Europe -  Paris

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As the capital of France, Paris enjoys an exceptionally well-balanced mix of business and leisure demand, which allows the City of Lights to have both a broad seasonality and strong average rate. Alongside London, Paris has remained one of the two most desirable destinations for hotel investment in Europe for more than a decade.

Despite a very difficult 2016 for Paris, following the two terrorist attacks in 2015 which were further compounded by similar events in Brussels and Nice in 2016, the hotel market slowly recovered in 2017 and continued to do so in 2018. The Parisian market enjoyed 11 months of impressive growth until November 2018, thanks to the return of international leisure visitors as well as business and meetings visitors. RevPAR levels dropped in December 2018 owing to the disruption caused by the ‘yellow vests’ movement in the capital, which forced the closure of several businesses and tourist attractions. 2019 was a year heavily disturbed by the ‘yellow vests’ movement and the pension reform strikes in December, resulting in a slight decline in hotel performance for Paris with a 1% RevPAR decline in 2019. The Paris hotel market suffered, driven by a decrease in visitors from the USA and Asia, who are particularly sensitive to safety concerns. However, there is still potential for further growth as RevPAR remained slightly below its previous peak in 2014 (nominal terms), in part due to the additional supply in the luxury market, including the Hotel de Crillon (2017), the Hotel Lutetia (2018), the Hotel du Louvre (2019), the Cheval Blanc (2021), the Bulgari Paris (2021) and Madame Reve (2021).

The city recorded a steep decline in hotel performance in 2020 and 2021 on account of the pandemic. However, the Paris hotel market proved to be quite resilient compared to other gateway markets in Europe, particularly in 2021 when RevPAR levels reached 80% of the 2019 RevPAR performance towards the end of the year. 2022 consolidated an exceptional recovery for Paris, with RevPAR levels exceeding 2019 levels by around 18%, mainly driven by an overall increase in rates to counter inflation and the return of high-yielding international leisure visitors, such as Americans backed by a positive exchange rate. The return of physical large-scale events also drove a return in occupancy for the market, and the Rugby World Cup in 2023 and the Olympic Games in 2024, both to be hosted in Paris, should further boost the appeal of the city for these years.

The current hotel pipeline in Paris includes 27 projects, totalling approximatively 3,500 rooms (around 4% of the existing hotel supply) with most of these rooms expected to materialise in 2023. The most anticipated projects in 2023 include the opening of the 109-room Zoku Paris in the 17th arrondissement (May 2023), the 34-room Villa-Des-Pres in the 6th arrondissement (May 2023) and the 118-room Hilton Paris Eiffel Tower in the 7th arrondissement (September 2023). Other notable projects include the opening of the 150-room Canopy by Hilton Quartier Latin in November 2023, the 101-room Faena Paris Champs Élysées (formerly a Sofitel) in May 2024, the 163-room 1 Hotel Aurore in June 2024, the 100-room Louis-Vuitton Hotel and the 210-room Pestana CR7 Hotel, both in early 2025.

Paris remains a favourite of investors and no uncertainty seems to have been factored into acquisitions, owing to the general resilience and strong fundamentals of the Paris market. Recent notable transactions include the purchase of the 172-room The Hoxton Paris for around €170 million by Schroders in December 2022, the 68-room Hotel Royal Saint-Honoré for €87 million (or €1.28 million per key) by Archer Hotel Capital BV in November 2022, the 36-room Hotel Soho House Paris for €70 million (or €1.9 million per key) by Rivoli Avenir Patrimoine and Amundi in November 2022, the 75-room Hotel Pont Royal for €70 million (or €933,000 per key) by Champagne hospitality in February 2022 and the 39-room La Residence Du Roy for a reported €30 million (or €769,000 per key) by LOV Group Invest in January 2022. Overall, hotel values increased by 2.1% in 2022 compared to 2021, slightly lower than the European average increase of 3.3%.

Change In Value For Market: (€Euro)

Legend
Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: More than -10%

For more information, please contact:

Sophie Perret, MRICS, MBA
Managing Director
[email protected]
  • +44 0 2078787722 (w)
  • +44 0 7725781037 (m)