France gets a fifth star

France has a new way to define luxury. A new five-star category has been added to the country’s hotel ranking system … as if you’d need the extra star to pick one of these properties out of a lineup! The marketing ploy, of course, is to use the extra etoile to draw big spenders and entice them to open their wallets a bit wider. France had to amp up its ranking system, as it was the only country in Europe lacking a five-star category, despite its reputation as a destination. You can now find 13 five-star hotels in Paris.

While France has resisted the worst of the travel market slump in Europe, according to a report by Deloitte, it has lost some British and American tourists. The French government hopes the fifth star will help invite them back. Visitors to France have fallen 7.5 percent this year to 15.9 million, according to the Paris Tourism Office. And, the market has suffered a 14 percent drop in revenue per available room night for the first half of 2009, thanks to shrinking demand, shorter booking times and competitive pressures.

Yet, Paris did have the highest occupancy rate in the euro zone (74 percent) and the second highest average room rates (after Venice) for the first half of the year.

[Photo via MigrantBlogger]

Hotels lowering standards, prices and star ratings

It won’t come as a surprise to hear that hotels all around the world are suffering. The hotel industry is becoming a survival of the fittest, and as some hotels simply close for good, others are taking a more practical route to get out of trouble.

Luxury hotels have been lowering their prices, but many of them have hit a limit on how low they can go. Most have tried adding creative promotions, and even handing out dining coupons or other incentives, but eventually they’ll need to cut other corners to make ends meet.

By removing amenities like fresh flowers, free drinks, newspapers, magazines and free gifts for elite guests, hotels are saving a fortune. At the same time, the removal of these amenities means the hotel can no longer hang on to its current star rating. What used to be a four or five star hotel, suddenly becomes a three star hotel, with a three star price.

I’m sure this solution may work for the short term, but by removing a star (and the services attached to that star), hotels will also drop out of view of people looking for a luxury hotel. Removing services that used to be included with a room will also annoy loyal returning guests who expect a certain level of luxury. And finally, turning your once upscale property into a not-so-luxury hotel also damages your brand, something that may take years to fix. Then again, I’m sure it beats the alternative of having to fire everyone and close.