Summary of our market study
Sales of 5-star hotels are estimated at 5.2 billion in 2023 and and total hotel activity is expected to exceed 25 billion euros.
In France, there are 31 Palaces and over 430 5-star hotels
The global luxury hotel market is worth over $150 billion. North America is the most dynamic market in this sector.
In France, 5-star hotels account for 14% of total hotel sales.
Four- and five-star luxury hotels account for only 9% of hotels in the provinces.
Around a quarter of foreign tourists opt for luxury accommodation, the majority of them preferring hotel chains to independent hotels.
Demand for luxury hotels in France can be divided into two main categories: business and leisure customers. Leisure guests account for the majority of Palaces and 5-star hotels, and are growing fast compared with business guests, who account for only 10-15% of all Palaces guests.
Some luxury hotel giants
- Westin Hotels & Resorts: The pillars of well-being Westin Hotels & Resorts represents a sanctuary of health and rejuvenation in the luxury hotel segment.
- St Regis Hotels & Resorts: The pinnacle of timeless elegance St Regis hotels and resorts are legends in the luxury hotel sector, offering experiences that exceed expectations.
- Leading Hotels of the World: A collection of unrivalled distinction As the umbrella organization, Leading Hotels of the World offers a selection of the world's most magnificent independent hotels.
- Waldorf Astoria: The Legacy of Signature Luxury Waldorf Astoria has been setting standards in the hotel industry for over a century.
- Fairmont Hotels & Resorts combines environmentally-friendly practices with luxury.
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Summary and extracts
1 Market overview
1.1 Definition and presentation
Luxury hotels are accommodations with exclusive, personalized and unique services, where the guest is the focus of attention and the experience must be impeccable. There are a number of strict criteria that must be met for a hotel to qualify as a luxury hotel. Very often, these are 5-star hotels, but this is not always the case, as luxury hotels can emphasize different hotel characteristics, such as exceptional design or the history of the building. On a global level, luxury hotels are frequently chains. Among the most important are :
- AccorHotels
- Relais & Chateaux
- Four Seasons
- The Leading Hotels of the World
- Marriott International
- Intercontinental Hotels Group
In France, luxury establishments welcome 60% of foreign tourists every year, and the majority of them belong to major hotel chains. In fact, independent hotels are less popular than chain hotels. If we consider only hotels with the palace distinction, foreign customers account for 80% of overnight stays. This market suffered greatly from the health restrictions imposed by the pandemic, but showed an exceptional recovery in 2022 and 2023. Sales for 5-star hotels are estimated at 5.2 billion in 2023, up 26% on 2019.
Luxury hotels in France are found in remarkable sites, urban areas and winter sports resorts. 5-star establishments account for 4.24% of French hotels.
The technological environment is having a major impact on the luxury hotel sector, which has to keep pace with technological progress by building more direct relationships with its customers via social networks. So, the evolution of technology is very important for this market. The luxury hotel market is very much influenced by the arrival of younger generations in the luxury segment, who are changing travel and consumption habits.
1.2 The growing global market
The global luxury hotel market was valued at $***.** billion in **** and is expected to grow at a CAGR of **.*% over the period ****-****.
Global luxury hotel market World, ****-****, in billions USD Source: ****
The most dynamic market is North America, with a market share estimated at **.** billion dollars in ****. Europe also accounts for a significant share of the travel and tourism services market. Finally, the growing upper-middle and middle-class populations in the Asia-Pacific region have contributed significantly to the growth of this market.
Although the global market experienced a sharp decline in ****, due in particular to restrictions linked to the health crisis, the market remains buoyed by the development of tourism and a significant evolution in living standards. [***] According to a **** Expedia Annual Vacation Privation survey, **% of respondents had to cancel one or more trips due to the pandemic in ****.
1.3 French market in exceptional post-pandemic recovery
French hotel business
After an exceptional year for the French hotel industry in ****, business in **** remains strong, driven by an influx of international visitors and an increase in end-of-season bookings. Although occupancy rates for summer **** were slightly down on the previous year, average prices continued to rise, contributing to a solid RevPAR for the summer season. Thus,for the French hotel industry in general, revenue per room (***), at **.*%, continues to improve, and if the trend continues, will soon exceed its **** level. According to INSEE, total hotel sales in France will amount to€**.** billion in ****.
