Paris Summer Olympics: Three key trends to consider

Analysis by Christina Choueifaty and Letizia Rossi-Espagnet

The impact of sporting events on hotel performance has been well-documented recently. Now all eyes are on the Summer Olympics in Paris between 26 July-11 August 2024. This summer will mark exactly 100 years since the Summer Olympics were last held in France.

Utilizing Forward STAR data as well as forecast analysis from STR and Tourism Economics, there are three key trends developing with just six months before athletes, coaches, spectators and media converge on Paris for this “mega-event.”  

More than half of hotel rooms are already booked

The Olympics impact on Paris’ hotel bookings is already more than clear. As of 1 January, occupancy on the books was already trending above the 50% level for almost the entire event period. The highest percentage of room bookings currently sits on the weekend of 2-3 August, with each night at 59.2%. This is a huge jump for Paris this far ahead of the event, especially when compared to the same time last year, when the corresponding nights were at just 5.0% and 4.5%, respectively. As of now, the last day of the event (Sunday, 11 August) is the only day with bookings below 50% (46.4%).

Naturally, as the event draws nearer, booking levels will continue to increase. Overall, Paris’ August occupancy (luxury and upper upscale classes) is forecasted at 72.6%, which would be a 9.1% increase from last year. With less event dates, July is forecasted at 77.2% (-0.5%). As noted in the next section, occupancy impacts are not as pronounced as average daily rate (ADR) during the Olympics.

Taking a wider look, the Ile-de-France region is showing significant jumps in occupancy on the books as well. The highest levels (as of 1 January) are currently seen on Saturday, 3 August (44.9%) and Sunday, 28 July (43.5%). At this time last year, bookings for those nights were at just 5.3% and 3.9%, respectively.

Luxury and Upper Upscale hotels will be the ADR standouts

Paris is expected to see a significant jump in July and August ADR. The impact will be especially pronounced across the luxury and upper upscale classes, which are forecasted at +8.7% and +72.7%, respectively. 

An Olympics spike in ADR will align with previous hosts during non-pandemic years—Beijing, London and Rio de Janeiro. In London, ADR growth was even more significant following the bounce back from the global financial crisis.

Across all three markets, the ADR impact influenced the entire host year, while annual occupancy actually came in lower. That occupancy decline happens as many of the travelers that typically funnel into the market will avoid the destination due to perception around large crowds and high prices. Other demand-driving events are also less common around the time of the Olympics. As noted below, new supply also limits occupancy gains.

Driven by ADR, the impacts on revenue per available room (RevPAR) have also been obvious for previous hosts. We project a similar story in Paris this year.

Slower supply expected to aid strong occupancy

Supply is an important contributing factor when analyzing hotel performance during an event of this size. Many host markets will see an influx of new inventory as investors look to capitalize on high demand and showcase a property for long-term success.

The story in Paris will be a little different. The market’s inventory currently comprises 90,712 hotel rooms. Only 970 additional rooms are expected to open before the start of the Olympics this year, which would present a modest 1% increase.

Supply growth in Paris has even been slowing in the years leading up to the Olympics, which adds to the expectations of occupancy remaining strong during the event period.

The unusually low Paris pipeline activity is particularly visible when compared to what was seen during the six months before the past games. Looking at London hotel openings in anticipation of the 2012 Summer Olympics, an additional 4,554 hotel rooms were opened in the city between January 2012 and July 2012. A similar situation was seen in Rio, where 4,194 rooms were opened in the six months before the Olympic Games in 2016. An outstanding 22,151 rooms were added to Beijing’s room supply between January and July 2008.

Summary

Thus far, according to Le Monde, over 7 million Olympics tickets have been sold. A resell platform is also planned to be opened in spring, which might push the number of visitors further. Overall, with the Olympics still six months away, the world moved on from the pandemic, and strong ADR expectations, Paris hoteliers are in for a successful summer. Additionally, looking past the summer period, the market is also expected to see a boost in the number of visitors due to the planned reopening of the Notre Dame Cathedrale in December. Before a fire forced its closing in 2019, the landmark used to attract 30,000 visitors a day (13 million per year).