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Analysis

Paris up close

Following our top French cities for hotel markets, Hospitality On's editorial team invites you to a detailed look at each city on the list. Each focus will provide an opportunity to draw a portrait of the destination: analysis of figures, major projects in progress... These texts will also be invitations to reflect on the challenges facing each destination. At the top: Paris.

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The Top

Paris

Le Grand Paris 

Paris

Key figures in hospitality: (Source: Observatory MKG Consulting / OK_destination)

Key figures in hospitality

 

 

 

 


Key tourism figures: (Sources: INSEE/ OTCP / Inside Airbnb / ADP)

key tourism figures

Key macroeconomic figures: (Source: INSEE)

key macroeconomic figures

Analysis of the figures

A very good year for the capital. Market trends are good, both on the supply side with hotel openings and on the demand side with an increase in the number of international arrivals and an increase in the number of overnight stays. With very strong growth, income and price indicators are clearly the most striking figures for 2018. In fact, it is a return to normalcy, to growth, after the post-attack years. Slashed prices, stagnation of the OR, then return of tourists, increases in the OR, then increased prices this year.

The occupancy rate is particularly impressive: 81%; even though Paris is the city with the second-most Airbnb listings in the world. In fact, furnished accommodations for short tourist stays have relayed the supply of hotels showing no vacancies. Therefore, there is still room for new actors, especially as the number of international arrivals continues to rise.

The Parisian hotel business is a true safe haven, almost a refuge. Real estate prices have been rising for almost 10 years, with a few exceptions or occasional micro-decreases, the number of tourists is increasing: after all Paris will always be Paris. Or is becoming so once again two years after the terrorist attacks.

la France, éternellement triomphante

Some contextual elements: issues, risks, etc.

The yellow vest crisis is a major unknown. While it did not totally penalize results in 2018, except in December, it did have an impact the beginning of 2019. This is particularly true since the crisis continues, although it has greatly eased, within a context that remains explosive. As a result of the great national debate, European price increases on consumer products, the Court of Auditors' report criticizing the increase in the deficit following forecasts on purchasing power... The reading of the situation remains complicated and the emergence of the crisis, all in all very sudden, leaves a risk for the future based on social hazards. Putting it into perspective: labour law strikes, protests at the SNCF, yellow vests... Although means for maintaining order, which have been much debated, have multiplied, the trend is problematic, at least for the glamorous image of the capital.

These social movements follow the complicated context of the terrorist attacks. The sequence is not the easiest, especially since the risk of terrorism remains present throughout the capital's territory. Just look at the construction around the Eiffel Tower: a bullet-proof wall now surrounds it. And the Strasbourg attack at the end of the year leaves little room for optimism. Especially since the situation is increasingly tense both locally and internationally.

Then there is the environmental issue. Paris seems to have been spared, especially in terms of image: smog covers Beijing, Bangkok, but Paris always has a blue sky in the collective imagination. Moreover, the climate agreement, commonly known as the Paris Agreement, is an excellent sign of environmental soft power for the city. And yet there were 13 days of pollution alerts in 2018. If this is not an alarming variable, it is at least a variable that needs to be monitored. Public authorities have taken charge of the problem: alternating traffic, Crit'Air decals. The flooding of the Seine in 2018 is another example of environmental risk.

Social and political crisis - think of the strike at Hyatt rue de la Paix, at the Eiffel Tower -, terrorism, environmental issues: these are three macro phenomena need to be taken into account when talking about risk situations in Paris. There is a "capital effect": as it is central, Paris must ask itself questions on all levels, hence these very broad issues.

But of course, other events are also to be taken into account, although on a more micro level. First of all, the upcoming elections in 2020, which are likely to be very competitive, as early as 2019... What if tourism were to become a subject of the campaign? This was central in Barcelona, particularly regarding over tourism and the issue of housing. Same in Amsterdam. It should be noted that one of the deputies of the Mayor of Paris is at the forefront of the Airbnb subject, particularly given the upcoming events, which are expected to be very attractive to tourists: the Olympic Games, the Rugby World Cup. Beware of elections.

A few incidents have been damaging as well, but they are undoubtedly too narrow in scope to have any impact on tourist activity: Autolib' shutdown, widespread bug in the Vélib' service, closure of small concert halls (nightlife and the young side of the capital remain points of light concern in the face of destinations such as Berlin and Barcelona).

philharmonie, le symbole d'un renouveau de Paris ?

Some elements of context: the positive, projects

After years of decentralization, followed by crises - first the financial crisis of 2007, then the debt crises - the capital is once again regaining its strength in terms of projects and even in terms of the strength of these projects. There are several reasons for this renewal: the halt in the forced march of the development of balanced metropolises and new cities, awareness of European competition, the dynamism of public authorities with changes, new structures, new skills...

