As the French hotel industry prepares for a June reopening after months of hibernation, hotels in the lower-priced budget segment have survived the crisis better than those at the luxury end.

Still, even budget hotels have struggled in the country, with revenue per available room down year over year by approximately 40% during the pandemic.

Hotel industry data analyst In Extenso, a partner of CoStar hospitality analytics firm STR, reported February hotel occupancy in France slumped to 9% in the luxury segment and 19% at midscale hotels.

Pierre-Frédéric Roulot, president of the country’s second-largest hotel group, Louvre Hotels, said occupancy rates at hotels that stayed open depended strongly on “the level” of the establishment.

“Most of the Louvre hotels stayed open since the beginning of the pandemic because the government asked them to cater for health-carers, for people who were sick sometimes," he said.

“In 1-star hotels such as [brand] Première Classe, we are reaching 70% to 80% occupancy rates ... so 20% less than in 2019. But for 3- or 4-star hotels, our brands Campanile and Kyriad, the fall in occupancies is much sharper, slumping by 50% to 55%,” he said.

Louvre has approximately 800 hotels in France under brands including Golden Tulip.

Roulot said a quarter of his hotels remained open.

The divide between hotels that depend heavily on foreign tourists and those that rely more on everyday local business trade partially explains why budget brands have fared better, Roulot said.

“Location is also playing a hand. Hotels in Paris and other big cities are holding up much better than those in the countryside or by the seaside,” he said.

The domestic market has helped “limit the damage” due to the loss of international tourists, he said, “But it is still very low compared to last year,” he added.

“Our establishments have been harder hit by the crisis because they welcome largely a foreign clientele, 50% to 70% depending on the hotel,” said Michel Morauw, Hyatt Hotels Corp.'s vice president of operations for France.

He said some hotels such as the Hyatt Regency Paris Etoile, where he is also the general manager, also host large conferences and seminars.

Of 12 Hyatt-branded hotels in France, only the Hyatt Regency Paris Etoile, Hyatt Paris Madeleine, Hotel du Louvre and Hyatt Regency Paris Charles-de-Gaulle have remained open since last October, “with occupancy rates between 10% and 25%,” Morauw said.

In the French capital, business clients, “especially aircrews and workers who live in regions and travel to the capital for business meetings,” have helped to fill hotels, he said.

According to the Paris Regional Tourism Committee, known by its French initials CRT, French guests have represented 96% of hotel occupants during the pandemic, mostly to the benefit of budget hotels.

Budget hotels have recorded average occupancies of 18%, compared to 4% for luxury and 8% for midscale.

Hoteliers’ hopes of recovery have been muted by a third national lockdown, which has just started to ease.

In its latest tourism outlook, the CRT does not project a strong international tourism rebound until 2022, but hoteliers now are banking on more Europeans and non-EU foreigners for summer.

The crisis has prompted widespread closures and layoffs in the capital’s upscale hotel sector amid the absence of foreign tourists and government restrictions on restaurants and bars.

Throught a voluntary redundancy scheme at Hyatt, 176 jobs were cut at three of its French hotels, including the Hôtel Martinez in Cannes, Morauw said.

The hotel union, UMIH, estimated 50% of Paris hotels have closed, some permanently.

One reason budget hotels have fared better than those in the luxury segment is less dependence on restaurants and bars to drive demand.

There was “no point in staying at the [luxury] hotel if the bars and restaurants are closed,” said Hubert Jan, UMIH president in Brittany’s Finistère department.

Budget hotels have been able to turn to other revenue sources.

“During the first lockdown, we closed five of our hotels and kept the rest open to accommodate healthcare staff, police officers and civil servants,” said Wu Qin, general manager of the Hipotel Group, which has 15 budget hotels in Paris.

He said about 10 of the company's hotels are currently open for general bookings, while hotels such as the Paris Olympiades Sacré Cœur are still operating privately or are shuttered to traditional guests.

“Occupancies have varied between 20% and 60%. We no longer have an international clientele, not even French. Our customers are from Paris for private or professional reasons,” he said.

Staying open during the pandemic had a downside, Louvre’s Roulot said.

“We didn’t benefit from all the [government] aid we would have if we had closed. We also had to change all of our protocols in hotels,” he said.

“The hotel business is one of overhead costs. So the difference between being just a little open or fully booked is really a big one, because we still need pretty much the same number of staff to operate it,” he added.

Hyatt, despite having a France portfolio mostly in higher-priced segments, also struggled with the decision to close or keep hotels open, Morauw said.

“Opening an establishment means deploying many services. It is sometimes less profitable to welcome guests than to leave it closed,” he said.

Morauw said bookings in summer 2020, especially in Nice and Cannes, helped soften the “shock” of the crisis, with a French clientele enabling the destination to achieve respectable occupancy rates.

“But they spend less than foreign tourists,” he added.

With France planning a staggered three-phase, three-month exit out of lockdown, hoteliers said they remain in the dark somewhat about exactly what they can open and when. At press time, the reopening of hotels is planned for June 9.

Hyatt also is looking forward to an uptick in bookings for its luxury hotels, with the Hyatt Regency Nice Palais de la Méditerranée, Hotel Martinez in Cannes and newly renovated Hôtel du Palais Biarritz all having reopened on May 6.

Roulot, like other hoteliers, is banking on the vaccination roll-out “for business to take off.”