by Georges Panayotis
Franceās tourism supply isnāt making headway. Just a slight understatementā¦ The small bound observed in the growth of the hotel supply last year came after five consecutive years of contraction. Hereās hoping weāve hit bottom, but thereās no guarantee a kick will bring us back up for air very soon.
While the exit of old properties, with poor standards and well below market expectations tends to be a good thing, it only compounds the lack of new offers. This is particularly true for new hybrid concepts that are more innovative and will fill the void that is forming and compete with established properties.
It is important to be careful not to settle with a situation that does not have just short term inconveniences. The evident ā deliberate? āshortage of accommodations encourages aggressive Revenue management. Recurring events in major cities drive prices up, but increasingly uphold the idea that the hotel industry is becoming unreasonable. Some hoteliers are shooting themselves in the foot at this game. It is not enough to call out to French authorities for increased promotions abroad to bring in cohorts of well-to-do Chinese, Russian and Brazilian tourists. There must also be a large, modern, innovative range of accommodations accessible to all budgets, national and international alike.
The asset light strategy makes financial analysts happy but it doesnāt have beneficial effects alone. Of course this separation of asset management and operations increases the share price, but it also attracts the gaze of predators seeing companies to take over. Is the creation of added value so tangible? By relying on individual franchised entrepreneurs to guarantee hotel development, we give them a major responsibility that they do not necessarily have the means to assume. The government has made Tourism and the renewal of its supply a ānational priorityā. In a heavy, money hungry industry, it will only succeed if it is able to implement the necessary incentives.
Meanwhile, delays accumulate. Todayās challenge bears on the value of a business. Good management is no longer the only criteria. What is the value of a business when much of its marketing, distribution, customer relations is outsourced? In the end the risk is born by franchised investors, who are threatened by stagnation, or a drop in average daily rates within a global context of economic deflation.
Investment in the brand and on-line distribution is a necessity that can only be encouraged, although it cannot be an end in itself. Promoting a withering supply and distributing rooms that are insufficiently renewed means losing efficiency. How can it be explained that a group that is present only in the United Kingdom succeeded in putting as many rooms on its national market as other major groups have throughout the European Union?
France is digging the bed for alternative accommodations packages that will create consumer habits and gradually divert clientele from hotel accommodations. In five years we should not be surprised to see AirBnB omnipresent and start-ups fall through the crack! At the moment they are marginal and focus on new clientele segments. This is what hoteliers believed about OTAs in the 90s with a certain insouciance. Getting back to more basic observations: not much progress can be made with the cart in front of the horse. It is a question of priorities: industrial or financial?
