Marketbeat Greater Paris - FY 2025

INVESTMENT ACTIVITY

In 2025, the hotel investment market recorded approximately €1.9 billion in transaction volume, with 75 hotels representing 6,075 rooms transacted over the year.This reflects strong annual growth, with the number of hotels traded increasing by 86%, the number of rooms by 100%, and total investment volume rising by 16% year-on-year. However, this momentum was less driven by large-scale trophy asset transactions and instead supported by a higher number of mid-sized deals, particularly concentrated in Paris. Private investors accounted for two-third of the volume transacted in 2025.

PRIME YIELDS

Prime yields have broadly stabilized over H2 2025, with levels generally ranging between 4.75% and 5.25% in Paris, reflecting a more balanced investment environment and sustained appetite for core assets. However, a degree of yield compression has been observed for smaller trophy assets in prime Parisian locations, where competition remains particularly intense. In these cases, pricing is increasingly driven by high-net-worth individuals (HNWIs) and family

offices, who have shown a greater willingness to accept tighter yields to secure rare, best-in-class opportunities. This trend underscores a two-tier market dynamic, with private equity fund discipline on pricing coexisting alongside more aggressive bidding from private capital on prime assets.

SUPPLY

Supply growth remains constrained. Several factors naturally slow down hotel development in Paris: the scarcity of land, very strict regulations to obtain building permits, and high construction and financing costs. We are seeing more transformations of existing buildings rather than new constructions. Recent openings confirm an upmarket shift. This is illustrated with the hotel La Fondation, a 58-key five-star hotel or the Boudoir des Muses resulting from the rehabilitation of a former convent.

PERFORMANCE

Greater Paris closed 2025 with solid operating momentum, reaching an average ADR of €160, occupancy of 72.3%, and RevPAR of €115.7 (same as 2024). Performances remain solid compared to the year 2024 which was marked by the hosting of the Olympic Games. Inner Paris market sees its RevPAR increase by 4% compared to 2024, reaching €180.4. This is linked to a strong increase of the occupancy rate to 80.7% (+4.3 points vs 2024) and stability of the ADR at €223.5 (-1% vs 2024).