The real estate services firm’s annual hotel operator survey saw international and regional hotel operators – all of which are active in France – give their views on sector opportunities and challenges in the market.
The results reveal the following key trends:
- Resorts and luxury hotels have a very positive performance outlook, according to 73% and 61% of the surveyed operators. Nevertheless, majority of respondents are also optimistic or very optimistic about the future performance of other hotel classes and types.
- 30% of pipeline projects are reported to be delayed or on hold, primarily due to rising development costs and issues with debt funding.
- 71% of surveyed operators would consider paying higher rent for hotels with the highest ESG certifications.
The French hotel market has largely recovered from the impact of the COVID-19 pandemic, principally driven by strong ADR growth. After two years of unprecedented slowdown, hotel performance finally returned to pre-crisis levels in 2022, driven by the gradual return of domestic and international demand. With such continuing growth in performance, operators are once again keen to grow their portfolios and our survey shows that the performance outlook is anticipated to be very strong over the next 12 months, especially for Luxury & Upper Upscale hotels.
Unsurprisingly, Paris continues to be the most attractive market, with the vast majority of operators expressing a very high interest in expanding in the French capital. Lyon, Bordeaux, Nice and the Ile-de-France region have gained interest compared to our 2021 survey, not only because of their strong performance but equally because these markets represent ‘need-to-be’ locations for any operator that wants to build a strong presence in France.
However, the hotel pipeline is being dampened, with 30% of new projects being reported either delayed or on hold, primarily due to the rising construction cost and continued uncertainty in the debt markets.
Our latest study highlights that operators are very optimistic about the performance of resorts and that ESG considerations are starting to be reflected in the contract terms including preferred commercial terms for assets with the highest sustainability credentials.
In terms of performance risk, the operators confirmed the growing trend of hybrid leases or the inclusion of operating guarantees in the case of management contracts. Other trends include rising key money provisions and flexibility in contract termination.
In summary, the French hospitality market is currently experiencing a prosperous era, which has resulted in the introduction of more diverse brands and concepts. Thanks to very solid market fundamentals and the organization of major events such as the Rugby World Cup 2023 and the Olympic Games 2024, the next few years are expected to reinforce the full recovery in hotel activity leading to a favourable outlook for operators.
Once again, we would like to thank all the operators who have participated in this survey.
The survey was conducted by Cushman & Wakefield in H1 2023, and completed by 21 senior executives representing hotel operators with existing presence in France or interest to enter the region. The respondents are responsible for more than 3,500 hotels with over 283,000 rooms already operating in France, with a collective pipeline of 300 proposed hotels comprising over 36,000 rooms.
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 50,000 employees in over 400 offices and approximately 60 countries. In 2021, the firm had revenue of $9.4 billion across core services of property, facilities and project management, leasing, capital markets, and valuation and other services.