French Hotel Market Outlook 2024

France has been the world’s top tourist destination for over three decades. Millions of international visitors are drawn to explore the country’s abundant natural beauty and remarkable architectural heritage each year.

Tourism accounts for nearly 8% of France’s GDP and supports over 2 million direct and indirect jobs. This success is driven by millions of dedicated men and women passionate about their work and country, consistently upholding France’s reputation for excellence.

In economic terms, in 2023, the tourism sector, particularly in accommodation and catering, has seen a 7% rise in business creation compared to 2022 and 4% compared to 2019. With 38,700 new positions created over the past year, the tourism industry has “once again become the leading recruiter in France,” according to Atout France’s economic report. Specifically, in the third quarter of 2023, the accommodation and catering sector employed 1.3 million private workers, marking a 1.3% increase from 2022 and a 12% rise from 2019.

During this period, 15,200 new positions were created, while the average salary saw a 3.5% increase compared to 2022, amounting to a total payroll of €8 billion¹.

Luxury hotels have demonstrated impressive resilience, using their “pricing power” to achieve significant rate increases. In the luxury segment, average prices surged by 48% compared to 2019 and 9.6% from 2022, while high-end hotels also saw notable price hikes of 27.4% and 9.8%, respectively. This sharp rise in rates has fuelled strong performance, with RevPAR (Revenue per Available Room) soaring by 37.8% since 2019 and 10.9% from 2022.

While occupancy rates have remained stable compared to 2022, showing a slight increase of 0.8 points, they still haven’t fully recovered to pre-pandemic levels, sitting 4.7 points below 2019 figures. This suggests that while the luxury segment has excelled in maximizing revenue through higher pricing, there’s still room to regain lost ground in terms of occupancy.

Post-pandemic travel preferences have shifted, with a premium placed on exclusive, high-end experiences. The luxury segment has seized this opportunity, but the gap in occupancy highlights that not all travellers have returned or that the high prices may have deterred some. Nevertheless, the focus on revenue over volume seems to be paying off now.

French Hotels Performance

2023 vs 2022 vs 2019

Hotel Occupancy Rates by Type (2023)

Average Daily Rate (ADR )by Type (2023)

RevPAR growth per hotel type²

Across all regions, the hotel sector has seen a significant boost in Revenue per Available Room (RevPAR) compared to 2019 and 2022. However, the pace of recovery differs based on the destination’s stage in the rebound process. It’s a positive indicator of recovery, but the differences between regions reveal how tourism trends and local attractions have shaped their individual paths back to growth.

The top-performing regions—Auvergne Rhône-Alpes, the South Region (Provence Alpes Côte d’Azur), and Île-de-France—have shown the most notable improvements in RevPAR. Provence Alpes Côte d’Azur led the charge with a 31.9% increase, followed by Île-de-France with 28.5%, and Auvergne Rhône-Alpes with 23.9%. While Île-de-France experienced a more robust resurgence in 2023 after a slower recovery post-pandemic, the other two regions managed to exceed not only their 2022 performance but also their 2019 levels—an awe-inspiring feat in an era where many regions are still striving to match pre-pandemic tourism levels.

These regions’ recovery underscores how critical their unique assets are to the tourism landscape. For example, Île-de-France—with Paris at its heart—remains a magnet for international visitors, especially after major global events like the Olympic Games. Meanwhile, Provence Alpes Côte d’Azur and Auvergne Rhône-Alpes benefit from their natural beauty and reputation as premier leisure destinations, attracting both domestic and international travellers year-round.

The outlook is broadly positive in coastal regions, with a few exceptions. Brittany and the English Channel saw a slight decline in occupancy rates. This trend can partly be attributed to the exceptional performance of La Manche in 2019, driven by the 75th anniversary of the World War II D-Day Landings. This event was a one-time boost for the area, making the 2023 figures appear weaker.

