France, as one of the world’s top tourist destinations, is struggling with a hotel shortage. A range of factors make it very difficult to build new hotels in large enough quantities, which results in skyrocketing prices and various other problems for travellers. This trend over recent years has coincided with a significant rise in the use of Airbnb. But what is the true connection between those two events?

If Airbnb and similar companies are being targeted by public authorities for contributing to the scarcity of housing on the market, why aren’t hotel chains facing the same level of scrutiny? The answer likely lies in the lobbying power of the hotel industry.

Across the globe, cities are engaged in an ongoing battle against Airbnb and short-term rentals, introducing increasingly restrictive regulations. The common accusation against the platform is that it reduces the availability of housing for residents, prioritizing tourists instead—thereby driving up rents.

While it is understandable that authorities seek to prevent cities like Paris from becoming mere tourist hubs, why restrict short-term rentals while allowing the proliferation of new hotels each year?

While Airbnb and furnished tourist accommodation are in its sights, Paris City Hall is indeed promoting substantial development of the hotel industry. In 2008, it decided to reserve public land in order to build 7,000 rooms as part of a ten-year hotel plan. In the end, 16,300 additional rooms were created, exceeding the initial objective by more than 100%. This phenomenon does not only concern Paris: the growth in the supply of hotel accommodation is often even double or even triple that of the supply of accommodation in the major French cities.

According to the Atelier parisien d’urbanisme (Apur), an association bringing together specialists in urban planning in the capital, between 1994 and 2018, 150 hotels and 21,500 rooms were built in Paris and in the inner suburbs − i.e. 900 new rooms each year. In inner Paris, 77 new hotels and 8,700 rooms were built over the same period. In 2014, the Plaza Athénée, the illustrious Parisian hotel owned by the despot at the head of the Sultanate of Brunei, was extended after the acquisition of three buildings adjoining the historic building.

How can we solve this complicated problem? There is clearly a misallocation of space in the city. Thousands of hotel rooms are empty in Paris each evening; those square meters could be allocated to housing Parisians instead.

In inner Paris, creating new hotels generally requires transforming existing ones. Apur examined the number of building permits issued between September 2014 and December 2018 and identified a trend of net hotel creations, with a majority of cases seeing new constructions overall. And this dynamic is not showing any signs of slowing down or stopping.

There are concerns among the tourism industry about France’s ability to meet the demand of tourists wishing to visit, especially with the government setting ambitious targets for tourism. Paris is already one of the leading tourist destinations in the world, along with Tokyo and New York. Should we continue to build new hotels, even if it is to the detriment of Parisians’ ability to find housing, and then blame American tech companies for housing shortages?

Whatever is going on behind the scenes, the overarching trends are clear to see. As is so often the case with European policy in the twenty-first century, pointing the finger at a corporate giant is easier than confronting the real and complex issues facing an entire industry. Airbnb’s hands may not be clean, but for as long as French and European politicians continue to kick the can down the road, it will be tourists in France who suffer most from the stranglehold around the travel and accommodation industry’s neck.

This article was written by Florent Aubert. Florent is a French twentysomething professional working in the finance and real estate sector. He graduated in 2016 with a Master’s in law and economics, having interned at the Cato Institute and a British law firm’s Hong Kong office.

References

Apur. (2014, May). The metropolitan plan for hotels (Note No. 71).
Matus, C. (2014, July 31). A delicately managed face‑lift for a Paris beauty. The New York Times.

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