Paris leads France’s recovery in hotel investments

As France slowly recovers from a tourism downturn sparked by a spate of terrorist attacks in 2015 and 2016, Paris’ hotel market is modernizing and diversifying its room supply.

Following those difficult years, the French National Institute of Statistics & Economic Studies (INSEE) reported overnight stays increased 5.2% year over year in the fourth quarter of 2017. Tourist numbers have also risen 7.8%.

Paris is leading the recovery, INSEE reported, with an 8.8% rise in hotel stays to 45.5 million, one-third of them from inbound visitors. Q4 2017 was Paris’ best fourth quarter since 2010.

Hotel performance data from STR, parent company of Hotel News Now, shows the market still hasn’t fully recovered.

After full-year hotel occupancy dropped 4.9% in 2015 to 76.7% and decreased 9% to 69.8% in 2016, occupancy rose 5.5% to 73.6% in 2017. In January 2018, hotel occupancy in Paris decreased 1.1% year over year to 67.6%, while average daily rate grew 8% to €228.23 ($272.49) and revenue per available room rose 6.8% to €154.25 ($184.16). In February, Paris hotel absolute occupancy was 65.4%, but still up 6.5% over the same month in 2017. ADR rose 5.9% to 206.79 ($246.89) and RevPAR increased 12.7% to 135.18 ($161.41) during the month.

Thomas Emanuel, STR’s director of business development, said Paris is still suffering from post-terrorism doldrums, with Parisian hoteliers hit harder than any other European city affected by such attacks.

“I think Paris occupancy levels have yet to fully recover from the terrorist atrocities of 2015, and it’s the only major European market that suffered such attacks over that time that has not recovered,” he said. “International visitors, particularly those from the (U.S.), were really put off.”

Emanuel added traveler confidence is returning.

“The market is not trading near full capacity, but we are optimistic occupancies will continue to gradually recover throughout 2018. ... On the assumption that there will be no more attacks,” Emanuel said.

Despite the downturn, Paris room rates remained high in 2017 and are the third-highest in Europe after Geneva and Zurich, according to business consultancy PwC. Paris’ recovery is expected to continue throughout 2018 and 2019.