These dips in occupancy remind us how historical or cultural events can create significant, albeit temporary, surges in tourism. It also highlights the importance of sustained attraction strategies, particularly for regions like Brittany and the English Channel, which might need to diversify their offerings to maintain momentum.

Mountain regions present a similar success story, driven mainly by leisure travellers. Though many French tourists have returned to travelling abroad, foreign visitors are again flocking to France’s beaches and mountains, eager to experience the country’s iconic landscapes.

The renewed interest from foreign tourists is a promising sign of recovery, especially in mountain and coastal regions. While French tourists may be exploring more international destinations, the ability of France’s natural attractions—like its beaches and mountains—to draw in overseas visitors speaks to the country’s lasting appeal. France continues to capitalize on this by blending luxury with natural beauty, keeping its position as a top destination despite evolving travel patterns.

The diverse performance across regions highlights the resilience of France’s tourism industry but also shows the importance of adapting to shifting market trends. While certain areas may rely heavily on international events or one-time historical milestones to drive occupancy, others—like Île-de-France and the South Region—are finding success through their well-established reputations as must-see destinations. The challenge will be to maintain this momentum and ensure sustainable growth across all regions, not just those benefiting from short-term boosts²

Forecasting the rest of 2024

The conclusion of the 2024 Summer Olympics in Paris was a pivotal moment for France as a host nation and a premier global tourism destination. The Games highlighted the country’s rich cultural heritage and stunning architecture and underscored its renowned hospitality. As France now shifts from the excitement of the Olympics into a new chapter, its tourism sector faces promising opportunities and emerging challenges.

The summer of 2024 is taking on a more complex character, with some regions benefiting heavily from the Olympic boost while others have been hit by adverse weather and shifting consumer behavior, particularly in spending. After a slower start in July, August is expected to show stable attendance compared to 2023, and the outlook for the late season remains optimistic. The Olympics’ impact is evident, but the variability across regions reflects how external factors—like weather and changing spending habits—can heavily influence tourism. This underscores the need for regions to diversify their offerings and adapt to these challenges.

The Olympics played a key role in maintaining tourism levels, attracting nearly the same number of international visitors as in 2023, with overnight stays remaining consistent. Paris, unsurprisingly, was the biggest winner, seeing a 13% rise in foreign tourists during the Games. The event drew in long-distance travellers, with air arrivals from China surging by 43%, Japan by 13%, and the United States by 13%.

Tourism from neighbouring countries like Germany and Belgium remained steady, but British visitors were notably fewer, likely due to increased competition from other Mediterranean hotspots like Spain and Italy. International tourism continues to serve as a substantial revenue driver for France. In July alone, international spending increased by 8% year-on-year, and before the summer even began, international visitor spending had reached €32.5 billion, a 6% rise from 2023. The spike in tourism from long-haul markets such as China and the US highlights the importance of major global events in drawing international visitors.

The Olympics have cemented Paris’ appeal, but the decline in British tourists suggests that France’s competition with other European destinations is intensifying, especially as travel preferences evolve.

An earlier study³ on the economic impact of the 2024 Olympics projected long-term benefits of €8.99 billion, with €2.6 billion specifically attributed to tourism. The surge in visitors during the Games has already supported these predictions. While July started slow, Paris and the surrounding Île-de-France region saw a major influx of tourists during the Olympic period. Domestic tourism also experienced a significant boost, with 1.4 million French tourists visiting Paris during the Games, a 27% increase compared to the previous year. Across all host areas—including Île-de-France and eight other major cities—overnight stays by French tourists rose by 12%, while European and long-distance stays climbed by 16% over the 19-day event.

The Mediterranean regions stood out as the most dynamic during the summer of 2024, while the Atlantic arc, stretching up to the English Channel, experienced a decline in attendance. This marked a sharp reversal of the positive trends seen in the previous two years. However, despite these challenges, the coastline remained the top choice for French tourists. The performance of coastal areas illustrates the strength of France’s traditional summer destinations, but the slowdown in regions like the Atlantic arc shows that sustained success is not guaranteed.

