From the annual analysis of the French hotel supply conducted by MKG Hospitality, on 1st January 2012, France counts less than 18,500 classified hotels for a total number of less than 648,000 rooms. This last figure sees a net loss of 6,400 hotel rooms.The constant shrinkage of the French hotel supply is mainly due to the decrease within the Economy independent-hotel category (1* and 2*). In this category alone, there are 634 fewer hotels and 12,300 fewer rooms than last year. The new supply coming mostly from hotel chains is not sufficient to compensate the losses. It is getting increasingly difficult to launch new construction projects and to compete with long-stay residences.
The overall shrinkage of France’s capacity to accommodate foreigners means that international clients might relocate to countries better equipped than France. The industry calls for a realistic and dynamic tourist strategy in favor of new constructions and new hotel concepts.
While restructuring the hotel supply appears to be necessary to meet the needs of a hotel supply that has been revived by improved quality, the void left behind as obsolete hotels (or hotels that are out of the market) disappear is no longer successfully being replaced by a new supply. The detailed analysis of the hotel supply carried out for the entire country by the database at MKG Hospitality shows a national supply that has shrunk by 1%, to drop below the 648,000 room mark. A net balance of another 6,385 rooms disappeared from the inventory. This loss may be added to the 8,500 rooms lost the previous year. With this new deterioration, France’s global supply is returning to its volume of a decade ago, in the midst of the 9-11 crisis.
This situation is explained by to the sharp decrease of the independent hotel supply that shrank by 2% (or 7,300 fewer rooms). This happened at a time when the usual dynamism of the chain-hotel supply is slowed by difficulty of bringing a new supply out of the ground and pursuing the cleaning of certain franchise brand chains. In the end, the chain supply grew by fewer than 1,000 rooms in all.
The economic crisis, the cost of marketing, and consumer expectations have undermined the profitability of a growing number of economy hotels that are paying the high price with a net drain of 634 hotels and 12,300 rooms – a record loss.
However, the slump in the independent hotel sector does not condemn all operations. The same inventory also shows that growth in the independent supply is very significant in the three, four, and, five-star categories, which together experienced net growth of more than 5,000 rooms. This movement is the continuation of the decade-long trend that marks the return of independent hoteliers to there are of expertise: full service hotels in city centers.
Moreover, hotel groups have decided to place franchising amongst their developmental priorities. Due to internal movements between chains, the growing power of franchisees in the supplies of corporate chains is not visible in the figures representing global growth. Growth, even marginal, for chain hotels on a shrinking global market allows them to cross another threshold of market share. Today, more than 43% of the global supply operates under a hotel brand, and certainly more than 50% if we add the main consortia, which require the flying of their banner.
The analysis of the global lodging supply in France is pertinent only to classified hotels. However is they are not the only ones to address a commercial clientele. Parallel types of accommodations are increasingly poaching on these markets. Tax incentives remain strong for stimulating investments in new tourism residences and especially urban residences which have the advantage of being less seasonal. Despite the succession of high profile failures of operators such as Mona Lisa, Maison de Biarritz and Residhotel, real estate promotion is doing well: Adagio by Pierre&Vacances/Accor, Citadines, Appart’City, Park&Suites, Odalys City, Cerise by Exhore and Hipark are all multiplying their openings. While the tension with hoteliers may have subsided, it is clear that the residence-hotel model is absorbing a significant share of developers’ resources as they focus less on the hotel industry.
