Hotel Market Beat - Greater Paris

Investment Trends

The hotel transaction volume in Greater Paris reached €1.9Bn during 2022. This was 300% above 2021 but also 7% above 2019 level. The key driver were several major transactions in prime locations, with price per room exceeding €1M. Examples of landmark deals in 2022 include The Hoxton, and the Locke Paris.

Prime Yields

In 2022, yields gradually rose with a steady increase in the second half of the year, especially in the last quarter. This has been primarily driven by rising cost of financing and risk concerns, underpinned by the geopolitical and economic challenges. The European Central Bank wants to keep a positive outlook saying that the situation is now “more balanced” than in December 2022.

Market Performance

Hotels recorded an outstanding performance in 2022, with RevPAR at €154 in Paris and €98 in Greater Paris (+14% and +8% above 2019). As previously experienced in H1 2022, performances were driven by strong ADR (€205 in Paris and €142 in Greater Paris). In the meantime, occupancy reached 75% and 69%, slightly below 2019 levels, due to still weaker demand from corporate segment and long-haul source markets, especially China.

Supply

In 2022, the hotel supply increased by 75 properties, adding approximately 10,000 rooms, most of which opened in the first half of the year. This included primarily midscale and upper midscale hotels in central Paris and the periphery, but also highly expected high-end assets such as the TOO Hotel and the SO/Paris Hotel. More high-profile openings are expected in the first quarter of 2023, such as the Hotel Dames des Arts.

Demand

After two difficult years, hotels in Paris have bounced back thanks to strong demand from international tourists in 2022. While leisure tourism has picked up, business tourism is to take longer to return to pre-covid levels. While the occupancy level of hotels in Paris was still behind 2019, the recent removal of travel restrictions from China and Japan, as well as the Rugby World Cup, should help hotels to recover fully in the course of 2023.

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Media Contact

Katell Bourgeois

Head of Hospitality France [email protected] +33 672 594 171