I DISCOVERED at first hand in Biarritz this week just how pragmatic the travel industry has had to become in its approach to pricing. In search of a cheap hotel for the night - Easter Saturday, so not exactly a quiet night - I approached the cheerful-looking Comfort Inn on the Avenue de Reine Victoria more in hope than expectation.

Did they have a family room? 'Ah, non . . .' It would have to be two doubles - but she had two next to each other. I looked at the tariff: doubles were Fr600 (about pounds 75) each; pounds 150 for the night. The receptionist was so polite and encouraging (qualities not normally associated with French hotel receptionists) that I felt I ought to look at them. She handed me the keys and left me to study the rooms alone.

The rooms at the Comfort Inn are, yes, jolly comfortable. So they should be at pounds 75 a throw (excluding petit dejeuner). I returned to reception saying the rooms looked fine but they were beyond our budget. Quick as a flash the receptionist pulled out her pad and jotted down some prices.

She would charge us low- season rates - and the children qualified for a reduction. It would be Fr350 for the adults' room, Fr250 for the children's room, making a total of pounds 75 for both - a 50 per cent reduction.

The pressure to cut prices is partly because of the fact that the French tourist industry is feeling the pinch at the moment. The home French market is depressed and so far this year business from the UK is well down. Specialist French tour operators in the UK report that bookings have dropped by about 20 per cent on this time last year - largely, they believe, because of the feeble exchange rate (currently around Fr8 to the pound).

But the main reason is that competition in the French hotel business has become tough, particularly at the lower end. France is associated with the charming, small owner-managed hotel - think of good-value hotels and you think probably of Logis de France, not the Formule 1 chain. But it is the latter that is setting the trend.

What Formule 1 offers is almost exactly the opposite of the Logis concept. Formule 1 rooms have a wash-basin (but no en suite bath or toilet), they sleep three (two in a double, one in a single) and you will probably have to check yourself in (the computer gives you the number of your room, which you key in at the door). Formule 1 hotels are to be found just off the autoroute or in that special French commercial/industrial wasteland inhabited by hypermarkets, furniture warehouses and garden centres on the edges of towns and cities. Formule 1's main attraction is not aesthetic but financial. A simple, clean room will cost you no more than pounds 15 per night.

The French landscape is filling up with all manner of budget hotel chains: Climat, Campanile, Aster, Monsieur Lit and many more, providing tens of thousands of rooms at pounds 20 to pounds 30.

Price-cutting in this sector is inevitably affecting more expensive places such as the Comfort Inn in Biarritz. Bad news for hotels; great news for travellers - for the moment. It's a buyer's market; every price seems to be open to negotiation. Ask for a discount: the worst you can be told is 'no'.

Long term, however, there is always the worry that a price war leads to closures, which could mean the loss of some family-run hotels.