Paris

The City of Lights remains an ap­peal­ing des­ti­na­tion to in­vestors and tourists alike, de­spite re­cent in­sta­bil­ity. Gwenola Donet, head of France for the Ho­tels & Hos­pi­tal­ity Group at JLL, talks us through the op­por­tu­ni­ties and chal­lenges that France’s capi

Hospitality News Middle East - - CONTENTS -

Tourism de­mand

Paris is one of the most vis­ited cities glob­ally and the most pop­u­lar des­ti­na­tion for in­ter­na­tional tourists vis­it­ing France by far. The city has many tourist at­trac­tions, large con­ven­tion and congress venues, and at the same time, is a po­lit­i­cal, ad­min­is­tra­tive, eco­nomic and fi­nan­cial cen­ter. His­tor­i­cally, Paris has ben­e­fited from a well-di­ver­si­fied client mix. Cor­po­rate de­mand rep­re­sents a sta­ble av­er­age of about 45-50 per­cent of ho­tel bed nights. In­ter­na­tional bed nights make up be­tween 66 and 70 per­cent of to­tal de­mand, with the US and the UK top­ping the list. De­mand pro­duced a pos­i­tive trend be­tween 2009 and 2014, driven mainly by ris­ing lev­els of in­ter­na­tional ar­rivals. Vis­i­tors from China showed the strong­est growth, with bed nights from this seg­ment up 283 per­cent be­tween 2009 and 2015. In 2012 and 2013, strong growth in in­ter­na­tional vis­i­tors com­pen­sated for a de­cline in do­mes­tic de­mand, sparked by the chal­leng­ing lo­cal eco­nomic con­di­tions. Since 2015, Paris has felt the weight of geopo­lit­i­cal events, in­clud­ing Russia’s do­mes­tic dif­fi­cul­ties and spo­radic ter­ror­ist at­tacks. The big­gest de­clines were in the in­ter­na­tional leisure seg­ment, es­pe­cially in the num­ber of vis­i­tors from the US, Ja­pan, Italy and Russia which were down sig­nif­i­cantly. How­ever, busi­ness and do­mes­tic de­mand has re­mained sta­ble.

Up­grad­ing sup­ply

Ho­tel sup­ply in the cap­i­tal of France com­prises around 1,550 prop­er­ties with a to­tal of 80,200 guest rooms. The num­ber of ho­tel rooms in Paris has in­creased by just three per­cent dur­ing the last decade. How­ever, in the past five years, Paris has ex­pe­ri­enced an up­grade in sup­ply, with the vol­ume of four-star and above seg­ments up by around 18 per­cent, mostly through the re­po­si­tion­ing of lower-cat­e­gory prop­er­ties and the open­ing of bou­tique and lux­ury ho­tels, par­tic­u­larly in the Palace seg­ment. In the bud­get-to-mid­scale seg­ments, new sup­ply has been lim­ited, re­sult­ing in a mar­ket that’s well bal­anced be­tween three, four and five-star ho­tels, but un­der­sup­plied when it comes to bud­get and econ­omy prop­er­ties.

Per­for­mance

Due to se­cu­rity con­cerns, ho­tel per­for­mance in Paris has been in de­cline for 15 con­sec­u­tive months, bring­ing to an end the up­ward rev­enue per avail­able room (REVPAR) cy­cle that has been in ev­i­dence since 2010. The up­per lux­ury seg­ment reg­is­tered the big­gest drop, fall­ing 22 per­cent in 2016, due to lower de­mand and ris­ing com­pe­ti­tion from providers such as

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