and posted a rise of 6% in RevPAR in total by the end of the first trimester of 2004, a direct consequence of a 6.1% rise in the average room rate.

Given the excellent results observed in March and the assessment of the first trimester of 2004, we are optimistic for the upcoming months. Nevertheless, certain uncertainties weigh upon the economic and geopolitical context; these elements may affect the stabilisation in growth.

Methodology

Activity results of this survey were based on a sample of 2,000 corporate chain hotels in France, and represent 200,000 rooms. The data, gathered monthly from each hotel are redressed by category within the chain supply. MKG Consulting has the largest hotel database in the world outside the USA, with the best representation of all hotel segments.