Tourism and Hospitality Trends (2017)

bTourism, Culture & Hospitality Managing changes in a unsettled economic climate Tourism and hospitality trends 2017 July 2017 Editorial 01 A turbulent year marked by continued insecurity 02 Dynamic regional cities 06 Contrasting trends in the French hotel sector 10 Hotels are improving their environmental performance at every level 14 Museums and heritage sites – strategies to attract Millennials 20 The uberisation of the hotel industry – new consumer behaviour 26 In 2017, budgeting hotels’ local taxes with reform of rental values 32 Human capital – a question of sector appeal and customer satisfaction 36 Our services, your contacts 39 Tourism and Hospitality trends Editorial This decade may not be over yet – far from it! – but it is likely that the years from 2010 to 2020 will be seen as a period of upheaval, during which the adaptability of the tourist sector will have been severely tested. Major structural changes are underway, driven by the rapid development in technologies and their growing place in our personal and professional lives. Customer expectations have also changed: concerns about sustainability and our environmental footprint, the desire for personalisation and "destandardisation" of products and services, the quest for sociability and a new kind of relationship with service providers, the expectation of versatile and multi-functional spaces, etc. These changes are having an impact on products and services in the hotel industry, which are being adapted, transformed and reinvented through the emergence of innovative concepts. They are also being felt in marketing (via the internet, on tablets and smartphones, via social networks, etc.), training of staff (who are being released from a wide range of administrative tasks to focus instead on being hosts and advisors) and cost management. Models are changing, forcing investors and operators not only to be adaptable and responsive but also to try to anticipate coming changes so as not to be left behind. Economic uncertainty is another challenge the sector needs to address. Far from the gradual cycles of growth and recession of past decades, today's crises can be sudden, frequent and very difficult to anticipate. Economic and financial crises, whose shockwaves are often amplified by economic globalisation, but also social and security crises, with the series of attacks that have hit France, Belgium, Germany, Turkey and many other countries around the world over the past few years. Investors and operators must also adapt to this new order, which heightens the unpredictable aspect of business and development plans and requires greater anticipation, responsiveness and adaptability. In this climate, in which the outlook sometimes appears obscure, any guidance is welcome. We hope that the articles in this new edition of Tourism and Hospitality Trends 2017, drawn up by our experts in the Tourism, Culture, Hospitality and Leisure sectors, will be of help in reaching your decisions. We hope you find it interesting! Philippe Gauguier and Olivier Petit Joanne Dreyfus Partners, In Extenso Partner, Deloitte Tourism, Culture & Hospitality Tourism, Hospitality & Leisure 1 Tourism and hospitality trends 2017 A turbulent year marked by continued insecurity Overall, activity in the French hotel industry ended the year down in 2016. Although the regions recorded a positive performance, the general trend was greatly influenced by the drop in performance in the hotel hubs of Paris and the Côte d'Azur. By Philippe Gauguier, Partner, and Sacha Fournier, Manager, In Extenso Consulting in Tourism, Culture & Hospitality. Data processed by Grégory Fortems, Consultant, In Extenso Consulting in Tourism, Culture & Hospitality. On a global scale, 2016 will have been in tourism and the hotel industry, which generally positive for the hotel industry. must find short-term as well as long- Africa, the entire American continent, term solutions to maintain the industry Oceania and even Europe have posted and drive it forward. Revenue per available room (RevPAR) up compared to 2015. Within Europe, After a mixed year in 2015, 2016 was despite this growth in the hotel sector, also difficult, reflecting the economic three countries recorded significant falls climate. The two traditional drivers of in visitors and average prices – the hotel industry – Paris and the Côte Belgium, Turkey and France. Insecurity d'Azur – suffered, dragging down certainly continues to be the main French performance as a whole (see negative factor. table 1). In addition to the tragic events that have struck France since January 2015 and greatly affected tourism, the hotel industry also has to come to terms with more long-term phenomena intrinsic to the sector, including sectoral developments (growth, mergers, increased quality, etc.) and changes to consumer behaviour and guests’ expectations. External factors have also had a notable impact, such as the success of online travel agencies (OTA) and increased competition from alternative destinations. This is no simple challenge for all those