The Paris hotel market has reported dips in occupancy as a result of disturbances tied to the Yellow Jacket Movement, but sources suggest this may be somewhat offset by an outpouring of support following the tragic fire at Notre-Dame Cathedral.
PARIS—Occupancy in Paris has dropped in the first three months of 2019 due to disturbances centered around the Mouvement des Gilets Jaunes, or Yellow Jacket Movement, so called for the high-visibility smocks worn by protestors, according to sources.
Average daily rate has largely not followed suit, though, sources added.
If that was not bad enough, on 15 April, Paris’ principal symbol and tourist attraction, the cathedral of Notre-Dame de Paris suffered extensive damage from a fire.
The cathedral reportedly is visited by approximately 36,000 people a day, or 13 million a year.
Philippe Gauguier, managing partner at In Extenso Tourisme Culture & Hôtellerie, a data partner of STR (Hotel News Now’s parent company), said France has already seen good come from what officials are at the moment considering a tragic accident.
“The publicity and community of the French people is very positive, and it will provide a positive image of the country,” said Gauguier, who added the incident had nothing to do with terrorism and would serve to draw people closer together. He noted many world leaders already have called for solidarity and support in the aftermath.
Gauguier said he is confident Paris’ visitor numbers will not decline, as the cathedral is often part of a visit, but not all that draws visitors to the city.
Meryem Jamali, a consultant at In Extenso, agreed.
“Everyone knows (Notre-Dame Cathedral) is the most visited monument in Europe, but I think there will be a positive outcome because it will create a lot of curiosity. Hoteliers need to redirect clients to all the other great attractions Paris has to offer,” she said.
Jamali added plans to restore the cathedral already have attracted large donations from business leaders, including Bernard Arnault, chairman and CEO of LVMH Moët Hennessy Louis Vuitton SE, which in December bought hotel firm Belmond for $2.6 billion.
“It is just a prescient feeling that Paris will not be overly affected because we’ve seen so many positive message coming from everywhere,” she said.
The terrible fire might also distract visitors’ attention from the Gilets Jaunes protests in Paris, which began on 17 November 2018. Some of the demonstrations—all of which are on Saturdays—were marked by civil unrest, but unsavory incidents had died down by the end of 2018 until resurfacing on 16 March.
The protestors’ concerns involve what they believe are high fuel and living prices and an unfair tax burden on the middle and working classes.
Sources state that the movement is mostly peaceful, but shops and businesses have been damaged. Some businesses take preventive action and close down during the protests, which have spread to other French cities, but are centered on Paris and on the Avenue des Champs-Élysées in the 8th arrondissement.
In Extenso’s Gauguier said the Yellow Jackets disturbances came at a time when the Paris hotel market was getting back to posting good performance numbers, approximately six months after strike action on the French rail network.
“In October, we were pretty sure 2018 would see better numbers than what we achieved in 2014, (but) this did not happened due to Yellow Vest,” Gauguier said.
“Very clearly some hotels have been affected, with a year-on-year January 2019 decrease in bookings of 13.7%,” he said.
In the week following 16 March, hotels in the Champs-Élysées area saw cancellations amounting to between €10,000 ($11,200) and €14,000 ($15,680) every day, Gauguier said.
“The immediate consequence going forward is that we will have only limited pickup for the months of April through June. These disturbances could be the consequence of announcements coming from competitor countries, recommending not traveling to France,” he said.
Hoteliers are not panicking, Gauguier said.
“The main positive lesson that we learn from the past is that when you have this type of demonstration, there is no benefit in dropping rates,” he said.
While hotels in the higher-level segments in France have seen a drop in performance, Paris hotels across all segments have been affected both in occupancy and average daily rate, he said.
“Tourism at this time of the year has not yet entered in the high season, but every category of Parisian hotels, from budget to luxury, have been affected in terms of RevPAR,” he said.
“Leisure and business travel is strong, though, and especially compared with the dark days of the terrorism incidents of 2015 that included attacks at the Bataclan Theatre and at the offices of the French magazine, Charlie Hebdo.”
One significant difference is “everyone knows the Yellow Vest demonstrations are concentrated on Saturdays only,” Gauguier said. “We still feel that business is back, which was not the case in 2016.”
Jamali said important criteria to keep in mind are that the disturbances are concentrated mainly in the 8th arrondissement district near the Champs Elysées.
“The media tends to generalize that the demonstrations are across all districts in Paris. It is not,” she said. “The images on social networks and the media are clearly deteriorating the image of Paris, which has a direct impact on leisure foreign clientele that need to be reassured.”
“In fact, Paris has had only three or four difficult weekends with real damage, but the images of violence remain. Measures need to be taken rapidly to prevent another 16th of March in Paris; otherwise the upcoming months can turn out to be difficult for Parisian hoteliers.”
Jan Freitag, SVP of lodging insights at STR, said data shows that even the government-designed “Palace Hotels”—11 hotels that include such celebrated names as the Hotel Del Crillon, Hotel Le Meurice and Four Seasons George V—have not been immune to the challenges caused by the demonstrations.
“Performance in these 11 hotels mirrors the market overall in that demand declined steeply while ADR growth is not negative but severely stymied. The absolute ADR and occupancy, which historically have been among the highest in the world are now much, much lower,” Freitag said. For full-year 2018, these hotels posted 59.6% occupancy and ADR of €987 ($1,105).
“Over the last three months, more than half of the 1,700 Palace rooms were empty, and it will be interesting to note if ADR growth will be sustained given the lack of demand. Then again, these properties are not trying to fill rooms at any price, as their ‘normal’ occupancy clearly shows,” he added.
Rates hold firm
In the first three months of 2019, Paris room demand has declined and room rate growth has been severely curtailed, Freitag noted.
Rates, as expressed in euros, are not dropping, he said, but it is not unreasonable to assume that this may happen given the changes in demand and occupancy.
“Parisian occupancies have historically been quite high (2018: 78.3%) but have lately been just around 65%,” he said.
Freitag added monthly ADR (in U.S. dollars) has declined in the first quarter in the French capital.
Gauguier said he believed the disturbances would be over this month.
“There was lots of debate in February and March and political compromise. On 23 March, everything was a lot calmer. I am sure Paris will recover, and it should not take more than two months,” he said, adding that for terrorism attacks, the recovery period is typically 100 days.
“All this movement is very concentrated on Paris itself, not in the other regions of France. A little bit in the French Riviera, but not that much,” he said.
Data from STR shows average occupancy in Paris was 80.1% during the week in which the disturbances began, and has not been higher than that since. During the first nine weeks of 2019, Paris hotel occupancy only increased above 70% once (73.9% between 21-27 January), the data shows.
Demand drivers and seasonal fluctuations notwithstanding, occupancy across Paris in the first nine weeks of 2019 reached its highest level of 73.9% in the week beginning 21 January and its lowest level of 63.51% in the week beginning 4 February.
During the week in which Mouvement des Gilets Jaunes’ protests started (17 November), revenue per available room in Paris averaged €171.58 ($193.66), which has been surpassed at least up to the week of 3 March. The lowest average weekly RevPAR recorded in that period was €91.55 ($103.33), although RevPAR for the week beginning 21 January reached €159.53 ($180.06).