2016 was a tough year for the French travel market; terrorist attacks in Paris and Nice, as well as slow economic growth, discouraged travelers from near and far. According to Phocuswright’s French Online Travel Overview, international arrivals were down 8% and Paris hotel nights were down 10% in 2016. Since then, however, there’s been a slow but steady recovery. The election of pro-business president Macron and an increase in consumer confidence seem to be changing the trend.
The stable government and anticipated economic gains were expected to deliver a 2% growth in gross travel bookings in 2017 for a total of €43.6 billion, according to the Phocuswright report. Growth is expected to continue in 2018 to 3%, and the market is expected to reach €48.5 billion Euros by 2021. Online bookings are projected to grow 7% in 2017, but still lag 8% behind the European average, with 43% penetration. Mobile bookings are also on the rise and were projected to reach 18% in 2017, representing 21% of online revenue.
The French market has higher supplier-direct bookings than other European countries, despite a fragmented market. This is due to most segments having a large player that can successfully compete with OTAs. By 2021, it’s projected that nearly 75% of online bookings will be directly with a travel supplier, according to Phocuswright. However, OTAs also continue to grow. The report projects OTA bookings to grow 4% in 2017 to €5.3 billion Euros, with pan-European Booking.com the market leader.
French travelers set themselves apart from their European counterparts in other ways as well, as shown in the Phocuswright report. The private-sale market, for example, is still seeing heavy growth in France with companies Voyage Privé and Vente-Privee growing at impressive rates. French travelers also still use travel agents heavily, with the majority of packages booked through high street travel agents or tour operator call centers.
Recent developments with major travel players in the last year are likely to have an impact on the market, including:
- The city of Paris has sued Airbnb for failing to enforce the requirement for tax ID numbers on all city rentals. If the city wins, Airbnb will be forced to pay €1,000 per listing a day for listings that are not in compliance. This affects tens of thousands of listings, and has the potential to significantly impact the sharing economy in Paris and boost hotel stays. The trial date is set for June 12.
- Paris is preparing for a hotel boom, as fifty new hotels are expected before the Olympics in 2024. Nine new hotels are planned in eastern Paris for a total of 1,442 rooms; 5 hotels and 800 rooms will be added in the Porte de Versailles district; and central Paris will add 700 rooms.
- AccorHotels the French-owned hotel operator, continues to acquire a number of companies in the travel industry. They’ve recently bought Australian hotel group Mantra, that operates in Australia, New Zealand, Bali, and Hawaii; they’ve also acquired partial ownership of Orient Express, which will include a new hotel collection; they acquired Gekko, a business hotel booking tool; and just acquired ResDiary, a leading platform of restaurant reservations.
- On the airline front, AirFrance-KLM is diversifying its offerings with its new spinoff, Joon, which they’re marketing as its “innovation airline” that will feature its own identity and innovative tools. While flights will be more affordable and attractive to sought-after millennials, AirFrance insists it is not a “low-cost airline” and the quality will be equally attractive to current Air France customers.
- The sharing economy has caused the most disruption in the car rental segment, with companies such as Zipcar, BlaBlaCar and Autolib providing useful alternatives not just for travelers but for car-less city dwellers who occasionally need a ride.
Overall, the French travel market is looking positive and poised for modest growth in the coming years, given continued consumer confidence, a stable government, and being able to limit the impact of terrorist activity in the country.