The 800 million euro sale of Westin Paris tests the high-end hotel market

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One of Paris’ biggest and most illustrious places to stay is up for sale for 800 million euros, testing investors’ appetite for such trophy hotels in a post-coronavirus world.

The Westin Paris Vendome hotel, which has hosted Napoleon III’s wife, Russian dukes and the Dalai Lama since it was built in 1878, is being quietly marketed by owners Henderson Park, according to two people familiar with the matter.

Henderson Park bought the hotel, which is operated by the Marriott Group and occupies an entire city block, in 2017 for 550 million euros from Singapore’s sovereign wealth fund GIC.

The hotel is currently listed at around 800 million euros despite the impact of the pandemic on the sector – a “hard-hitting” valuation, according to Kenneth Hatton, head of hotels in Europe, the Middle East and Africa at the company. real estate CBRE.

“It’s an asset with a lot of reconfiguration that is needed, so the risk of redevelopment is always something to consider,” Hatton said, adding that the 440-room hotel, which faces the Tuileries Gardens, had become “old and tired”.

The sale attracted interest from a handful of bidders, according to one of the people, including sovereign wealth funds, ultra-high net worth individuals and heads of state. But neither is yet in exclusive talks to buy the property, which houses commercial space below its rooms.

“Given the footprint, it will be very attractive to a global pool of capital who will want to forever own real estate in the heart of Paris . . . especially the Middle East and Asia [buyers]”, Hatton said.

The sale process, first reported by real estate publication React, is an indicator of investors’ willingness to buy into upscale downtown hotels after two years in which the sector was battered by ongoing and volatile travel restrictions.

Luxury hotels have suffered particularly given their dependence on foreign visitors and the high overhead costs needed to maintain their staff and services.

Henderson Park has cut costs at the hotel, where suites with Eiffel Tower views are advertised at around €4,000 a night.

The pandemic is eating away at its revenue, the Westin announced a big round of layoffs in early 2021. About half of the hotel’s roughly 350 employees have been laid off and their roles filled by contractors.

The Paris market had already gone through a difficult period in the run-up to the pandemic with supply exceeding demand as travelers avoided the city following the terrorist attacks of 2015 and 2017, followed by the yellow vests protests a year later.

Luxury and high-end hotels in Paris lag behind rivals in London and Berlin, with their highest occupancy rates since 2015, reaching 73%, compared to 81% in London and 79% in Berlin, according to the STR sector data provider.

Hatton said the Westin would need 175-250 million euros to “bring it to true luxury” as well as a drastic reduction in the number of rooms, but said a developer could give it a quick “red lipstick and rouge”. makeover for around 50 to 100 M€ if they were less inclined to commit capital.

The hotel was previously heavily reliant on meetings and events such as high-end fashion shows, an area of ​​travel that will likely be among the last to recover from the pandemic.

Henderson Park declined to comment.

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