Paris hotels will experience short-term pain but a strong recovery to follow, says HVS London

Published on : Friday, May 15, 2020

Once the Paris hotel sector overcomes the initial period of recovery, the longer term, post-Covid future looks promising with the Olympic Games in 2024 expected to provide a much-needed boost to tourism.

Looking at recovery in Paris’s hotel sector, global consultancy HVS says that the Games are likely to benefit the rebound of tourism, with the €2bn investment plan to revitalise Disneyland Paris expected to go ahead, albeit with possible delays because of the pandemic.

Paris is currently undergoing a phased easing of the strict coronavirus lockdown measures imposed on 17 March, with hotels – as well as restaurants, cafés and bars – expected to start opening from 2 June if conditions are considered favourable at the end of May.

“The characteristics of the Paris hotel market from its demand sources to its transport links and supply dynamics will play a significant role in the recovery of the hospitality industry once travel returns,” commented report co-author Maria Coll, consulting & valuation analyst at HVS London.

As one of the world’s major global destinations Paris benefits from a well-balanced mix of business and leisure demand and exceptional transport links giving it a broad seasonality, allowing the city to capture demand at whatever point activity returns.

“We expect domestic demand to recover faster largely due to growth in ‘staycations’ which will shift the balance in the short term. While this will help initially, the gap left by international tourism will present a challenge until international visitors can return,” said Coll. “Traditionally high rates in Paris might give hotels operators some room to manoeuvre, with tactical discounting to boost demand, although the city may well miss out on leisure travellers on a budget, who might opt for cheaper destinations.”

While Paris ranked first in the world for its meetings business in 2018, as with most European cities group business and MICE demand is likely to take longer to return. However, visitation will be boosted with the staging of popular events in the city such as the Tennis Open, the biennial Air Show, and the haute couture fashion shows once they resume, although this may well be into 2021.

Furthermore, Paris has a high number of hotel rooms in its pipeline – some 4,000 rooms by 2022. While those under construction are expected to open at some point, the pandemic is likely to delay many new openings, which will be of benefit to existing hotel supply.

“Paris has remained one of the most attractive hotel markets over the past decade, both for visitors and investors and, following a paced return once demand can resume, should continue to be one of the top tourism destinations worldwide,” concluded Coll.


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