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Hotels in France Record RevPAR Decrease of 9.1% in August 2009

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According to MKG Hospitality's market monitoring database, HotelCompSet, which incorporates 2,000 hotels in France and over 200,000 rooms in all categories, France recorded a RevPAR decrease of 9.1% in August 2009, with July dropping by 7.3%.

 Although July 2009 recorded a RevPAR drop of 7.3%, this was still an improvement compared to the beginning of 2009.

 Results in August (the first 25 days) declined even further, with a 9.1% decrease. July and August together recorded a drop of 8.1%, slightly better that the first eight month’s average of - 9%.

 Compared to 2008’s results, occupancy rates decreased by over 5 points in both July and August 2009.

The upscale hotel segment recorded a 15.1% RevPAR drop in July/August against an almost 18% average decrease since the beginning of the year. This was driven by a better situation in occupancy than expected compared to previous months.

This result however hides a different situation between July and August. In July, upscale hotels, including palaces benefited from a more favourable environment, recording one of their better performances for the year.

August however proved to be a difficult month for this segment, with RevPAR decreasing by almost 20% and OR falling by over 6 points, as per MKG Hospitality’s preliminary estimates.

 The main reason for this drastic change is an early Ramadan (August 22), which encouraged some Middle Eastern/Arab clients to travel earlier than usual and leaving beginning to mid August. The second half of August has been difficult for many hotels.

The 3-star segment managed to stand out during the summer. The RevPAR decrease is less marked than at the beginning of the year thanks to an improvement in OR: -2.5 points, the lowest decrease among all hotels categories. This is achieved through good performances in August.

July’s RevPAR decreased by 7.7% with OR falling by 4 points, while estimations for August are for a 2.2% RevPAR decline and OR close to August 2008 level (-1.1 points). This segment most likely benefited from an increase in local clientele, who otherwise would normally spend their holidays abroad, but due to the global economic climate chose to stay closer to home.

The 2-star segment has also faced a difficult summer season, with a dramatic reduction in OR of -7.1 points (July/August), compared to a -5.4 points average since the beginning of the year. Attractive deals from 3-star hotels has stolen some market share from the economy segment.

Looking at the various regions, while activity in the upscale segment improved in Paris and the French Riviera in July, a decline is evident in August.

 The Parisian hotel industry recorded a RevPAR decline of 7.7% in July and a limited OR decline of 2.3 points. Estimations for August reveal a 17% decline in RevPAR. OR however remains at around 75% on average in July and August.

 In a gloomy global economic climate, the capital’s strong tourist appeal certainly remains a pillar for the hotel industry.

 Along the coast, the French Riviera’s RevPAR increased by 1.2% in July for all categories, but showed a decline of almost 15% in August. In contrast, the Atlantic, Channel, as well as Golfe du Lion (from the Roussillon until the Bouches-du-Rhône) all record better performance in August than July.

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