One of the largest and most illustrious places to stay in Paris is up for sale for €800 million, testing investors’ appetite for such trophy hotels in a post-coronavirus world.
The Westin Paris Vendôme hotel, which has hosted Napoleon III’s wife, Russian dukes and the Dalai Lama since it was built in 1878, is being discreetly marketed by owners Henderson Park, according to two people familiar with the deal.
Henderson Park purchased the hotel, which is franchised by the Marriott group and which occupies an entire city block, in 2017 for a reported €550 million from Singaporean sovereign wealth fund GIC.
The hotel is currently being offered at around €800 million despite the impact of the pandemic on the sector - a “punchy” valuation, according to Kenneth Hatton, head of hotels in Europe, the Middle East and Africa at property company CBRE.
“This is an asset with a lot of reconfiguration that is required so redevelopment risk is always something to be considered,” Hatton said, adding that the 440-room hotel, which faces onto the Tuileries gardens, had become “old and tired”.
The sale has drawn interest from a handful of bidders, according to one of the people, including sovereign wealth funds, very wealthy individuals and heads of state. But none is yet in exclusive talks to purchase the property, which houses retail space below its rooms.
The sales process, first reported by property publication React, is a gauge of the willingness of investors to buy into high-end city centre hotels after two years in which the sector has been battered by ongoing and volatile travel restrictions.
Luxury hotels have suffered particularly badly given their dependence on overseas visitors and the hefty overheads required to maintain their staff and services.
Henderson Park has cut costs in the hotel, where suites with a view of the Eiffel Tower are advertised at around €4,000 a night.
With the pandemic eating into revenues, the Westin announced a large round of redundancies at the start of 2021. Around half of the 350 or so staff at the hotel were made redundant and their roles filled with subcontractors.
The Parisian market had already faced a tough period coming into the pandemic with supply outstripping demand as travellers steered clear of the city in the wake of terrorist attacks in 2015 and 2017, followed by the gilets jaunes protests a year later.
Paris’ luxury and high end hotels have trailed rivals in London and Berlin with their highest occupancy levels since 2015 reaching 73 per cent compared to 81 per cent in London and 79 per cent in Berlin, according to the industry data provider STR.
Mr Hatton said that the Westin would need between €175 million and €250 million spent on it to “bring it to true luxury” as well as a radical reduction in the number of rooms but said that a developer could give it a quick “lipstick and rouge” makeover for around €50million to €100 million if they were less keen to commit capital.
The hotel has previously been heavily reliant on meetings and events such as high-end fashion shows, an area of travel that is likely to be among the last to recover from the pandemic.
Henderson Park declined to comment. - Copyright The Financial Times Limited 2022
