The upward trend of the French hotel industry is confirmed by the final data of the first half of 2006, the summer season strengthens this upward trend and the return of foreign guests boosts the activity and stimulates the average room rate. Preliminary results show a 10.2% rise in RevPAR in July and a 6.1% growth for August.

All segments benefit from this growth – the 4* category registers the best results with an outstanding improvement of + 17.1% in RevPAR for July.

The best July since 2001

The summer season's preliminary results show excellent performance for the French hotel industry. In July RevPAR rose by 10.2% and occupancy rates rebounded strongly with +1.8 point to reach 72.9%. This is the highest occupancy rate that has been registered in five years (the 4* segment registered a six point rise). Overall average daily rates increased significantly (+7.4%), while the 4* category registered the highest growth in RevPAR (+17.1%).

Several factors explain these good results.

First of all the excellent performance in the leisure segment can be named. Last year's summer season was already great for the French Riviera but a bit disappointing for the Atlantic coast. This year the results of the Atlantic coast were far better with a RevPAR increase superior to 10% in Biarritz in July. July's heat wave undoubtedly contributed to the improvement of the performances of the hotels located on the coast. Big cities and in particular Paris also benefited from the growing number of city travellers: the week end of the 14^th July (bank holidays) ended with a 7.5 point increase of the occupancy rate in Paris.

The acceleration of the economic recovery in France impacted the business segment in July. The second quarter's strong GDP growth, among the highest in Europe, boosted the hotel activity.

Also, international clients are more present in France than they were last year, confirming one of the big tendency of the year 2006. The upscale segment in particular benefited from this growing presence. The Parisian luxury hotels for instance boasted outstanding performances with RevPAR gains of almost 20% in the first half of 2006.

In spite of a difficult international geopolitical context, in particular due to the Israel-Lebanon conflict, long-haul clients did not cease to come to France. France even benefited in the detriment of the Middle-East by spill over of guests.

The growth in average room rates add to explain the good summer season. Rate increases clearly contributed to the improvement of revenue per available room (RevPAR) but have marginal impact on the competitiveness of the French hotel industry as hotel rooms remain quite affordable compared to the other European destinations. From 1988 to 2006 average room rates of the French hotel industry raised by only 1.2% per year whereas inflation amounted to 2% per year in the same period.

The first trends captured for August seem to confirm July's results. During the first 2 weeks of August, the occupancy rate slightly increased (+0.2 point), the growth in average room rate is more significant  at +5.8% and RevPAR rose by 6.1%. Despite the unfavourable weather, August's seems to follow July's upward trend.

The third quarter confirms the acceleration of recovery

The final results for the first half of 2006 show a 4.4% increase in RevPAR. The acceleration of the recovery observed primarily in the last months of the first semester, continued in July with a 5.2% year-to-date increase in RevPAR. At the end of 2005, MKG Consulting forecasted a RevPAR ranging between 3% and 5% for the whole of 2006. At the end of July, the French hotel industry is already above this forecast.

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