French luxury hotels reach for a star

PARIS (Reuters) - A cliche recipe for success is to aim for the stars. France's luxury hotels say they need to reach for just one more.

The world's largest tourism destination has introduced a five-star category to its hotel ranking system and the country's gilded establishments are flocking to apply, believing the upgrade will reel in higher rollers.

Until this year, France was in the odd position of being synonymous with high culture, finery and the very best in food and drink -- yet it had none of the five-class hotels found elsewhere in Europe.

"Lots of people have asked why even so-called palaces here like Georges V and Hotel Plaza Athenee had only four stars," said Francoise Parguel, vice president of communications for the Sofitel chain.

Paris now has 13 five-star hotels, the city's tourism office said. For many, including Sofitel, the fifth star is simply the culmination of longer renovation programs aimed at shifting upmarket.

Hotels applying for top status need to satisfy hundreds of criteria, from bedroom size to phones in bathrooms.

"Why a fifth star? While there only used to be a 'luxury' fourth star, today it's about putting French establishments on the same level as international competition," said the press office of Concorde Hotels & Resorts, which owns Le Palais de la Mediterranee based near the Cote d'Azur overlooking the sea.

The government hopes a five-star bracket will help France better weather the financial crisis: the French hotel sector has held up better than neighboring countries, but suffered from a drop in British and American tourists, Deloitte said in its winter 2009 research report.

A more standardized rating system might win them back.

Analysts say the sector's resilience is thanks more to budget hotels than the high-end, which has lagged behind other countries such as Britain.

"It's a marketing operation and does not change much from an operational point of view," said Guillaume Rascoussier, a hotel sector analyst at Oddo Securities. A fifth star alone could not justify higher room rates, he said.

STAR QUALITY

Visitors to France fell 7.5 percent to 15.9 million in the first half of this year, according to the Paris Tourism Office.

Dwindling demand, shorter booking times and pressure on average room rates led to a 14 percent drop in revenue per available room in the first half of 2009, Deloitte said.

But Paris still had the highest occupancy rate in the euro zone, at 74 percent, and the second-highest average room rates after Venice in the first half of 2009, said Deloitte.

Spain has been hit hard by competition from Turkey and North Africa, as well as a dwindling number of visitors from Britain due to the weak pound against the euro.

"Even as more European countries emerge from recession, it may take some time for business and leisure demand to bounce back and hoteliers to start reporting positive results once more," Deloitte added.

AIM HIGHER... OR LOWER

While France is known for elite culture, it's the budget hotels that have proven most resilient during the financial crisis.

"France depends less on the high-end than Germany, or Spain for example. Economy hotels in France represent much more of the total network than in other countries like Germany or Spain where it is much less developed," said Oddo's Rascoussier.

Accor, a French company which is Europe's largest hotel group, has had to cut costs to help weather a decline in demand for its upscale and midscale, but said in October its economy segment in France had proven resilient.

For the time being, luxury hotels say they will continue to hold out for big spenders rather than address the mass market.

Paris' Le Meurice, known for its illustrated ceilings and celebrity chef, embarked on a 6 million euro ($8.84 million) facelift two years ago, prior to the five-star initiative.

"We feel no need to go mass market," said Le Meurice spokeswoman Anne Vogt-Bordure. "After all, we are a palace."

(Editing by Sara Ledwith)

($1=.6790 Euro)