Despite the forecasts that tourists and investors would lose their faith in Paris due to political uncertainty and security concerns; the French metropolis made it to the top of the Hotel Investment Attractiveness Index of Colliers International. Paris hotels are the top for invest in Europe.
This index analyzes the climate for investment in 20 European cities. Paris hotels was particularly impressed by the high growth demand; the strong performance of the hotels, the high return and the market depth in the period from 2012 to 2016.
According to the latest data from Tophotelprojects, Paris has done well in the valuation of the market yields and the investment volume between 2007 and 2016. In addition, 15 million visitors arrived in 2015; and the hotels recorded an average utilization rate of 77% in the period from 2012 to 2016.
Further highlights of the Colliers study:
- Ranking number two is London and then Barcelona, Amsterdam and Berlin are the most interesting cities to invest.
- The first two cities, Paris and London, are very similar. Paris is striking for London with slightly lower development costs. Small development costs are one of the factors in which Barcelona strikes particularly well and catapults the city forward, even before Amsterdam. In all other areas the two cities are almost the same.
- Istanbul is relatively back in the 17th place despite the size of the market; which promises good demand and low development costs. However, the operating income is low as the occupancy rate is low and therefore lower returns are to be expected. The current political and economic climate is also unhelpful for a robust investment market.
- Zurich is the big city too. People will be respect Zurich in the future. The operating income and the past few years were excellent, which indicates a supply shortage in the hotel industry. The interest in new investments is high and if demand continues to rise; Zurich can become one of the most popular cities for development and investment. And that despite the high development costs.
Background: Collier’s index uses twelve metric components, in which each of the 20 cities can reach a value of up to 400. These include height population, gross domestic product, total employment, commuters, number of tourists, hotel occupancy, average room rates (ADR), hotel room rates (RevPAR), land prices, construction costs, growth and investment.
These points are summed up and give a total sum which shows which market is top-level in terms of general demand and current performance; and how the market’s attractiveness affects the acquisition of existing hotels and the construction of new ones. And Paris hotels are the good choice for long term investment.