The City of Light enjoys a well-balanced blend of business and leisure demand resulting in both a broad seasonality and strong average rates.

Since 2015, Paris has faced multiple challenges which highly disrupted hotel performances. As the city was recovering from the 2015-16 terrorist attacks, the ‘yellow vests’ movement and pension reform strikes of 2018-19, as well as the transportation strike of 2019, the COVID-19 pandemic hit the world.

The market has since shown remarkable resilience and has gradually recovered, reaching record levels of RevPAR in 2023.

Despite and throughout this tumultuous period, Paris has maintained its status as one of the most sought-after destinations for hotel investment, owing to its robust underlying fundamentals.

Tourism Demand

Paris visitation numbers have historically been strong, regularly reaching around 15.5 million a year. Approximately 40-45% of demand is domestic, with international visitation led by the USA, the UK, Germany, Italy and Spain.

Owing to the string of impactful events from 2015 onwards, visitor numbers started to decrease and dropped below 15.0 million in 2016. However, by 2017, visitation reached record highs; although, owing to a decrease in length of stay and an underlying increase in inventory, occupancy continued to lag slightly behind levels reached pre-2015.

We understand that rates also struggled to rebound, with 2019's nominal ADRs still below 2014 levels. The ensuing COVID-19 pandemic brought any signs of progression to a halt. Nonetheless, in contrast to other major tourist hubs, Paris saw a notable resurgence in visitor interest from June 2021.

The dynamics of a well-balanced customer mix, underlining a strong weekly and monthly seasonality, boosted the rapid ramping-up of visitation figures. By the end of 2023, the number of bednights recorded by INSEE was the highest ever.

Large sporting events, such as the Rugby World Cup, and the boost from countries such as the UK, the Netherlands, Switzerland and Italy helped 2023 visitation reach pre-pandemic levels. With Paris hosting the 2024 Olympic Games, visitor numbers are forecast to reach new records.

Hotel Performance

Between 2014 and 2023, and despite a near stand-still in 2019 and an inevitable decrease in 2020, we estimate that ADR increased by 40%, a compound annual growth rate (CAGR) of 3.8%.

This is well above inflationary growth and highlights the higher yields due to improving demand and the sky-rocketing rates observed in Parisian palace hotels and luxury properties. We believe that the rest of the market has remained more price-sensitive with rates growing in line with inflation since 2014.

Whilst overall occupancy in 2023 was close to that of 2019, we note that the shoulder seasons, typically boosted by meetings and events, showed marginally lower levels.

We expect that the return of face-to-face meetings and larger conferences, together with a full return of visitors from source markets such as the USA, Japan and China, will help further revive the Parisian market’s performance and compensate for the risk of the luxury rate lift being temporary.

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