The hotel zones showing the strongest growth are the Northern Alps, Paris, the Pyrenees, the eastern Mediterranean coast and Corsica. RevPar has risen in all zones, but occupancy rates have not returned to **** levels everywhere.
Occupancy rates of over **% in hotels and residences in the Northern Alps testify to the popularity of winter sports with tourists. This trend is also evident in the Southern Alps and the Pyrenees, with good performances. In the mid-range mountains, despite less favorable snow conditions, results are better than in **** and **** in terms of RevPAR. in Paris and major cities, results surpassed those of ****, but remained below the exceptional Christmas of ****.
revPAR ...
2 Demand analysis
2.1 Typology of demand
From the outset, there are two very different types of hotel customer. These are business and leisure customers.
Business customers include: executives, sales representatives (***), researchers, technicians, workers and the self-employed, who travel for varying lengths of time, depending on the work to be done on site. They are segmented as follows:
Full-fare" business travelers: do not benefit from special discounts, and pay the posted rate; one-off stays most of the time; Agency" business travel ers: sometimes benefit from a special price; commission to be paid to the travel agency that booked for them; Corporate" individuals: customers accommodated at a rate specially negotiated by the hotelier (***) with their company in return for an annual volume of rooms rented; this particularly concerns airline or rail company staff; Special price" individuals: business travelers who benefit from a promotional or negotiated rate on the occasion of an event; for example, exhibitors or trade show visitors.
Business groups can also be divided into :
Seminars: business meetings held in the hotel; Congressists: participants in a congress, symposium or company convention held outside the hotel, who are simply staying at the hotel; Various business groups: more marginal, tours corresponding to shows, concerts or political party gatherings.
In terms ...
2.2 A relationship with travel that has evolved since the end of health restrictions
In ****, YouGov conducted a post-covid travel survey, focusing on luxury travel. Although the survey was carried out on a global scale, it provides up-to-date information on the travel trends of the world's wealthiest people. For **% of those surveyed, travel has become more important since the end of the pandemic.
Unsurprisingly, the higher the respondent's income, the more they consider travel an important part of their lives. The graph below illustrates this disparity. Here, a low income corresponds to less than **% of the median income, a medium income is between ** and ***% of the median income, and a high income will be above ***%.
Perception of travel as a function of income World, ****, Index base *** vs. average
Poll: Has travel become more important since the pandemic? World, ****, Index base *** vs. global average It's also important to highlight theyounger generation's infatuation with luxury travel. Millenials and Generation Z are becoming increasingly involved in the luxury sphere, and their consumption patterns are very much their own. An emerging trend among these generations is the desire for meaningful travel experiences.
The luxury sector is currently facing a younger, connected and affluent clientele, dominated by the rise of Millennials and Generation Z, for whom travel is not only ...
2.3 Stays in French hotels
French hotels
There are a number of unclassified or star-less hotels that are not included in the graphs. The graphs therefore focus on * to * star hotels. In France, there are ***** different hotels, including *** *-star hotels. *-star hotels account for **.* thousand rooms, or *.**% of total rooms in France.
Number of establishments by star rating France, in ****, in number of establishments
Five-star hotels make up a small proportion of the French hotel fleet, the majority of which is made up of three-star hotels. On the other hand, five-star hotels have a higher occupancy rate than other categories, except for four-star hotels, and account for *.* million total overnight stays, including *.* foreign nights.
Number of hotel rooms by star rating France, in ****, in thousands
Trip purpose of French palace guests France, in ****, in
Observation of trends in occupancy rates for French Palaces shows a sharp decline from **** to ****, mainly due to the health crisis. While the average occupancy rate of French Palaces was almost divided by four, Palaces located in Paris were more affected than those on the Riviera.
This more obvious decline in Paris can no doubt be explained by the drop in business clientele observed in the previous section, given that business clientele ...
