RECENT OPENINGS

Lodging • Reopening of the 124-room Hôtel de Crillon, managed by Rosewood Hotels & Resorts group (July 5, 2017).

• Opening of Villages Nature, an ecological leisure complex by Disneyland Paris and Pierre & Vacances, with four villages, 1,730 cottages, 10 lakes and a 9,000 m² indoor water park. (July 2017).

• Reopening after full renovation of the Lutetia, by French architect JeanMichel Wilmotte, after adding a 700 m2 spa (late 2017).

• Marriott debuts its Autograph Collection in Paris, with a 50-room hotel in the former Pentemont Abbey (2018).

• Transformation by Japanese architects Sejima and Nishizawo of the department store La Samaritaine into a deluxe property, Cheval Blanc, with 72 rooms and suites (2018).

• Creation of the first Fauchon hotel at the corner of Place de la Madeleine and Boulevard Malesherbes, with 60 rooms and a Fauchon bar (2018).

• Opening of a 200-room Mama Shelter within the Paris Expo Porte de Versailles exhibition, with a 350-seat restaurant (early 2019). Gastronomy • Alain Ducasse Group to open two new addresses at Palais Brongniart and at Mututalité (late 2017) then a brasserie in Montparnasse station (2020).

• Opening by Guy Savoy of a brasserie on the ground floor of Monnaie de Paris, the Métal Café (2018). parisinfo.com

Airbnb for alternative accommodation. Key events in 2016, such as the UEFA European Championship and the Auto Show, failed to help reverse a decline in performance. REVPAR for 2016 fell 13 percent year-onyear, driven down by a fall in both occupancy and average daily rate (ADR). However, there have been signs of recovery since September, with falls in REVPAR easing and now posting positive growth since January.

Investments

Paris has historically been the main focus of hotel investment activity in France, representing about two thirds of the country’s trading volume. Average investment volumes have been EUR 1.4 billion annually since 2010, mainly generated by single-assets. Paris was one of the top five most liquid cities in the world in 2016, illustrative of the longer-term trend. Demand for good quality hotel investments significantly outweighs the supply of assets for sale in the market. Hotel property prices are high, thanks to the city’s solid fundamentals, the lack of available development sites, high development costs and limited sale opportunities. Prime assets in Paris are viewed as secure, long-term investments and attract a wide and diverse pool of both established and emerging sources of capital. In 2016, investor appetite remained strong, despite security issues in France and steep falls in hotel performance. Purchasers have factored low yields into their pricing in 2016, due to decreasing REVPAR and net operating income (NOI), with an expected recovery by 2017 into early 2018.

Outlook

The major mid-term risk lies in the geopolitical and terrorism threat, which is difficult to forecast and has become an issue for all major Western cities, including Germany, Belgium and the UK. However, assuming there are no further attacks, the city should bounce back relatively quickly, returning to pre-decline levels by between Q4 2017 and mid-2018. A stronger performance should be facilitated by an improved domestic economic climate and the favorable euro/dollar exchange rate, which is boosting American visitors’ spending power, although the knock-on effect of decisions taken by the new US presidency remain a concern. With numerous transactions and iconic openings, Paris has confirmed the strength and vigor of its hotel market, retaining its status as one of the most sought-after markets, in terms of hotel investment, in 2016. Demand for hotel investment opportunities in Paris is likely to remain high for the foreseeable future. The lowrisk profile, considerable barriers to entry and need for hotel operators to have a presence in Paris, together with its great international appeal and strong outbound travel tradition will continue to guarantee high investor appeal. jll.eu