The hotel business is facing rising real estate prices. Currently, the hotel business is a kind of El Dorado.

Economics of Tourism

If energy and personnel costs in hotels have increased, many professionals have managed to raise prices above these increases due to stable demand.

Investors continue to be interested in this industry.

The article is available only to subscribers.

If the real estate market is in crisis, there is one industry that is surprisingly thriving: the hotel business.

“No one expected such a rapid recovery after Covid-19,” says Olivier Petit, director of the consulting firm In Extenso, which specializes in the hospitality industry.

“Currently, the hotel business is a kind of El Dorado,” confirms Frédéric Jozenans, president of Grape Hospitality, which owns a hundred hotels.

Previously perceived as a "niche," these real estate assets have now come into the spotlight in the current situation.

“Investors are flocking to hotels because it is one of the few real estate sectors that is holding up. Nearby offices and residential properties are in a state of complete collapse. The same goes for retail,” summarizes Mr. Peti.

Thus, despite the increase in interest rates, the hotel market should continue to grow. In France, according to an annual study by KPMG published in October, 125 new hotels (16,000 rooms) are expected to open by 2026.

And yet, since the beginning of 2023, there are slightly fewer clients than in 2019, before the pandemic. While Americans have returned to France, Asian clientele is no longer coming. The number of business travelers has also decreased compared to the period before the health crisis. "Practices have changed. Employees are traveling less," explains Stefan Botz, a hospitality expert at KPMG.

However, despite not reaching full occupancy, hotels significantly compensated for this by increasing prices: the average room rate rose by 11% over the year and by 26% compared to 2019, according to monthly data from the MKG agency.

This significantly increased the key industry metric - revenue per available room (RevPAR). From January to October 2023, it grew by 16% compared to the same period in 2022 and by 22% compared to 2019.

“Full jerk, particularly at the loading level.”

“These impressive figures affect all categories of hotels, from the most budget-friendly to the most luxurious,” said Sylvie Bergere from MKG at the investor forum in early November.

In 2000, the annual turnover in the Logis hotel chain increased by 19%, reports the director of this federation, Karim Soleyavup.

The practice of "staycations" (wandering between "work" and "vacation") has allowed hotels to extend their stay durations and attract new visitors.

“This is especially true along the entire Atlantic coast, which is experiencing a real revolution in terms of attendance. People are arriving as early as Thursday and leaving during long weekends all year round,” comments Stefan Botz from KPMG.

You have 25% of this article left to read. The rest is available only to subscribers.

This message will be displayed on another device. How can I get rid of it? By clicking on "⨯" and making sure that you are the only person reading Le Monde with this account. What will happen if you continue reading here? This message will be displayed on another device. It will remain connected to this account. Are there any other restrictions? No. You can log into your account from any number of devices, but use them at different times. Don't you know who else it is? We recommend that you change your password. Limited reading Your subscription does not allow you to read this article. For more information, please contact our commercial service.