2.4 The importance of foreign customers
French luxury hotels, like French luxury in general, find a large proportion of their customers internationally. While Asian customers are the biggest market for luxury clothing, luxury hotels seem to be particularly popular with North Americans (***). According to INSEE, **% of overnight stays in *-star hotels in France in **** were made by French customers, while foreign visitors accounted for **% of all overnight stays. *-star hotel occupancy France, ****, in percent Source : INSEE Around **% of French hotel guests are international. **% come from the United States and Canada. The average length of stay is *.* days, higher than for all ranges combined (***). Origin of palace customers France, in ****, in The upturn in tourism since the covid period has therefore been highly beneficial for French palaces.
Average spending in France by the main international clientele for an overnight stay in a hotel or campsite France, ****, in euros Source: ****
3 Market structure
3.1 Value chain and hotel operations
Organization chart of a typical hotel
Source: ****
Here's a non-exhaustive organization chart showing the structure of a hotel and the staff required to run it. obviously, the size of the establishment will have a huge influence on the number of staff, their functions, etc., but it does allow you to visualize the diversity of the staff (***), or an asset manager.
Here are the main categories of operating costs for a luxury hotel:
Staff Maintenance and renovation Marketing and sales Technology Supplies and equipment energy and utilities Insurance Taxes and legal fees
Hotel operating costs have risen sharply in recent years. On the one hand, exogenous factors are influencing the hotel industry: the adjustment of pricing policy in ****, in response to inflation caused by the conflict in Ukraine, as well as the anticipation of indirect costs such as the increase in usual charges, including energy, and operational costs such as room cleaning.
On the other hand, endogenous factors specific to this industry are also affecting costs: an upward revision of the remuneration policy in April ****, challenges in recruiting and retaining staff, and so on, all of which have led to a reduction in the payroll ratio.
The combination of these purely operational ...
3.2 French luxury hotels
According toINSEE, France had *** *-star hotels in ****, offering a total of **,*** rooms.
The website atout-france.fr lists the establishments that have received * stars since ****, with a total of ***. The following map shows the regional distribution of these establishments, and shows that a minority of regions account for the vast majority. The Île-de-France, Provence-Alpes-Côte d'Azur and Auvergne-Rhône-Alpes regions together account for more than **% of five-star hotels.
Source: ****
The following chart shows that the most represented regions remain the same, with a majority of Palaces in Île-de-France, with ** establishments in the city of Paris.
Regional breakdown of French Palaces France, ****, in units Source: ****
3.3 Sales structure: distribution of reservations and sales breakdown
In the cost structure section, we will detail the distribution channels used to book hotel rooms, as well as the breakdown of sales, which will give us an overview of the sector's cash inflows and outflows.
Direct distribution channels
Website Telephone line Social networks
These are channels where sales are made directly with the hotel in question, and are particularly profitable as they do not require third-party commissions.
Indirect distribution channels
Metasearch engines : these are search engines that compare offers on OTAs or hotel websites, and make a profit from ads placed on the metasearch engine. Examples include Google Hotel Ads, Kayak, Trivago and TripAdvisor. OTAs (***): these represent an important source of bookings, since they enable customers to book online after comparing different offers. Hotels don't like OTAs, as they charge high commissions on bookings: Booking.com's average commission is **%[***]. Examples of OTAs: Booking Group, Expedia Group, Hotels.com... GDS (***), the GDS functions as a portal that agents can use to connect to hotels and then book directly on the hotel site. Sabre, Amadeus and Travelport are international GDSs.
Offline channels
Although the digital age favors online channels for their simplicity, offline methods such as phone calls, personalized e-mails, and traditional ...
4 Offer analysis
4.1 Average prices for French luxury hotels
While the average price of a Palace room fell slightly in ****, by **** it will have risen to ****.*€. Courchevel is the most expensive destination, with an average price of ****.*€, ahead of the Riviera at ****.*€ and Paris at ****.*€.
In comparison, the average price for *-star Superior hotels in France is ***€, with a maximum in the PACA region at ***€.
Average price of Palaces France, ****-****, in € excl. tax Source: ****
Wellness hotels have been the least affected by the health crisis, with the smallest decrease in occupancy rates, but they are the only luxury hotel category to have seen their prices rise from **** to ****.
