Varied but reassuring recovery dynamics in the hotel sector

Hotel Trends in France and Europe, review of the year 2021
Unsurprisingly, hotel performance in 2021 was better than in 2020, although accommodation revenue (RevPAR) is still down 37% compared with 2019. A recovery has nevertheless been initiated by industry professionals, with reassuring signs already visible of the resilience of French hotels: summer performance in leisure destinations, despite seasons shortened by health restrictions; the clear rebound of the seminar market since September 2021, allowing business customers to return; and the gradual improvement in the performance of Paris hotels, which account for a significant share of the upscale and luxury hotel stock.

The upscale and luxury segment, moreover, managed to better absorb the impact of the crisis in 2021, thanks in particular to a sharp increase in average rates (17% compared with 2019). This trend nevertheless remains to be confirmed, as many 4 and 5-star hotels have only recently reopened. The rise in average rates, approaching the performance of 2019, enabled hoteliers to get the recovery under way, despite occupancy rates still lower than those of 20219.

Although these rates are mainly driven by domestic customers, French hotels have outperformed other European countries. Ranking second behind England, France recorded an occupancy rate close to 50% in December, despite the spread of the Omicron wave.

New travel trends are redrawing the map of the regions

While the recovery has yet to be confirmed in Ile-de-France, where RevPAR remains more than 40% below that of 2019, a gradual improvement in indicators is being observed in mid-sized cities (fewer than 2 200 000 inhabitants) and in the French countryside, where accommodation revenue is 18% higher than before the crisis and average rates are up 9%.

The four coastlines nevertheless remain a favorite destination for the French, and the recovery there is more pronounced. Coastal hotel RevPAR is 1% higher than in 2019, while the average rate reaches 17%. However, these performances, close to those of 2019, do not include the French Riviera, which is penalized by the absence of international customers and records a RevPAR of -25%.

?The many lockdowns have intensified trends that were emerging until then. Seeking more of an experience and a reconnection with nature, many French people left urban areas to discover the countryside. They therefore favored boutique hotels for their more personalized offerings, as well as upscale/luxury hotels equipped with wellness and relaxation areas.? explains Olivier Petit, Associate Director at In Extenso TCH.

2022 under the banner of an accelerating recovery in the hotel sector

Performance at the end of 2021 gives reason to be optimistic for the year ahead. Thanks to better control of health conditions, the resumption of major events and business seminars and the return of long-haul customers (Asia, South America, USA, Middle East, etc.) will support the recovery momentum.

The road remains winding for hoteliers, who will have to face several challenges, with cash flow and a return to financial balance as top priorities, in particular after repaying public aid, including state-guaranteed loans (PGE). Recruitment, retaining human resources and keeping them motivated after several months of furlough will also be decisive for the sector's return to balance.