Hotels in Lyon: selling in a business and trade fair market

Lyon is first and foremost a business market. Regional head offices, industry, healthcare and research, business services and international institutions sustain weekday demand that tourism supplements without replacing. For a seller, that means a steadier trading account than in a resort, but one more exposed to the economic cycle and the trade fair calendar. For a buyer, Lyon is a readable, well-connected city where branded hotels hold a large share of the market.

Where demand comes from

Demand is spread across a few well-defined hubs. A hotel’s address often tells you who stays there.

• Part-Dieu, the business district built around the main station, combines office towers, a large shopping centre and rail traffic.
• Confluence, at the southern tip of the Presqu’île, mixes offices, housing and leisure on former industrial and port land.
• Gerland, in the 7th arrondissement, brings together healthcare companies, laboratories and research institutions.
• Cité Internationale, on the edge of the Parc de la Tête d’Or, is home to the Lyon Convention Centre and Interpol’s headquarters.
• Eurexpo, on the eastern side of the city, hosts the major trade fairs, including Sirha, the international food service and hospitality show where the Bocuse d’Or is held.

The Presqu’île and Vieux Lyon carry most of the leisure demand: heritage, shopping, food and cultural life.

A rail and air hub

Lyon was linked to Paris by France’s first high-speed rail line. It remains a crossroads between Paris, the Mediterranean, the Alps, Switzerland and Italy. Part-Dieu station handles most of the traffic, while Perrache serves the Presqu’île. Lyon-Saint-Exupéry airport has its own TGV station, and the Rhônexpress tram connects it to Part-Dieu.

Those links have a direct effect on value. Many business trips to Lyon are day returns. A hotel close to the stations captures arrivals the night before and multi-day stays. A poorly connected one suffers more from the same-day return. A buyer looks at the walking or tram time before even looking at the star rating.

Trade fairs, read over two years

Several of Lyon’s major events do not take place every year. Sirha and the contemporary art and dance biennales are held every other year. Other shows change dates or venues from one edition to the next. The Fête des Lumières fills the city for a few days each December.

That changes how the trading history is read:

• a year-on-year rise in the occupancy rate may reflect the calendar rather than the operation.
• RevPAR is best compared over a two-year cycle, or between years with similar event calendars.
• a business plan has to allow for years without a major show, rather than extend a strong year.

The summer lull typical of a business city, and quieter weekends outside events, are read the same way. A seller who presents the figures with the calendar alongside gains credibility. A buyer who makes the connection alone concludes that the file was presented in its best light.

Branded hotels: the contracts are part of the asset

A large part of Lyon’s hotel stock operates under a brand, through a franchise or a management agreement. In these hotels, the sale is about contracts as much as about a building.

Before approaching anyone, you need to know:

• when the agreement expires, and the terms and cost of renewal or exit
• the change-of-control clauses and the brand’s right to approve the buyer, which drive the timetable in a share sale as much as in a sale of the business
• any rights the brand holds over the sale: prior notice, right of first refusal, pre-emption
• the works required in the short term to meet brand standards, which the buyer will deduct from the price

A buyer who wants to change brand or go independent reads these contracts as an exit cost. A buyer who wants to keep the brand reads them as secured distribution. The same hotel is therefore not worth the same to both. Identifying the two profiles before the process opens tells you whom to approach first.

Independents, heritage and food

The Historic Site of Lyon, a UNESCO World Heritage Site, covers Vieux Lyon, Fourvière hill, the Presqu’île and the slopes of the Croix-Rousse. Independent hotels there often occupy old buildings: traboules (covered passageways), spiral staircases, inner courtyards. These buildings give the offer its character. They also set limits: extensions are difficult, the state heritage architect reviews visible works, and fire safety and accessibility upgrades are heavier than elsewhere. The guide CAPEX, compliance and star rating explains the effect on value.

The city’s reputation for food also gives restaurants more weight. A well-regarded restaurant carries the hotel’s image. It may also depend on a chef whose departure would weaken the whole. A buyer separates the rooms margin from the food and beverage margin, then asks what is left if the kitchen team changes.

Selling in Lyon without alerting the market

Lyon has the size of a major city and the habits of a place where everyone in the trade knows one another. Owners, operators, regional banks and brands move in the same circles. A sale can leak through an unexpected channel: a franchisor approached too early, a bank consulted about refinancing, a valuer who came to inspect the building.

A few rules follow:

• the brand is informed when the agreement requires it, on the terms it sets, and not before.
• the teaser stays anonymous, located at city or broad-area level, with no mention of the brand (“international brand” or “independent”).
• local buyers, who are best placed to recognise the hotel, only receive the file after signing a non-disclosure agreement, and only if they match the seller’s criteria.

How we work

We act exclusively for the seller, from valuation to completion, and present each opportunity to qualified buyers one at a time. Owners can read about our approach on the hotel sale advisory page. Groups and operators looking for an asset in Lyon can join the Cercle.