Analyses du marché

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Palace hotels in Paris: € 700 difference…

Palace hotels in Paris: € 700 difference…

Since 2010 and by 2020, the luxury market in Paris would have fundamentally changed its face. In 2010, the smallest group of the most exclusive hotels in Paris had relatively homogeneous performances. The difference in REVPAR between the first of the panel and the last was barely a hundred euros. Between 2010 and 2019, the openings and renovation projects saw the number of rooms double and mark the renewal of the history of luxury hotels in Paris.

If demand seems to be growing at a steady pace, the 8% increase in supply is a signal that might seem worrying. However, this “over” offer did not give way to a price war, but rather to a new segmentation, even a fragmentation in the own exclusive segment of the “Palace” ranking.

In 2019, it is clear that the market for Palace classified hotels is now completely fragmented. Between the first palace of this group and the last, there is now more than 500 euros difference in REVPAR. The price differentials are also final: barely more than 700 euros in average price for the latest and almost 1400 euros for the best, or a differential of 700 euros, from single to double, reflecting a “Palace” ranking that has become too wide. Thus, there is no longer a single price segment but several segments with very different prices in the “Palace” category. The ultra-luxury segment, with an average price above 1000 euros, and two other sub-segments that are more exposed to competition from the 5-star Luxury category. It is obvious that the price and the occupancy rate (REVPAR) are a recognition by customers of the exclusivity and consistency of the promise made to them in this segment with specific rules and codes. The price spectra in the other segments (3/4 and 5 stars) are less violent and relatively more concentrated.

The main explanation for these price differentials within the same “Palace” category, once homogeneous, seems to us to be linked to the exclusivity (or not) and the quality of the Customer Experience created and offered within each establishment. .

From the Customer Experience in the prestigious hotel industry, there is a powerful VISION of a creator relative to “the spirit of the place”. The embodiment and perception of this vision only make sense in the eyes of clients when the operational implementation successfully translates this Founding Vision representative of the DNA of the project.

Our analysis of the individual performance of Parisian Palaces over the past 10 years reveals a strong correlation between price and Customer Experience. It is “the uniqueness and exclusivity of the product and service” in their most sophisticated operational execution on a daily basis, that only the Customer recognizes by paying the price and by his loyalty.

If the Client is the final arbiter of the performances achieved by the Palaces, the success of each establishment is the work of a visionary relayed over time by a team. Inevitably, reality imposes itself in establishments of the “Palace” classification which brings together more than ever a diversity of establishments, with a very different service value, undoubtedly inviting to an administrative segmentation more in line with the reality of prices and experience. The distinction “Palace” is no longer homogeneous for failing to take into account the opinion of the sole arbitrator over time, the client …

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