Provincial France continues to feel ‘Le Squeeze’

08/08/2013 By Matt Costin

The hotel industry in France, much like Britain, sees the provinces struggling in comparison with the capital. Unlike Britain, France has the Riviera, where the sun shines on the hotel industry as on the beaches.

Paris and the Riviera are, of course, destinations for international travelers, so it is in line with global economic patterns that their hotels should outperform the rest of the country. RevPar in Paris grew by a healthy 4-5% in 2012. All but 15% of hotel investment in France went just into Paris and the Riviera. France has a ‘two-speed’ hospitality market. Given that, it will come as little surprise that in the provinces, major operators have been shedding weaker properties, leading to a fall in branded hotel inventory.

Shorter Stays and More Holidays Abroad
The issue is not that fewer French are staying in hotels (3.3m on business, 12.5m for leisure), just that they are staying for fewer nights. In the case of business travelers this represents nationally a 5% fall in volume, from 56m adult rooms nights down to 53m (BVA BDRC France Hotel Guest Survey 2013). The fall is greater for domestic leisure nights, down to 42m room nights. Occupancy fell also – around 3% in luxury, upscale and midscale tiers, 1.6% in the budget and superbudget tiers. The short break domestic leisure market has held up – it is domestic long stays that are responsible for the decline. Why? Probably because more French are holidaying in hotels abroad – Spain and Italy for long breaks, with Britain the chief beneficiary of the short break habit. French leisure travelers effectively exported 39 million leisure nights to hotels beyond French borders, a sharp increase on previous years. This reflects in the plateau reached in the French domestic leisure market which after slowing growth in participation reaches a plateau this year of an estimated 12.5m adults.

Reflecting the realities of EU trade flows, Germany is the leading destination for all French business travelers (just) ahead of Britain and Spain, though well ahead amongst frequent business travelers.

French businesses have suffered along with the rest of Western Europe and consequently are reining in discretionary expenditure. Their staff are less likely to stay overnight at conferences, reflected in a significant fall of an estimated 16% from 5m to 4.2m conference and event nights in the hotel where the event is hosted.

Hotel Brands
In the brand performance awards it is a clean sweep for Accor this year. Ibis is #1 Brand overall and is also top brand in leading choice (first or second preference) for leisure. Mid-market brand Mercure is #1 on leading choice for business while Accor’s Ibis Budget, in its second year of tracking, is this year’s Most Improved Brand. Hilton and Sofitel ranked as front runners among Upper Full Service brands and Relaix & Chateaux in the top of the range deluxe brands.

How do the French book their stays?
The online travel agency (OTA) market is at an earlier stage in its development in France than other major European markets. Compared with Germany, half as many French leisure travelers (23% vs 44%) cite OTAs as their usual reservation channel. Many French consumers still prefer to book direct with individual hotels. This is not to say that mobile technology and social media adoption are not proceeding in France as elsewhere; nearly one in three business travelers have used social media for hotel choice advice.

What do they want from their hotel?
As well as a great night’s sleep, business travelers of course want free wifi (‘weefee’ as the French say it!). Leisure travelers overwhelmingly select good value as their top priority. Other attributes are important (location, relaxing rooms, in-room entertainment) but most French consumers will make trade offs to maximize value for money. Like consumers nearly everywhere in straitened economies!