It was buried during the Covid year. It was all the more resurrected once the confinements came to an end. But why should the hotel industry still have the wind in its sails?
The post-Covid catch-up effect may be fading somewhat, but the growth momentum of the hotel sector does not seem to be in doubt. At least not yet. This asset class has escaped the cyclical downturn that has hit all real estate markets since interest rates began to rise, and is now part of an almost anachronistic virtuous circle.
A virtuous circle in which operating performance is constantly improving. On a global scale, demand has been exceeding 2019 levels for two years now, the benchmark year prior to Covid. The 1st quarter of 2025 confirmed the strength of this demand, particularly in Paris and the major French regional metropolises, with RevPAR still on the rise.
A virtuous circle where valuations are running counter to other real estate asset classes. Values have held up thanks to our business and property ownership model, which values operating income rather than rent alone. An estimated performance gain of around 200 basis points. The hotel sector has thus escaped the generalized repricing of real estate, posting a slightly negative return on capital since the 2022 peak (-4%), while real estate has plummeted by 19% over the same period.
A virtuous circle, finally, thanks to undeniable liquidity. The range of investors has broadened, from institutional investors who have found in the hotel sector an alternative to office space, to family offices that can position themselves in transactions averaging no more than €50/60 million. And let's not forget private investors who, with or without the 150-O B ter provision of the French General Tax Code, are getting a taste of the hotel business via club deals, either directly or through specialized funds.
Some are now wondering whether Donald Trump's new tariff policy could break this virtuous circle. Perhaps for the hotel market in the USA, but not in Europe, most analysts believe.
Because Europe has assets it can no longer ignore. "Europe's tourism industry is indeed united and indivisible," asserts Béatrice Guedj, Director of Research and Innovation at Swiss Life Asset Managers, in our columns. "The tourism industry is a driving force for France," insists Pascal Savary, Chairman of Atream. And like any industry, it needs infrastructure, especially real estate.
This virtuous circle is not about to be broken. But as always, there is not one, but many hotel markets. Just as there is not one, but many real estate markets. The trick is not to capsize when the wind is blowing.