Summary

France welcomed 89.4 million foreign tourists in 2018, which was 3% more than that of 2017. This resulted in the generation of USD 56.2 billion (EUR 49.3 billion) in revenue, for the same year. Visitors from the Asian countries registered a high share of the total value, up by 7.4%. the rising number of visitors are driving the market by recording high number of overnight stays which increased by 5.4% whereas revenue per available room (RevPAR) increased by 6.6% in the same year despite ongoing terrorism threat and the Air France and SNCF strikes and the Yellow Vest protests that affected the late 2018 and early 2019. Along with the growing RevPAR the hospitality industry in France still holds a demand for new developments even though the share of developments went up to 24% in 2018 which was at 16% in 2017. The country still holds strong demand for new developments particularly in Paris where the supply is lagging in meeting the high demand with the rising number of visitors year on year. with the existing demand and the upcoming 2023 Rugby World Cup and 2024 Olympics, the region holds great opportunities for hotel investors. Several other regional cities namely Lyon, Nantes, and Toulouse also have prospects for development along with the capital city Paris and are registering high demand. Though Lille also registering good demand, the city holds a good number of hotel projects that are in the construction pipeline and are targeting openings in 2020-2024 according to JLL.

Key Market Trends

Even with a Strong Hotel Project Construction Pipeline, Paris Still has a High Demand for Hotels

According to Hospitality Net, the total room supply in luxury hotels increased Paris significantly since 2012. There are more than 2,000 hotels as of the end of 2018 in Paris with a total of more than 82,000 rooms. In the same year, Hotel Lutetia repositioned its 128-room hotel followed by a 54-room Fauchon which is famous for its high-end food store and a few more. In the first half of 2019, the opening of the 25hours Hotel Terminus Nord, the reopening of the Hyatt’s 164-room Hotel du Louvre and the JO&JOE’s Paris-Gentilly which is providing an open house and shared spaces. The hotel project construction pipeline is going to add around 6,850 rooms which accounts for 8% of existing supply in the coming five years. Around one-third of this pipeline is largely dominated by luxury segment hotels and almost half of it is going to be located outside of central Paris which forecasts to reach the existing high demand.

Growing Occupancy Rate and RevPAR of Luxury Segment Hotels are Driving the Market

The occupancy rate of hotels in France is increasing year and year. In 2018, all the segments of hotels registered more than 62% of the occupancy rate. Though the occupancy rates of budget and economy segmented hotels are high, the luxury segment of the hotel contributed high amounts of RevPAR. The occupancy rate of luxury segmented hotels was around 63% which is 1.2% more than the occupancy rate it recorded in 2017. The segment also contributed high RevPAR with around EUR 299 in 2018, which was 7.2% more than it registered in 2017. Thus, the luxury segment is generating more revenues than the others and is attracting more attention from investors.

Competitive Landscape

The hospitality industry in France is largely dominated by domestic and other European brands, and yet has a high volume of international brands. AccorHotels is the leading player in the industry and holds a very diversified portfolio, from the budget segment to the luxury segment, followed by the Louvre Hotel Group and B&B Hotels.

Additional Benefits:

The market estimate (ME) sheet in Excel format
3 months of analyst support

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