involved 2 Tourism and hospitality trends 2017 Off Paris Seine / Elegancia Hotels. budget category rose in 2015 and which RevPAR remains up over the The overall picture is not so bleak again in 2016, mainly as a result past five years (4.4%). however. The final months of 2016 of the closure or conversion into were stable, even positive, for France social housing of a number of The Mid-range and Budget categories, as a whole. The regions recorded ageing hotels. Following relatively on the other hand, have recorded growth for the second consecutive stable occupancy this year, relatively stable average prices or a year. The Super-budget category RevPAR increased. limited fall in this difficult period. But recorded positive growth in mainland the sharp fall in visitors has impacted France (+0.2% in RevPAR). Ultimately, All other categories recorded negative accommodation figures. Once again, the prospects for the tourist industry in performance, with RevPAR down by the strong regional performance could Europe and in France remain between 4.1% and 7.5% in the High- not offset the sharp falls recorded in favourable. end category, which was the worst Paris and the Côte d'Azur. affected due to the poor results of Paris French hotel industry struggling A year to forget for the Paris hotel and the Côte d'Azur, whose figures overall industry have had a severe impact on higher- The French hotel industry finished 2016 Hotel owners in Paris have had a dire end segments. In light of the sharp rise with negative RevPAR in the vast year. After the terrorist attacks in Paris in available capacity over the past five majority of categories. Although the in 2015 (January then November), years, this year and contrary to 2015, regions achieved a positive there were hopes of a recovery within Luxury and High-end establishments performance, the general trend was three months, as had been observed adopted a more aggressive pricing greatly influenced by negative in similar cases. performances in the hotel hubs of Paris strategy with a fall in average prices of and the Côte d'Azur (see Table 2). around 5%. The strong regional performance in the Luxury category Against this backdrop, only the enabled a slight increase in visitors to Super-budget segment recorded be recorded (0.8% occupancy rate) RevPAR up slightly by +0.2% over and limited the fall in RevPAR. At the the course of 2016. Having end of 2016, it is the only category in suffered from the rise in VAT in 2014, average prices in the Super- 3 Tourism and hospitality trends 2017 Smaller fall on the Côte d'Azur than in Paris The Côte d'Azur experienced an exceptional year in 2015. The first quarter of 2016 confirmed those trends and, until June, performance remained strong with rises in RevPAR for the Luxury and High-end categories of 10.5% and 2.9% respectively. But after Paris and Brussels, the Côte d'Azur was hit by terrorism, in Nice, during the 14 July celebrations. From 15 July, hotels recorded a large number of cancellations. Event cancellations and changes of venue (including a Rihanna concert, the Nice Jazz Festival and the European Cycling Championships) made the situation even worse. Operators sought urgent solutions by targeting a wider range of guests (groups), adopting a very aggressive Maison Albar Hôtel Paris Céline. Photo: Jérôme Galland. pricing policy and handling a number of last minute requests. However, like But the bad news continued in 2016, owners across the whole of Paris. The Paris, these emergency measures had related primarily to safety fears Luxury hotel sector's RevPAR fell by limited success and could only lessen following attacks in Brussels in March, 41.5%! While average prices were the damage marginally. The entire in Nice on 14 July, in Turkey and in maintained in 2015, 2016 was the year summer season, critical for hotel Germany, which had an impact on for more aggressive promotional performance on the Côte d'Azur (30% Europe generally in the eyes of the strategies. But cheap prices are not to 35% of sales over two months, world. All of the traditional international enough to attract customers who fear depending on the category) was visitors to Paris are therefore down for their safety and the dual impact of severely affected. (with the exception of the Near East the fall in visitor numbers and average and the Middle East), since American, prices pushed down RevPAR at the Nevertheless, some operators European and Asian visitors are very end of December by -13.4% for low- recorded a rise in business customers sensitive to threat from terrosirm. This end hotels and by as much as -21% in 2016 (following several years’ year the Japanese dropped out of the for Luxury establishments. decline) during pre- and late season, Top 10 international visitors to Paris. In After 10 consecutive negative months, bringing valuable occupancy during the addition to terror risks, the Paris hotel hotel occupancy started to climb again week, even if business remained sector also had to deal with floods in the last two months of the year.

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