French market performance improves unevenly in August

August topped July for the French hotel industry, as those destinations with a strong ability to attract leisure tourists pulled up the market, according to new data from In Extenso.

Paris and the Côte d’Azur, along with a number of other cities, benefitted from leisure demand. For the remainder of the market, however, August proved difficult, and the 2012 summer season will not go down in history as accumulated growth in rooms revenue for July and August for the whole French hotel industry declined by 2% for all segments.

July’s launching of the summer season turned out to be rather a damp squid and, unfortunately, August did not save the day everywhere. Moreover, higher occupancy came at the expense of a strong downward pressure on ADR.

Without contest, the Côte d’Azur was the destination that benefitted the most from the month of August: occupancy rates were up, and unlike in other areas, this growth was also accompanied by a rise in average rates. While occupancy growth was more moderate in midscale hotels, it was much more significant in upscale and luxury properties, where average rates increased by 6% to 12%. Furthermore, the destination benefited from the good weather, hardly the case everywhere in France, as well as from the return of international visitors. July and August combined enabled the Côte d’Azur to post RevPAR growth of 5 to 6%.

Paris also took advantage of the return of overseas visitors in August, with upscale and luxury establishments posting occupancy growth of up to 10%. However, this increase did go hand in hand with a drop in ADR, down almost 4% in this market. Budget and midscale hotels found themselves in the opposite, and more difficult, situation. Occupancy in these segments dropped by over 6%, but they did manage to more or less maintain average rates. Ultimately, although upscale hotels were able to stabilize RevPAR thanks to occupancy, the remainder of the market posted lower rooms revenue compared to the same period last year. The very different profile of the months of July and August concluded in rather a mixed season, with room revenues nonetheless up by 2% to 4%

Regional France undoubtedly suffered the most in August as occupancy dropped in practically all categories. Budget hotels were the only ones able to stabilize occupancy rates.

Although ADR tended to grow, these increases were not sufficient to offset the drop in demand. That said, two agglomerations did manage to emerge relatively unscathed as northern towns appeared to have benefitted from the repercussions of the London Olympic Games. Consequently, Le Havre, Lille and Rouen posted significantly better results. Other destinations to experience a good month of August included southern French cities and/or cities attractive on the leisure market. Aix-en-Provence, Cannes, Dijon and Montpellier thus recorded good performances. However, the July and August results for regional hotels was far from brilliant, with rooms revenue down by 2% to 3%, depending on category.