Deloitte has just published its latest annual report on the French hotel market, Les tendances du tourisme et de l'hôtellerie 2015.
The company said that hoteliers face a difficult economic environment. The French economy grew only modestly in 2014 (+ 0.4% GDP growth), limiting domestic travel.
It adds, "The international environment has brought good news in 2014. France's main economic partners have experienced an acceleration in growth. In 2014, GDP in Germany rose by 1.5%, the United States by + 2.3%, the UK by +3% and Spain by + 1.9%. The decline of the euro experienced since spring 2014 is also good news. It makes France more affordable for foreign travellers."
The performance of hotels in various categories is shown in the chart below. Note that it includes both business and leisure travel.
Source: In Extenso Conseil TCH
Note: RMC/ARR does not include taxes.
Average room rate (ARR/RMC) at luxury properties in France increased by 0.3% in 2014 compared with 2013. However, during the period 2010 to 2014 ARR at luxury properties grew by 13.9%. This compares with 8% over the same period at upscale properties, 5.8% at mid-range hotels and just 0.5% at budget properties showing just how competitive the lower end of the market is.
Looking at revenue per available room (revPAR) instead of ARR, the increases are more marked. RevPAR at luxury properties grew by 20.4% between 2010 and 2014.
The Deloitte research shows that Paris and the Côte d'Azur were the big drivers of rate increases. Business destinations which have strong leisure traffic, such as Paris and London, tend to be doing well at the moment which might explain the former while the strong representation of luxury hotels on the two French markets has kept them buoyant.
In Paris, revPAR in all hotel categories grew by more than 10% between 2010 and 2014. In the regions, revPAR at super-budget to mid-range properties have fallen in recent years.