France hotels begin to reopen, but challenges remain
France hotels begin to reopen, but challenges remain
24 JUNE 2020 8:49 AM

As hotels reopen in France, hoteliers say the market has been severely curtailed, despite government help.

PARIS—France began its hotel lockdown exit on 11 May, with many of its 18,000 hotels given the green light to open after almost three months of closure, according to sources.

Others in the worst-hit coronavirus areas—so-called “red” departments like Greater Paris—had to wait until Phase Two of reopening was announced on 2 June.

On 3 June, France opened itself up to welcome travelers from most other European countries.

Some hotels reopened immediately, but many have been waiting in order to avoid a common problem in the COVID-19 hospitality world: Empty beds.

“As hotels increasingly reopen, many are empty, especially small independent hotels in country areas, but also (in) the city,” said Jean-Bernard Falco, founder and president of hotel-investment and asset-management firm Paris Inn Group, which has a portfolio of 35 properties of international brands and its in-house Maison Albar boutique chain.

Falco said France got off to a slow start with its tourism comeback.

“Fifty percent of the turnover of French hotels is achieved through business, namely congresses, and we are really lagging there compared to European competitors such as Germany,” he said.

With approximately 90 million tourists a year, France is the most-visited country in the world. The sector accounts for 8% of gross domestic product, €56 billion ($63 billion) in revenue and two million jobs, based on government statistics for 2019.

Outside of European visitors, U.S. vacationers are the most important, and those travelers are yet to be able to visit.

For many luxury hotels, some of which close for the winter, it’s been a slow start to the tourist season.

The l’Abbaye de la Bussière, part of marketing alliance Relais & Châteaux and with a Michelin-star restaurant, reopened on 19 June.

“I have no possible business if I only open the hotel and then serve room service. It is better for us financially with the payroll officially on ‘chômage,’” said owner Clive Cummings, using the French word for “furlough.”

The French government has paid approximately 70% of hospitality workers’ wages throughout the crisis, he said.

Since announcing the reopening of the hotel and restaurants, Cummings said “bookings are coming in, with quite a few Brits already for July and August.”

The pandemic already has taken a great toll on the turnover of his Burgundy hotel, he added.

“We estimate a 50% loss of revenue, and about €1.5 million ($1.68 million) plus of additional borrowing under a government scheme to keep cash flow afloat,” Cummings said. “So this winter and next year will be very difficult as well. Especially if things don’t settle down and this affects incoming tourism from overseas. So far we have not made any staff redundant but are really watching our costs.”

Insurance headaches
All over France, many hotels are struggling to stay afloat.

The country was one of Europe’s virus epicenters, with more than 29,000 deaths at press time.

Within a few days of its March lockdown, approximately 20% of some 660,000 hotel rooms in France were closed.

Various government aid is being offered to hoteliers to help with recovery.

Taking into account state assistance, the French finance ministry has estimated the loss in gross monthly profits in the tourism sector is at around €1.3 billion ($1.45 billion). State aid including tax breaks has helped to soften the blow to monthly turnovers by approximately 40%, the ministry claimed.

Another headache for hoteliers is that many have found themselves at loggerheads with those insurance companies refusing claims for operating losses.

Some insurers are waving contributions for two to three months, but that’s not enough, said Philippe Huertas, owner of hotel Manoir d’Agnès in southwestern France and regional president of hotel-industry body l’Union des Métiers de l’Industrie Hôtelière.

“We need help for the loss of business. We want hard cash for operating losses. Otherwise, 30% of our rural establishments are in danger of closing. If, that is, they don’t seize the day and capture the domestic tourism market from mid-July to mid-September,” he said.

In Paris, some hoteliers are not happy with the city’s €5 million ($5.59 million) rescue package for tourism.

Jean-Marc Banquet d’Orx, owner of Longitude Hotels, which has 11 assets, and president of UMIH’s Greater Paris branch, described the bailout as “low and quite ridiculous.”

“Hoteliers have suffered enormously, and some will find themselves in very difficult situations,” Banquet d’Orx said.

He added that he feared the worst is yet to come, particularly for smaller hospitality businesses that have struggled to meet steep rents in the capital during shutdown and which face bankruptcy without further support.

“Hoteliers and restaurants are striving hard to get things up and running again,” he said.

He added that comes with a whole new set of operating challenges.

“Wearing masks, floor marking, social distancing … all the health measures are in place, with strict time slots to receive visitors and with gloves and hydro-alcoholic gel. These will be difficult conditions. It is more complicated to welcome a guest with a smile from behind a mask or visor,” he said.

As major museums and tourist sites in Paris get set to reopen their doors by early July, Banquet d’Orx hopes that will be the hotel industry’s salvation, helping to woo domestic and international visitors.

A critical next step to that end is a stop to the European Union travel ban on foreign tourists, something that is due to happen slowly from 1 July.

Right now, many hotels are banking on a domestic tourism-led recovery.

Philippe Gombert, president of Relais & Châteaux, says since late May reservations have been taking off for many of the group’s 154 French hotels and restaurants for the first time in three months.

He estimated the loss of annual turnover to the group at 50%.

“The problem is 85% of my business in June is international, so we missed out entirely on this month,” said Stéphanie Gombert, his partner in hotel Château de la Treyne in the Dordogne Valley. “In peak summer months, about 80% of our guests are French, so we’re pinning our hopes for recovery on them.”

In fall, she added, there’s hope too, with a 50%-50% French, international clientele.

Nonetheless the finance ministry predicts losses to the industry “will never be compensated by domestic customers,” Stéphanie Gombert said.

An almost 65% reduction in hotel nights by foreigners in 2020 will have a devastating effect, no matter how strong the summer tourism comeback, she added.

“Whatever happens, 2020 will be a catastrophic year,” Philippe Gombert said.

“We will never be able to make up for eight months of activity in three,” he said.

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