In July, the average occupancy rate of the entire territory recorded a slight drop (-1.0 points), which was a contrast to the beginning of a recovery in April and the good activity results for the months of May and June.

With a modest increase in the average room rate of 0.3%, overall RevPAR saw a drop of 1.1%.

The Atlantic coast and Paris did better than the South of France.

A deceptive month of July, that is what we will remember from the beginning of the summer of 2004. The occupancy rate throughout the entire territory recorded a slight drop (-1.0 points). In addition, the average daily rate slightly rose by 0.3%. Also, global RevPAR saw a drop of 1.1%.

Occupancy rates down versus July 2003.

The drop in monthly occupancy rates occurred in all segments with the exception of the 3*, which rose by 0.5 points. The various categories continue to use different strategies that vary from one segment to the other. Thus, the budget segment manages to compensate for the drop in occupancy by raising the average room rates, while the upmarket industry must agree to dropping their rates in order to increase the number of visitors.

The deterioration of the 4* average daily rate in July led to a RevPAR that was down by 5.4% on the segment. The 3* category was also confronted by a drop in the average daily rate (-2.3%) that led to a drop in RevPAR of 1.6%. July 2004 was therefore a deceptive month for the French hotel industry, overall if we remember that its July 2003 results were already tarnished by a significant drop in RevPAR (-5.5%) versus the previous year.

Nevertheless, economic growth has begun. After a 2003 that was particularly bad for the French economy (+0.5% increase in GDP), the worst since 1993, the growth trend is once again positive, with an increase in growth in the national economy of 0.8% during the second trimester of 2004. The explanation of these poor results is therefore elsewhere.

New behaviour patterns in domestic consumers

Numerous professionals have observed that the 35-hour workweek has led to the practice of taking several smaller holidays throughout the year. The French take more trips, but for shorter periods. The summer season, and in particular the month of July, sees less tourists, and they stay for a shorter length of time than in the past. Another factor of explanation is that the weather conditions have not been excellent. The consumers, who increasingly make reservations at the last minute, by internet for example, therefore give preference to foreign destinations in the hope to find sunny weather.

Nevertheless, the decline is not homogenous. Regions such as Languedoc Roussillon, and to a lesser degree the Mediterranean zone, have undergone a real drop in the number of visitors. On the other hand, the Atlantic coast has done very well, particularly Brittany.

July was satisfactory for Paris and its region, which saw the return of American and Japanese customers, after a catastrophic year of 2003. The significant rise in occupancy in the 4* category is evidence of this (+2.0 points as a combined result). More generally, the chain hotel industry in Ile de France recorded an overall rise of 1.2 points in its monthly occupancy rate versus last year. Nevertheless, the differences between the performances of Paris and those of the regions are not so strong, like some observers have said it.

While it is true that the month of July has continued the trend in the medium term, but over 12 rolling months the revenue per available room in the French chain hotel industry was still unchanged (+0.1% versus last year). The average daily rates continue to rise by a relatively constant rate (+1.2%) despite the occupancy rates being slightly down (-0.7 points).

The final straight will be decisive for the French hotel industry. Despite the accident of the month of July, one can reasonably believe that the end of the third semester and definitely the fourth trimester will be up versus 2003, which will probably remain the low point in the French hotel industry for the last decade.
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