Fluctuating visitor numbers reveal a need for regions to stay agile and competitive, especially in the face of external pressures like weather.

A decline in French tourists was also noted in rural areas and, to a lesser extent, in mountain and urban destinations. However, the influx of European and long-haul visitors helped to balance out these declines, with foreign tourist numbers either holding steady or increasing in several key sectors.

Looking ahead, the season is expected to continue its positive momentum into September and October, buoyed by events like the Rugby World Cup and favourable weather conditions. Outdoor accommodations are set to see a 16% rise, hotel reservations are predicted to increase by 2 to 5 percentage points in major urban areas, and rental bookings are forecast to rise by 6% to 9% during these months. With major events like the Rugby World Cup on the horizon, France is in a strong position to sustain its tourism growth. The focus on outdoor accommodations and rentals also shows a shift in traveller preferences, reflecting a growing trend toward more flexible, nature-oriented stays. However, to fully capitalize on these opportunities, France will need to maintain its adaptability and continue attracting both domestic and international visitors.

The 2024 Summer Olympics have undoubtedly provided France with a powerful platform to showcase its attractions on the world stage, yet the overall tourism picture remains mixed. While major urban centres like Paris and coastal regions have flourished, other areas, particularly rural and Atlantic regions, have faced challenges. As the country moves forward, maintaining this momentum will require a balanced approach that addresses shifting tourist behaviours, adapts to regional differences, and leverages the ongoing appeal of major events like the Rugby World Cup. The next few months will be critical in solidifying France’s position as a top global destination⁴ .

Real Estate

The hotel real estate investment market in France faced a substantial downturn in 2020, a direct consequence of the economic uncertainties brought on by the COVID-19 pandemic. However, the market has shown resilience, gradually recovering over the subsequent three years. By 2023, total investments in the sector had reached approximately €2.1 billion. This represents a remarkable doubling of the investment volume seen in 2020, although it still falls short of the pre-pandemic levels witnessed in 2019. The sharp decline in 2020 was expected, given the pandemic’s impact on global travel and hospitality. The rebound in 2023, while impressive, suggests that investor confidence is gradually returning. However, the fact that investment volumes are still lagging behind 2019 indicates that the sector hasn’t fully recovered, likely due to ongoing market volatility and changing consumer behaviours.

While the market has made a strong comeback, its future success will likely depend on how well the hospitality sector adapts to shifting travel trends, such as the rise of sustainable tourism and remote work, which could affect long-term investment strategies.

According to BNP5 the corporate real estate investment market in France began 2024 with a cautious approach, recording total investment volumes of €5.9 billion. This figure marks a 28% decrease compared to the €8.2 billion invested in the first half of 2023 and falls significantly short of the ten-year average of €11.3 billion. This decline is accompanied by a shift in investment focus, with the office sector experiencing a slowdown (€1.8 billion compared to €4.0 billion in 2023) and retail investments also decreasing (€907 million versus €1.8 billion).

In contrast, the logistics and hotel sectors have shown notable growth. Investments in logistics reached €1.2 billion, up from €642 million, while the hotel sector attracted €1.5 billion. This growth is driven by renewed interest from international investors, particularly in these asset classes. The decline in overall investment volumes reflects broader market uncertainties and changing priorities in real estate. The significant drop in office and retail investments suggests a reassessment of these sectors’ long-term potential, possibly influenced by shifts toward remote work and changes in consumer shopping habits.

Despite the overall downturn, the hotel sector has performed robustly, representing a 36% increase from the €1.1 billion invested in the same period last year. This surge is attributed to several high-profile transactions, including:

• The acquisition of the Pullman Tour Eiffel hotel by QUINSPARK and MORGAN STANLEY in Paris’s 15th arrondissement, previously owned by Amundi Immobilier. (€330M)
• The purchase of the Hilton Paris Opera hotel by CITY DEVELOPMENTS LIMITED in the Central Business District (CBD) of the 8th arrondissement (€240M)
• The acquisition of the Mandarin Oriental hotel by GRUPPOSTATUTO in the CBD Opera district of the 1st arrondissement (€205M)

The hotel market’s strong performance, bolstered by significant deals and international investor interest, highlights Paris’s enduring appeal as a prime destination for real estate investment. The focus on high-value transactions suggests confidence in the sector’s future prospects, driven by global events and Paris’s continued prominence.

