Spotlight on New Hotels

Paris Hotel Sector Set for Impressive post-Covid Recovery

Paris

Strong support from the French government combined with the continued worldwide appeal of Paris has resulted in a dynamic rebound for the city’s tourism sector post pandemic ensuring its lead is maintained as one of the most desirable destinations for hotel investors, according to Paris – A Spectacular Start to the Recovery, the latest Market Pulse report from global hotel consultancy HVS.

Compared with other gateway markets the city has seen a solid rise in demand from June 2021 supported by the well-balanced customer mix it attracts, diverse demand sources and the broad seasonality of its tourist market.

A recovery initially driven by domestic and European leisure customers is being further supported by the slow but continued return of large-scale events, which are expected to crystalise the recovery of international tourism to pre-pandemic levels.

“Paris remains one of the most popular destinations in Europe, both for tourists and investors. The pandemic has proved the resilience of the market, with no significant, if any, distressed sales. Performance recorded in the second half of 2021 suggests that the hotel market could recover even earlier than expected,” commented report co-author Mathilde De Bona, an analyst with HVS London.

Paris experienced a marked decline in the performance of its hotels with the outbreak of the Covid pandemic, although to a lesser extreme than other European capitals. Recovery from the second half of 2021 demonstrates the market’s resilience, with RevPAR reaching around 50% of 2019 levels in 2021 compared with approximately 20% in Amsterdam and 30% in Brussels.

A modest hotel pipeline combined with a reasonable existing supply means the city can capitalise on additional demand from events such as the 2023 Rugby World Cup and the Olympic Games in 2024, while at the same time limiting post-Olympic adjustments in performance seen in other destinations with a large hotel pipeline ahead of a major event.

“The outlook for the hotel sector in Paris is very strong. The city has remained amongst the core hotel investment destinations across Europe, with prices being pushed to record levels despite performance being impacted by a series of challenging events since 2015/16 such as terrorist attacks, the yellow-vest movement, the heatwave of June 2019 and transport strikes,” commented report author Sophie Perret, a senior director at HVS London.

“The main uncertainty lies in the ability of the industry to absorb the cost pressures resulting from the pandemic, the subsequent wage negotiation and the war in Ukraine.”

Search