Whilst September was a little better than the rest of the year, October soon quashed any hopes of a recovery and the year-end looks set to be even trickier. Regional mid-scale hotels were the only exception to the general pessimism last month, with either higher or very slightly lower RevPAR.

All upscale segments in Paris recorded falls in occupancy (-8%, on average) and in average rates (-13%, on average). These drops were fairly dramatic, and put an end to the trend observed since the beginning of the summer, namely a narrowing of the gaps in results compared with 2002.

The slump in occupancy varied between -5% for First Class hotels to -13% for Deluxe hotels. In regard to ARR, with the exception of Palace hotels, the drop was much more dramatic (-3% for Palace hotels up to -20% for Deluxe hotels).

With a drop of `just` 10% in RevPAR, Palace hotels were the exception last month - a month where Deluxe, Boutique and Large Capacity hotels saw RevPAR fall by -20%, or more.

Mid-scale Parisian hotels saw occupancy fall by almost -3%. Two-star hotels managed to limit the decrease in rooms revenues, with a fall of just -2% in ARR, compared to 3 star hotels, whose average rate dropped by -3%.

To sum up, average rates in Paris were the most affected last month, mainly due to the ongoing economic malaise that forced companies to negotiate hotel rates to an even greater extent. This situation could worsen at the end of the year, since November and December are traditionally quiet times for hotels. Moreover, many companies are likely to postpone business trips and seminars due to budget cuts and the adoption of a `wait and see` attitude.

The situation was almost the opposite in the rest of France, where occupancy suffered the most. Occupancy rates were down between -1% for 2 star hotels and -9% for 4 stars. Two star hotels were the only group in France that posted a growth in RevPAR (up +1%), thanks to a higher average rate (over +2%).

Even if the short term outlook is not particularly positive, the year 2004 should give some hope, since American and Asian economic indicators are picking up, which may lead to a rise in European growth rates. If this is indeed the case, the year 2003 should be but a bad memory.