Investment patterns by hotel star category continue to reflect previous trends, with a clear preference for mid-range hotels, particularly 3- and 4-star properties. This semester saw an unprecedented number of single-unit transactions. However, expectations are high for a surge in hotel portfolio deals in the latter half of 2024. The emphasis on mid-range hotels aligns with ongoing market trends and suggests a stable demand for these properties. The anticipated increase in hotel portfolio transactions indicates a potential shift towards more comprehensive investment strategies, as investors seek to capitalize on the sector’s growth.

The cautious start to 2024 for France’s corporate real estate investment market highlights significant shifts in investment priorities, with notable growth in logistics and hotels contrasting with declines in office and retail sectors. The Paris hotel market, in particular, demonstrates resilience and strong performance, driven by high-value deals and international interest. As the year progresses, the anticipated rise in portfolio transactions may signal further confidence and strategic investment in the real estate sector.

Looking forward to the Future:

The post-Olympic period in France marks a pivotal transformation for the tourism sector. The recent Games have significantly enhanced the country’s global appeal, providing a considerable boost to its international profile. Despite this positive momentum, the tourism sector faces several challenges, including managing over-tourism, adapting to economic fluctuations, and addressing environmental impacts. The Olympics have undeniably spotlighted France as a premier travel destination, but it’s crucial to balance this newfound attention with sustainable practices to avoid the pitfalls of over-tourism. The challenge now is to harness the energy from the Games while mitigating any negative effects that rapid growth might bring.

To navigate these challenges, France is focusing on several key strategies: diversification, sustainability, technological innovation, and cultural enrichment. By diversifying its tourism offerings, France aims to attract a broader range of visitors and reduce dependency on any single segment. Sustainability initiatives are being prioritized to ensure that tourism growth does not come at the expense of the environment or local communities. Embracing technological advancements can enhance the visitor experience and streamline operations, making the tourism sector more resilient and adaptable. Additionally, cultural enrichment efforts can deepen the connection between visitors and France’s rich heritage, promoting more meaningful and respectful tourism.

In summary, France is well-positioned to maintain its status as a leading global travel destination by leveraging the positive impact of the Olympics. By addressing current challenges and focusing on long-term strategies, the country aims to ensure that the legacy of the Games contributes to sustained success and positive growth in tourism. As France moves forward, the key will be to capitalize on the increased visibility and interest generated by the Olympics while implementing forward-thinking strategies to create a balanced and sustainable tourism ecosystem. This approach will help safeguard the sector’s growth and preserve the unique qualities that make France a top destination for travellers worldwide.

The Destination Plan, which the Prime Minister prepared in November 2021, sets the goal of establishing France as the top global tourist destination and positioning it as the leading hub for sustainable tourism, supported by a sector that fosters excellence, growth, and job creation.

In response to increasing demand and the goal of maintaining its status as a major tourist destination, the General Directorate of Enterprises (DGE) has outlined four key priorities for the sector in 2024:

• Address rising demand and optimize economic benefits.
• Promoting more sustainable tourism
• Supporting innovation in the travel sector
• Facilitate access to skills and training

To promote and develop French tourism assets, the Destination France plan also plans to invest in the development of future tourism sectors.

• Expertise tourism
• Territorial engineering
• Slow tourism, ecotourism and agritourism
• Events and e-events

Disclaimer - The information and analysis presented in this report are gathered from various sources. No warranty or representation as to accuracy or completeness is made by Global Asset Solutions Europe SL, which shall have no obligation with respect to it. All rights reserved ©2024 Global Asset Solutions.