Paris has been announced as the number one spot for hotel investment in Europe, trumping London which came in second place.
This is according to Colliers International’s inaugural Hotel Investment Attractiveness Index, which analyses the investment climate of 20 European cities.
Paris took the top spot due to its high demand growth, strong hotel performance, high investment returns and market depth from 2012 to 2016, despite predictions that investors and tourists would lose faith in the city due to political uncertainty and the threat of terrorism.
With Paris in at number one, London and Barcelona came second and third most interesting cities to invest in, closely followed by Amsterdam and Berlin.
The results between Paris and London are very similar, but Paris pips London by virtue of having slightly lower development costs.
Manchester and Dublin also perform well, where hotel performance exceeds demand. The case for an increase in business demand growth in both cities looks very strong in the coming years, which should increase their attractiveness to developers and investors alike.
Dirk Bakker, head of EMEA Hotels, Colliers International said: “According to our latest data, Paris scored highly in terms of valuation exit yields and hotel investment volume between 2007 and 2016. Paris also saw over 15 million international tourists visit the city in 2015 and witnessed average hotel occupancy levels of over 77 per cent from 2012-2016.”
The Colliers index uses 12 metric components, weighted to give each of the 20 locations a score of up to 400, including population; GDP per capital; total workforce; commuting workforce; tourist arrivals; room occupancy; Average Daily Rate (ADR); Revenue per Available Room (RevPAR); Land site prices; Building costs; Valuation exit yields and investment volumes.