In fact, it is possible to identify two phases/trends. First of all, "soft" development - Intramuros - notably access to Culture: Paris Plage, Nuit Blanche... This aspect is more events oriented. It is where Paris had a contradictory situation: large trade fairs - Bourget for example - a central role in Fashion Week, a congress city, but no major events for the local population (and to a certain extent to stimulate international arrivals, with the likes of sales in London, the Mostra in Venice, etc.). This has been partially resolved, at least for the "local population" aspect, with events such as the Nuit Blanche and Paris Plage. Not to mention the recent international Euro and Gay Games. Then a second, more "concrete", trend with infrastructure construction, often accompanied by a vision for the City of Paris. The achievements and constructions abound: the construction of the Philharmonie, the project of a mega museum on Île de la Cité with the relocation of the Paris Regional Court, Seine Musicale, Paris Rive Gauche and its faculty, the Défense Arena, the renovation of the Salle Pleyel, the Fondation Louis Vuitton, soon the Pinault Foundation, the Canopée... In short: it is the return of major equipment, with investments that Paris had not seen since the end of the 1980s. The whole is oriented towards Culture, Tourism, with sometimes strong biases: closing the quays along the Seine to cars, creating the Grands Voisins, creating a balance to the east of Paris with new neighborhoods (Bercy Charenton, Paris Rive Gauche), but also to the north with the Rosa Parks station neighborhood, the creation of the Luxembourg campus... The green economy, the sharing economy, the whole cycling phenomenon has the wind in its sails, quite simply.

Just look at the revival of major foreign investments: Qatar with PSG, HSBC which is bringing activities back to Paris following Brexit, the European banking authority that is moving from London to Paris for the same reason... And in a cultural vein: AEG and Live Nation, the two American entertainment giants, are accelerating their activities in France. AEG is buying Rock in Seine, while Live Nation is staging two of its festivals (Download and Lollapalooza) in France. Smaller actors also have the wind in their sails, including the clubs Wanderlust and Concrete, which has obtained permission from the Town Hall to remain open 24 hours a day. Culture and entertainment have gained the lion's share of the capital's economy.

The next big topic, of course, is the Olympics. This subject is double-barreled because the games are so closely linked to the famous Grand Paris Express project. This point will be addressed in two ways: first, in a focus dedicated to the Grand Paris Express and the Olympics, but also in a more precise article on Paris as a Metropolis and not just as an intramuros city. With a real question: will events and transport in the tourist imagination succeed in transforming the image of Paris as a destination, which is currently very much focused on the Seine and its riverbanks, into a broader, truly metropolitan destination?

To return to a shorter time frame, 2019 should see several projects come to fruition. First, the large-format bicycle path linking the Bastille to the Place de l`Etoile. The opening of the Liberation Museum in the 14th arrondissement is also on the agenda, the works begun in 2015 should be completed on August 25, 2019, for the anniversary of the Liberation of Paris. The end of the first part of the renovation of Roland Garros is also on the agenda, with the opening of the Auteuil greenhouses. The project will be fully completed by 2020. Paris will also see the return of the Paris Air Show in Bourget in 2019. This will undoubtedly be a key event during the year.

Topics for the destination’s future

Airbnb: A major struggle is underway concerning Airbnb. Paris City Hall doesn't think the law goes far enough in regulating furnished housing for short-term rentals (in short: housing on Airbnb). Today, the law allows rentals - for main residences, not for secondary residences - of 120 days per year and a registration number is mandatory in Paris. The city has filed a complaint against many fraudulent landlords as well as directly against the platform. All trials and regulations have been frozen pending a decision from Brussels, which will nonetheless not be definitive for several years.

Olympics 2024: Olympic-related sites are divided into two zones. An area known as Grand Paris, on the territory from Plaine Commune to Le Bourget. A zone directly intramuros, in the vicinity of the banks of the Seine. The banks of the Seine, which are classified by UNESCO, should host many events for the occasion. Events will take place at the Eiffel Tower, on the Esplanade des Invalides, at the Jean Bouin Stadium, at the Parc des Princes, at the Grand Palais... A multitude of Parisian venues will be used for the celebration. New constructions, in particular the Olympic Village, will be built exclusively in the Greater Paris area. That said, intramuros Paris will nevertheless see different areas renovated or refurbished, such as the Grand Palais, which will be given a second lease of life for the occasion (work begins in 2019).

Grand Paris Express: Some of the new lines should be ready for the Olympics. The project is currently under fire from many critics, local elected officials are blaming a project on the cheap since the Philippe government took the decision to better control costs. Especially on stations. But this concerns above all the Greater Paris area. In Paris intramuros there will be only 3 new metro stations, on Line 14, in the 17th at the level of the ZAC (mixed development zone) of Les Batignolles. Moreover, the work should be completed on the ZAC by the end of 2019 or the beginning of 2020.  The area is already benefiting from the opening of a new section of the Q3 at the end of 2018

MICE, congress, business: While figures for 2018 have not yet been released, in 2017 Paris was the second largest destination in the world in terms of the number of congress attendees. And this excellent position should be maintained in 2018 and 2019: Paris is a major destination for congresses, business and trade fairs. Not to mention that this positioning is likely to be intensified if Brexit is confirmed. 2019 will also see the return of the Paris Air Show, which is always a highlight for Parisian hotel owners.

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