Paris luxury ‘Palace’ hotels face downturn on Airbnb and safety

“The Paris market is going to get very difficult,” said Didier le Calvez, managing director of the Bristol Hotel, one of Paris’ finest luxury hotels, rated as a Palace hotel. Along with bosses of the city’s other ‘Palaces’ he denounces Airbnb as a menace that enjoys an unfair advantage. “It’s a tax attack,” said Francois Delahaye, managing director of the Plaza Athenee (Dorchester Collection). Jose Silva, who runs the Four Seasons George V, said: “It’s obvious that a large part of our clientele, especially the families, will abandon the palaces.”

Airbnb offers between 380 and 400 Paris properties at over 500 euros a night. Of those, about 40 charge over 1,000 euros ($1,090). Add in the attraction of individuality, anonymity, and, in some cases, extra beds, and that puts them potentially in competition with the 1,000 euro a night Bristol and half a dozen other high-end Paris hotels, which have about 1,500 rooms to offer in total.

The Paris luxury sector is already worried about a surge in competition from newly opening hotels. Consultants JLL Hotels & Hospitality reckon that capacity will be 60% greater in 2018 than a decade earlier.  Paris’ luxury hotel segment latest additions include: The PENINSULA, the reopening of the RITZ Paris next March and the Crillon, early 2017.  A downturn in visits from wealthy Russians and Brazilians as the economies there falter, and security fears among US and Middle East visitors – all played an important part.

Le Bristol suffered a 20% drop in revenue in the first half of this year and an occupancy rate that fell to 61.2% from 69.2%. The Four Seasons George V saw a five percentage point drop in occupancy to 66% in the same period. The Plaza Athenee cut its prices by 20% last winter.

Airbnb says it is not in competition with the Palaces. “It’s a totally different thing,” said Nicolas Ferrary, director of the company’s operation in France. A spokeswoman added: “These residences are chosen for the unique experience they offer, but which remain very different from what a luxury hotel can propose.”

A recent change in the law, which was previously unclear about subletting homes, gave French people the right to do so with their main residence for four months of the year. Although they should declare any income for tax purposes, they do not face the other tax and social charges that a business such as a hotel has to pay.

How should luxury hoteliers counter competition from the likes of Airbnb

Jose Silva, GM of  Four Seasons George V, Paris, summarizes it brilliantly: “Wealth and world demand is going to grow. Hotels should continue to offer a radically different experience”.

adapted from Reuters / Business Insider (edited by CPP-LUXURY.COM)