Restaurant/seminar hotels, on the other hand, were forced to cut their prices sharply, and suffered from the decline in the importance of business customers observed in our demand study.
Change in performance and prices for luxury hotels (***) France , ****-****, in % Source: ****
4.2 Online presence and competition from OTAs
Two independent factors are making online life difficult for hotels:
The emergence of OTAs, which attract customers and even steal them from hotels by offering more attractive prices The neglect of hotels' e-reputation doesn't improve their visibility, leaving the field open to OTAs
With the digitalization of distribution channels, these factors are having an increasingly significant effect on hotels.
The impact of OTAs
The advantages of OTAs for hotels:
Benefit from OTA image Simplify reservations Generate new customers
Disadvantages of OTAs for hotels :
High commissions Rate parity (***) Loss of customer information
At first, OTAs were seen as a booking aid, with hotels still holding the majority of distribution shares, but now the influence of OTAs has become very important, as we saw in *.*. This in turn generated ever-increasing commissions for hotels.
The very wide choice of accommodation offers (***), Booking is sucking in more and more customers, just the number of overnight stays recorded on the site increased by **% between **** and ****[***].
Hotels' online presence
Competition is all the tougher as OTAs offer high-performance, ergonomic digital platforms that delight users. Indeed, OTAs don't hesitate to invest in marketing budgets, advertising, search engine optimization and more. One example is the $*.** billion for online advertising ...
5 Regulations
5.1 Star classification
France's tourist hotels are subject to a new classification system introduced in ****.
This classification makes it possible to review the positioning of hotels.[***]
For all five categories, the new classification guarantees the following:
A warm welcome in a clean, well-maintained establishment with family-friendly facilities. Full and accurate information on the establishment's services. Rooms with the minimum level of comfort and equipment expected. Handling and follow-up of complaints received in the establishment. A civic-minded team committed to welcoming disabled guests and promoting sustainable development
In addition to the different categories of hotels rated from * to * stars, the key points of this reform are:
Stars awarded for * years, by decision of the authority designated by the State on the basis of a report issued by an independent audit firmaccredited by COFRAC (***), to guarantee their competence and impartiality. In future, the inspection will be carried out by an accredited private assessment firm of the hotelier's choice, at the hotelier's expense. This audit will be supplemented by a mystery visit to the establishment for * and ** hotels. The audit will be carried out on the basis of the grid published in the decree of December **, ****, and the criteria audit guide to be used by the auditing ...
5.2 Rights and obligations of hotel professionals
Since January *, ****, hoteliers have been subject to new price information obligations (***). [***]
First of all, if you are setting up a hotel, before opening the establishment, the operator must obtain an opening permit from the prefecture of the défollowing this, and after an on-site investigation, a conformity visa may be issued, followed by a prefectoral opening order.
Hoteliers are also obliged to display certain prices at the customer reception area and outside the hotel. The final price must be indicated, including taxes, as well as optional services considered essential (***). Arrival and departure times must also be indicated, as well as any supplements.
In addition, the sale of drinks is subject to a compulsory license (***).
There is no legal percentage for deposits, although it is customary to pay a deposit of * to * nights for stays of more than a week.
At the time of payment, the hotelier is required to give the customer a note indicating :
the date ; name, address and category of establishment ; the number of the room occupied duration of rental; the name and address; the prices, including taxes and services, of the services provided to the customer; total amount due
Finally, in the event of theft, the hotel is ...
6 Positioning the players
6.1 Segmentation
- Accor Hotels
- Intercontinental Hotels Group
- Barrière Groupe
- Booking.com
- Egencia France
- Relais & Chateau
- Radisson Hotels
- The Originals Hotels
- Logis Hotel
- Mandarin Oriental
- Peninsula Hotels
- Four Seasons Hotels and Resorts
- Louvre Hôtels Groupe
- Sofitel (Accor)
- Le Shangrila Hotel Paris
- Oetker Collection
- The Leading Hotels of the World
- Kempinski Hotels
- Tiara Hotels & Resorts
- Marriott
- Hilton Hôtels
- Domaines de Fontenille
- Hyatt
- LBHC Boutique Hôtels Collection
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The luxury hotel market | France
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