Hotel de Crillon banks on recovery in Paris pulling power

PARIS (Reuters) - When Paris’s landmark Hotel de Crillon reopens in July after a four-year 200 million euro ($222 million) revamp, it will be hoping to catch a rebound in the luxury hotel trade after a wave of bloody street attacks drove away big-paying tourists.

FILE PHOTO An exterior view shows the Hotel de Crillon in Paris April 3, 2013. Paris's landmark Hotel de Crillon reopens in July 2017 after a four-year 200 million euro renovation. Picture taken April 3, 2013. REUTERS/Christian Hartmann/File Photo

Industry figures suggest that tourism in the French capital is recovering after heavy falls in late 2015 and much of 2016, though some experts caution that luxury hotels may have to wait up to five years before trade returns to normal levels.

With the luxury end of the market relying heavily on foreign visitors, the likes of Hotel de Crillon have been hit hardest by the drop in tourists after the Islamist attacks.

Occupancy rates of Paris luxury hotels fell 15 percent to 52 percent last year while revenue per available room sank by 22 percent to 500 euros, its lowest level since 2009, according to data from research firm STR for luxury property specialist Jones Lang Lasalle (JLL).

However, those numbers have been on the rise in the first four months of this year, driven by a return of Russian, Chinese, Japanese and U.S. visitors, said Christophe Laure, head of the French UMIH Federation for prestige hotels.

Hotel de Crillon, which was built in 1758 and has applied for the right to join a select group of 23 French luxury hotels that can call themselves palaces, is targeting an average occupancy rate of 55-60 percent, managing director Marc Raffray told Reuters.

“A true tourism recovery is under way in Paris, which remains a special city and still makes foreigners dream. I am confident about our capacity to return in coming years to a cruising pace above that of the current market,” Raffray told Reuters, citing “very encouraging” booking levels.

The 124-room Crillon, owned by a Saudi Prince and run by Hong-Kong based New World Group’s Rosewood Hotels, is looking to attract guests from the United States, the Middle East and Asia’s fast-growing wealthy elite.


Those wanting to follow in the footsteps of previous guests including pop star Madonna and former U.S. president Bill Clinton since the building’s conversion to a hotel in 1909 will have to pay rates that start at 1,200 euros a night and rise to 25,000 euros for the top floor suite named after composer Leonard Bernstein, who stayed there regularly.

However, the recovery of this top end of the market could yet prove a lengthy process, given the rise in luxury capacity in the French capital in recent years.

“I think it could take (Paris) palaces at least five years to return to average occupancy rates of 65-67 percent,” said Gwenola Donet, head of France for JLL Hotels & Hospitality.

This would compare with the sector’s occupancy rates of 75-80 percent in 2009 and 70 percent in 2013-14.

The reopening of the Crillon comes a year after the Ritz Paris unveiled its restoration and a year before the Cheval Blanc opens in the Samaritaine building owned by luxury group LVMH.

Competition has also been heated up by the arrival of Asian-operated rivals such as the Shangri-La, Mandarin Oriental Paris and Peninsula Paris.

Some industry observers say the rise in top-end supply will stimulate demand. Others are not so sure.

“Competition is good when newcomers arrive progressively. Here we have the shock of a massive offer. It can take five years to absorb it,” Donet said.

Editing by Richard Balmforth and David Goodman