Operators embrace French revolution

‘Nice place to live, wouldn’t want to work there’ is often the sentiment with France. Well, with its retirement age of 64, coupled with a perky state pension and reliable sun, you might well want to work there, but for the global hotel community, it has traditionally been treated with caution when considering developing there. 

The workers, you see, they have rights. And they’re not pretend rights, they’re the sort of rights that come with a dash of Molotov cocktails. This leads to things like high cost of teams, which can be a right downer when it comes to margins. Labour costs have always led to a fair amount of tutting from the global majors, many of whom are based in locations where you can boot someone out the door just for looking at you a bit funny and France is the worst of them. 

But times are looking up for the operators in France, not least because, since the pandemic, labour everywhere has started to feel its worth and now wage costs are horrendous in a number of locations. Hurrah! 

Cushman & Wakefield’s Hotel Operator Beat report on the country, released at the end of last year, forecast that performance was due to be very strong indeed – they’re hosting the Olympics, you know – plus the strong dollar is bringing in the high spenders. Or, as they no doubt think, bargain spenders. 

In terms of performance risk, the study found that operators had confirmed the growing trend of hybrid leases or the inclusion of operating guarantees in the case of management contracts. Other trends include rising key money provisions and flexibility in contract termination. This is another counter to the concerns that the French were my way or the highway about how things should be done. 

The study however found the hotel pipeline was being dampened, with 30% of new projects being reported either delayed or on hold, primarily due to the rising construction cost and continued uncertainty in the debt markets.

Since the report, the debt markets have cheered up, but that still leaves the issue of construction. Fortunately, this plays into the hands of that current sector trend; the conversion. This week saw Marriott announce that it was all hopped up on France, with the expected addition of 10 properties with over 1,000 rooms by the end of 2025. 

Alexandra Goguet, VP development, France & Benelux, Marriott International, commented: “We remain focused on strengthening our presence in primary and secondary markets in France in line with the strong demand we are seeing for leisure and resort experiences, as well as for business travel.

“Conversion and adaptive reuse projects represent nearly half our properties expected to join the Marriott portfolio in France by the end of 2025. These projects allow us to add hotels in key locations in city centres and demonstrate our expertise and flexibility in finding innovative solutions to adapt existing buildings whilst creating fantastic guest experiences.”

Of course if you play in France you’re in Accor’s backyard and last week the group announced that LVMH was investing in the Orient Express brand, so expect more trains and boats and general fanciness. 

Sébastien Bazin, Accor Group chairman & CEO, said: “We’re delighted to enlist LVMH’s rare expertise to continue pushing further the frontiers of this legend and bringing its embodiment to life in an ever more singular way.”

And delighted he very well must be. Bernard Arnault, LVMH Group chairman & CEO, is the kind of fellow who gets described as “a force” by people keeping a cautious eye out around the corner and as the world’s second-richest man by Forbes. He knows his stuff, is the conclusion and may have announced a successor, but don’t anticipate a stepping back. 

For observers of the sector and the relentless ‘but do we really want a hotel brand headed by a celebrity hairdresser’ debate, the deal holds no room to quibble. If LVMH don’t know how to deliver luxury – and how to sell it – then it’s time to go back to what is a brand/what even is capitalism and no one wants that while they’re thinking of the relative strengths of their state pension. 

Even without the uncertainty of a random election – and surely Macron was just jealous that everyone else was having them – it’s an interesting time to be considering France. Hold onto your heads. 

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