• The 10th Hotel Makers Forum, organized by MKG, was the occasion to look back at the evolution of the French hotels supply. It posts a light growth of 0,1% at the beginning of 2006, masking the continuation of a more intense reorganization. 
• The supply of independent budget hotels is shrinking a little more every year whereas corporate hotel brands located in the 0-1* categories are clearly progressing.  
• Amongst the integrated hotel chains, whose global supply increases, the Accor group is reinforcing its position as a leader, far in front of Louvre Hotels, its challenger in France.  
• Because of asset disposal and takeovers of entire hotel groups, nearly one third of the hotel chain collection has changed owners during the year 2005. 

A stable supply in room numbers

In front of a group of more than 250 operators, promoters and investors of the hotel industry, brought together at the Four seasons George V hotel for the 10th Hotel Makers Forum, Georges Panayotis, president of MKG, presented the evolution of the French hotels supply. After 2 years of stagnation (-0,1%), the French global supply is stabilizing, posting a very slight increase of +0,1%. On the 1st of January 2006, the hotels supply counts 662 607 rooms for 19 911 establishments. But for the third consecutive year, the number of hotels is decreasing (-1,1%) with a negative balance of 229 hotels, sign of an ongoing mutation of the hotels supply. 

For the first time, the share of independent hotels is under the level of 60%, representing 59,7%. Corporate hotels chains see their room supply increase by 1,8% with larger hotelswhereas independent establishments post a downturn of 1,0%. The super-budget and budget segments are the most affected by this phenomenon. On the 0-1* category, independent hotels register a decrease of 1,0% against a progression of 3,6% for corporate hotel chains, and a decrease of 3,1% in the number of bedrooms for the 2* category against a slight increase for corporate hotel chains (+ 0,5%).  

Independent hoteliers give up more and more the operation of establishments located in rural areas. Hotel chains do not compensate for this decrease, preferring to focus on urban areas. The concentration of the French hotels supply takes places in urban and tourism areas. 
On the opposite, the growth of the supply collection of up-scale independent hotels is growing rapidly with an increase of 9,9% in the number of rooms against +1,5 for the whole of corporate hotel chains. 

On this particular segment, independent hotels have arguments to put forward. Online marketing enables them to compete with the large networks ensuring a greater visibility. Furthermore, investors are seduced by the potential higher returns in this segment. For the hotel chains that are present in France, the development of their hotel collection, by organic and external growth, represents a financial investment similar to 10 A320 Airbus. 
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The classification of hotel group brands demonstrates the prevalence of the Accor group, placing five of its brands in the top six brands present in France. Historic brands- Ibis, Mercure, Novotel – continue to see their respective supply increase. The development of low budget hotels in France is sustained by the new heavy weight of the French hotel landscape ETAP Hotel, whose development surpasses that of Formule 1. The purchase of the second largest French hotel group, Louvre Hotels, by Starwood Capital has not slowed down the development of its brands: Kyriad and Première Classe see their supply increase; Campanile, the fourth brand in France, is in light retreat, just like the upscale brand Concorde which lost several affiliates. 

The French budget hotel category demonstrates its dynamism. The budget hotel chain B&B, bought by the Eurazeo investment fund, sees its supply increase by 7,1%. The group is followed closely by Balladins who is getting closer to the Top 10. The brand, which is controlled by RMH as known a spectacular development of 24,4% of its supply. Villages Hotel, the seventeenth brand, completes the list of budget hotels that are doing well with a progression of 11,7%. 

Best Western, the third group in France, as begun its development again (+6,2) by completing its supply in tourism destinations and cities of more than 100 000 inhabitants. InterContinental Hotels Group, the first group in the world and fourth in France, is in withdrawal (-8,8%) due to the loss of the Holiday Inn Garden Court franchise and the sale of the InterContinentaljewel of the Castiglione street in Paris.  

The supply of the American group Starwood Hotels & Resorts progresses in an important way in 2005, +47,6%. Added to the Westin brand, established in Paris, Starwood increases its presence due to the management takeover of the Le Meridien brand, that has 4 hotels in France. 

On the opposite, many franchisors have lost more contracts than they have gained in France, this is the case of the Quality and Clarion brands from Choice Hotels and Golden Tulip. 

Significant movements of capital affecting the ownership of hotels 

During the year 2005, many large operations have led to the transfer of ownership of about 30% of the French hotel chains supply, without inevitably changing the operator. The sale of 128 hotels for 1,7 billion euros to Starwood Capital, the transfer by Duke Street Capital of the B&B group for 380 million euros to Eurazeo,…have modified the ownership of the buildings, sometimes operating companies, of a little less than one third of the hotel chains supply established in France.