France - Travel & Tourism: A volume and value driven industry (Strategy, Performance and Risk Analysis)
France’s travel and tourism sector contributed approximately US$85 billion to its economy in 2016 and is expected to reach US$73.1 billion by 2021. The country’s increasing revenues from tourism are mainly attributed to the country being host of several famous tourist destinations, such as the Eiffel Tower, the Louvre, Arc de Triomphe and Disneyland, which attract travellers from across the globe. Also, the country’s intriguing war history and rich culture entice tourists with varied interests from different parts of the world.
In 2016, France’s tourism expenditure was US$285.5 billion and it is expected to increase at a CAGR of 5.4%, from US$231.4 billion in 2017 to US$285.6 billion in 2021. This increase is attributed to several measures undertaken by the government to ensure the safety and convenience of its tourists. For instance, the relaxation of visa norms, and approval of visas within 48 hours for countries such as China and India, will increase inbound tourism. France has also beefed up its security at key tourist destinations after several terror attacks since 2015. Moreover, with an expanding economy and rising cross border trades, tourism flow for business activities will increase the total tourist volumes.
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Revenue per available room to increase with increasing occupancy
Due to increasing occupancy and an influx of inbound and outbound tourists, revenue per available room across all categories of hotels is expected to increase over 2017-2021 at a CAGR of 4.9%. Revenue per available room for luxury hotels recorded a value of US$435.1 in 2016, which is expected to increase at a CAGR of 5.7% over 2017-2021 to reach $574.4. Revenue per available room for budget and midscale hotels, which together account for the majority of hotel revenue, are expected to increase at CAGRs of 3.6% and 4.7% respectively over 2017-2021.
Increasing tourist volumes to drive fleet size
In France, car rentals fleet size increased at a CAGR of 2.5% over 2012-2016, mainly driven by the demand for rental cars from inbound travelers, who require cab services from airport and non-airport locations. Fleet size is expected to increase at a CAGR of 3.0%, from 236,226 in 2017 to 266,155.8 in 2021, owing to the influx of domestic and international tourists.
Full service airlines dominate the passenger airlines market
Full service airlines dominate the market and currently contribute more than 85% to total passenger airlines revenue. The market for full service airlines is expected to increase at a CAGR of 3.8%, from US$30.1 billion in 2017 to US$34.9 billion by 2021.
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