New Paris hotel joins race to pamper the super rich

Kai Yuan Holdings

31/07/2014 17:19

* Hotel helps Paris compete against others luxury capitals 
    * Total cost of Peninsula estimated at 750 million euros 
    * Investment to take several decades to pay off 
 
    By Astrid Wendlandt 
    PARIS, July 31 (Reuters) - After four years of refurbishment 
work costing 430 million euros, the Peninsula Paris hotel opens 
its doors on Friday, promising prince-like treatment to 
well-heeled visitors to the French capital. 
    It is part of a battle to attract Asia's new class of 
super-rich that not only pits the world's top hotel groups 
against each other but also cities such as Paris, New York and 
London. 
    For the Peninsula team, it is a long-term investment, 
piggybacking on Paris's efforts to woo the Chinese in particular 
over the past decade - yet it comes as the luxury industry in 
France is feeling the pinch from a drop in traffic from Russian, 
Indonesian and Japanese tourists. 
    Even spending by the Chinese, the world's No. 1 shoppers, 
only rose 14 percent in France in the first six months of the 
year, after rising by more than 20 percent and higher in the 
past few years, according to VAT-refund company Global Blue. 
    Such projects are important for the government too. France 
is seeking to exploit its position as the world's most visited 
country to boost the trade balance and stimulate the euro zone's 
flatlining second economy by convincing tourists to spend more. 
    Located in a 1908 building a stone's throw from the Arc de 
Triomphe and Champs Elysees, the hotel will offer rooms starting 
at just over 1,000 euros a night and rising to 25,000 euros for 
a penthouse suite with its own roof-top garden.   
    Each of the 200 rooms allows guests to make free phone calls 
anywhere in the world and is fitted with a printer, coffee 
machine, a nail polish-dryer and a tablet centralising all 
functions from dimming lights to ordering breakfast.    
    A fleet of BMWs, Mini Coopers, two Rolls-Royces together 
with 600 staff, including masseuses and cigar connoisseurs, are 
on hand to cater to every whim of its guests. 
    The Peninsula will need to spare no effort to stand out 
against other newcomers such as the Mandarin Oriental, the 
Shangri-La and the Royal Monceau operated by the Singapore hotel 
group Raffles which opened their doors in recent years. 
    Once the refurbished Ritz and Crillon hotels re-open next 
year, Paris will have increased by over 50 percent its number of 
five-star beds to over 2,000 in little over a decade. 
    "There may be some over-capacity in the short term but for 
me it is not a problem as it will be absorbed and these new 
hotels will reinforce Paris' image as a luxury destination," 
said Georges Panayotis of hotel and tourism consultancy MKG. 
    Indeed, analysts say it will take at least 25 years if not 
more to get a return on an investment the size of the Peninsula 
Paris, or an estimated 750 million euros (1 billion dollars), 
when including the cost of acquiring the building. 
     
    LUXURY MARKET 
    The hotel itself is steeped with history, having housed the 
Nazi military command when Paris was occupied in World War Two 
and hosted 1973 peace talks aimed at ending the Vietnam War. 
    The project is a joint venture, run and 20 percent owned by 
the Hong Kong and Shanghai Hotels group  0045.HK  behind the 
Peninsula hotels in cities such as Hong Kong, Shanghai, Beijing, 
Tokyo, New York, Chicago and Beverly Hills. The rest belongs to 
Katara Hospitality, part of the Qatar Investment Authority. 
    "Our name is reassuring for a certain type of clientele," 
hotel director Nicolas Beliard said of the Peninsula brand. 
    Last month, Hong Kong-listed investment firm Kai Yuan 
Holdings Ltd  1215.HK , which has interests from steel making to 
real estate, bought the Paris Marriott Hotel Champs-Elysees for 
344.5 million euros for which it said it aimed to boost its 
Chinese clientele.  ID:nL4N0OY06Y  
    Ten years ago, the Chinese tourist market barely existed in 
Paris, the domestic shop-window of luxury products ranging from 
Louis Vuitton bags to Cartier jewellery and Remy Martin cognac.  
    Since then, the government and Paris city hall have sought 
to attract more Chinese visitors by making it easier to obtain 
visas and by strengthening security, particularly in tourist 
hotspots, to prevent muggings.  
    A spate of attacks against Chinese tourists in recent years 
have blemished the city's reputation, prompting negative 
headlines in the local Chinese media.  ID:nL6N0G24RJ  
    "For me the battle lines are not between the hotels 
themselves but between London, Paris and New York as luxury 
destinations," said Philippe Leboeuf, head of the rival Mandarin 
Oriental hotel. 
    But if the stakes are high, so could be the potential 
rewards. Revenue per room generated by five-star hotels is about 
seven times that of the hotel industry average, with annual 
occupancy rate throughout the year of about 75 percent, 
according to MKG. 
    The Peninsula's prospective clients are at the top end of a 
tourist sector which brings in 82 million visitors a year and 
contributes 12 billion euros to France's balance of payments - 
still not enough to wipe out an overall trade deficit which 
stood at 4.9 billion euros in May.  ID:nL6N0PJ1GT  
    Foreign Minister Laurent Fabius is spearheading efforts to 
persuade tourists to extend their stays in France, noting that 
Spain pulls in 30 percent fewer visitors than France but derives 
10 percent more revenue from them.  
(1 US dollar = 0.7470 euro) 
 
 (Additional reporting by Pascale Denis; Editing by Mark John 
and Alison Williams) 
 ((astrid.wendlandt@thomsonreuters.com; 33149495440; Reuters 
Messaging: astrid.wendlandt.thomsonreuters@reuters.net)) 
 
Keywords: LUXURY FRANCE/HOTEL