Friday, January 16, 2009: Some growth in 2008 may have left the French hotel industry with enough strength to battle the recession of 2009.
The results released by MKG Hospitality’s database Hotel CompSet reveal that economy hotels achieved €46 revenue per available room, which represents a 4 percent increase from 2007.
A relatively low decrease in occupancy rates of 0.8 percent and a 5.3 percent in the average daily rate assisted this growth.
The midscale category also performed well, with revenue per available room growth of 3.3 percent, a 5.5 percent increase in average daily rate and only a 1.4 percent fall in occupancy rate.
“The Economy and Midscale hotel segments will certainly be a lot more resilient during the difficult months ahead, and help France somewhat weather the storm,” said Director of Development, Vanguelis Panayotis.
“People will of course continue to travel, be it for leisure or business, as it is a necessity these days,” Panayotis continued.
“Their travelling habits will change however. Consumers and companies alike will continue cutting back on costs, making Economy and Midscale hotels a much more practical and efficient option.”
The largest losses were suffered by the upscale hotel segment, who finished 2008 with a revenue per available room growth of €142, which represented a decline of 0.7 percent.
This was attributed to the fall in occupancy rate of 2.1 percent, and limited growth in average daily rate by 2.2 percent.
The final growth in the industry for revenue per available room was 1.9 percent, with decline in occupancy rates by 1.3 points at 68.4 percent, and the average daily rate growing by 3.9 percent.
There was little change to the profit hierarchy in France, with Parisian hotels continuing to dominate with 80.3 percent occupancy. The Ile-de-France celebrated the highest revenue per available room growth of 4.1 percent.
“The last few months have sent out warning signals,” Panayotis asserted. “Although average daily rate growth has remained positive, occupancy rates fell considerably.”
“We will now see hotels reducing their rates in order to fill their rooms, and therefore a reduction in ADR. If they haven’t already, hotels should begin taking drastic action, especially knowing what the rest of the year might have in stall.”
Panayotis insisted that revenues and costs remained fundamental, and appropriate rate strategies and profit protection plans were needed to uphold competitive advantage.
The difficult year ought to be viewed as an opportunity to plan, according to Panayotis, who maintained “When the tables turn, and indeed eventually they will, those who are well prepared will reap most of the rewards.”
“Not all companies are structured the same way. Certain companies will find it easier to survive the downturn.”
