According to the 47th edition of the KPMG study on the French hotel industry, the industry proved resilient once again in 2023. But while the first half of 2024 was mixed, the second half of the year and 2025 look promising.
According to the Banque de France, 2023 was a very buoyant year for tourism in France, with record results, including a +12% rise to 63.5 billion euros in international tourism receipts .
However, the year was less kind to the 31 Palaces (a third of which are in Paris) and 433 five-star establishments.
This is one of the many conclusions of the 47th edition of KPMG’s “L’Industrie Hôtelière Française” study, which examined the operating and management ratios in 2023 of over 3,100 hotels (representing 245,000 rooms). This represents almost 43% of the total number of registered hotels in France.
The study “also takes stock of demand dynamics for 2023 and 2024, as well as developments in investment, hotel valuation, and trends strengthening the hospitality industry after the Covid crisis.”
Les Palaces de Courchevel: a good vintage in 2023
According to the Observatoire des Palaces 2023, the sector zoom conducted by the leading audit and consulting firm, overall occupancy rates for French Palaces fell last year, across all regions (Paris, Alps, Côte d’Azur, Provence, Basque Country, Bordeaux and Saint Barthélemy (Caribbean)). The only notable exception is Courchevel, where the rate rounded off by one point. The posh resort boasts no fewer than 5 palaces: the K2, Les Airelles, Cheval Blanc, Barrière Les Neiges and L’Apogée.
Is there a causal link here? Average prices in French Palaces have risen by a further 25% in 2023, all regions combined, after already soaring by more than 30% in 2022!
However, this strategy has enabled them to record sales growth of around 15% last year compared with 2022. Similarly, their RevPAR (revenue per available room) isup 20% on average in France. With a slight bonus for the Palaces de la Riviera, which posted the highest sales growth: +21%.
But alongside the Palaces – a very exclusive club reserved for establishments distinguished by their heritage (history, architecture), tailor-made experiences and top-of-the-range services – 5-star hotels, more focused on “contemporary comfort”, were no longer the most buoyant last year.
5-star hotels in poor shape by 2023
While hotel room nights across all segments rose by 3% in 2023 in France, almost catching up with 2019 (-1% vs. 2019, source: INSEE), occupancy growth was strong across all hotel categories… except for 5-star superior hotels!
These are the very hotels for which “the weight of international clientele is the greatest”, as KPMG points out.
More generally, taking all categories together, the study reveals “a general increase in RevPAR for hotels in France in 2023, which has offset the rise in operating expenses and thus generated EBITDA levels higher than in 2022”.
Average prices for French hotels have themselves risen in all categories (between +4% and +12% between 2022 and 2023, depending on the segment). This surge was linked to the “inflationary context”, the “return of international customers” and “the hosting of sporting events (Rugby World Cup)”. These price rises offset those in operating costs, and EBITDA (gross operating profit) levels exceeded those of 2022.
Resilience of the French hotel industry
KPMG sees this as proof of the “resilience” of the French hotel industry, superior to that of most of its European counterparts.
Indeed, last year the European hotel industry “did not escape the repercussions of an economic, financial and geopolitical context temporarily less favorable to investment (record inflation, rising cost of debt, rising construction costs, political instability, etc.)”.
In 2023, the Old Continent thus recorded “its lowest volume of hotel transactions since 2014 (excluding 2020) with €13.8 billion in traded volumes, down 14% on 2022 and 24% on the ten-year average”.
Against this backdrop, France is one of the continent’s most resilient hotel markets, with total hotel transaction volumes down 12% to €2.1 billion in 2023, but4% higher than the ten-year average.
A bright outlook for 2025
The other good news is that the resilience of the French hotel industry is confirmed in 2024, albeit in a more “mixed” way… While 2025 looks rather auspicious.
In the first half of 2024, the number of hotel room nights declined by 2.2% to 100 million. But while domestic overnight stays fell (-3.6% vs. 2023), foreign overnight stays continued to grow (+0.3%).
KPMG explains the domestic under-performance by “a series of cyclical factors: unfavorable weather, election weekends, a wait-and-see attitude and a shift in departures in August and in September/October, with strong pick-up in bookings in the capital”.
In Paris and the Ile-de-France region, hotel occupancy suffered in the run-up to the Olympic Games, but recovered during the two weeks of the Games.
In June, hotel occupancy in Greater Paris fell by 13 points compared to 2022, “with business and leisure travel postponed to a later date”.
In July, market and non-market overnight stays by domestic customers fell by a further 6%, while those by European and international customers remained stable.
The Olympic Games effect
Fortunately, from July 24, just 2 days before the opening ceremony, the Olympic Games effect was finally felt.
Overall, over the 19-day event period and across all host territories (Ile-de-France and 8 major cities), French overnight stays rose by +12%, and international overnight stays by +16%.
“These performances, which were concentrated on the event venues (Ile-de-France and other major cities), helped to balance out the summer results,” says the study.
And the coming months of 2024 bode well for the future.
“While an overall assessment of hotel occupancy in the third quarter is expected, the outlook for the off-season looks promising,” says Stéphane Botz, KPMG Partner in France, National Hospitality Director. According to him, “2025 should also benefit from the notoriety generated by the Olympic Games, as well as from flows generated by major international trade shows such as the Paris Air Show.
Wellness and green seminars: promising trends
Finally, the KPMG study highlights a number of promising trends for the Hospitality sector.
While 2022 and 2023 “marked the return of the golden age of wellness”, with an “explosion in demand for wellness stays”, and “unprecedented levels of spa occupancy”, this craze slows down in 2024. KPMG sees this as the “consequence of both the impact of inflation on customer purchasing power and the density of supply”.
In such a context, “the ability of hotels to stand out from the crowd and innovate in order to better meet customer expectations and win their loyalty is key”.
On the other hand, another trend is still booming: that of “green residential seminars”.
These are “driven by strong demand from companies for venues that integrate CSR criteria, and from their employees for stays that reconnect with nature (and their teams)”.
This type of offer, “historically dominated by a few major players who have made it their speciality”, is seeing the emergence of new players, “with business models enabling them to welcome complementary clienteles (business during the week, leisure at weekends)”.
Some venues have “specialized in hosting high-end, small-committee seminars, with increasingly exclusive and personalized experiences”.
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