Business Outlook 2025 | Hotels - France

In 2024, the French transaction market was good, with volume estimated at €2.5 billion, largely driven by the Parisian market, estimated at €1 billion, especially thanks to big operations in Paris e.g. Pullman Paris Tour Eiffel for €330 million, the Hilton Opéra for €240 million, the Dame des Arts and the Mandarin Oriental for €205 million.

The need for liquidity by some major players in the real estate market has affected the hotel sector, which remains more liquid than others. With the sudden rise in interest rates in 2023, the investment market is clearly more oriented towards value-add within a lack of ‘core’ players, and SCPI players exclusively positioned on brick assets only which have had to increase their return expectations and see their assets depreciate and lose liquidity. However, the strong easing carried out by the BCE at the end of 2024 should soften this trend in 2025. Hotel business fund owners were overall less exposed thanks to their operational performances which made it possible to offset the negative financial impacts. Across France, from an operational point of view, the Olympic Games generated an unstructured year with an underperformance before the games from June to mid-July, and an overperformance during the Olympics, representing an additional turnover of €357 million* in professional accommodation (excluding online platforms). This represents an increase of 1.4% in the sector’s annual turnover.

Another unpredictable element we saw in 2024 was the dissolution of the National Assembly and a  'wait and see' attitude may continue into 2025 as the new governments in France and the UK take power, as well as another Trump presidency in the US. 

*Source: MKG Consulting

We anonymously surveyed hotel business owners across the country to gather their views on the year ahead.

• Despite a return to a normal year without major events, demand should stabilise through more international arrivals, particularly from Asia, boosted by the success of the JOP, spotlighting Paris.
• The ’upscaling’ trend will continue to maintain low room growth (+0.2% CAGR 2019-2023) as small underperforming properties close or renovate, contributing to occupancy stabilisation.
• Institutional investors are expected to return to the hotel market, while owner-operators will continue their positive investment trajectory, seeking operational leverage.
• High interest rates and office market downturn challenged real estate developers, creating opportunities for redeveloping tertiary projects or building new hotels in VEFA structures.