Single-Use Status of Hotels
Hotels have long been treated as the paradigm single-use premises: built for a specific use and incapable of conversion to another activity without major and costly works. The single-use classification gives them access to the derogatory rent regime of Article R. 145-10, which exempts them from the standard five-criterion market-value framework and from the capping rule of Article L. 145-34.
Hotels with Mixed Activities
The presence of complementary activities alongside the hotel does not automatically destroy single-use status. Where the hotel tenant operates ancillary activities serving the same client base (bar, restaurant), with the same entrance, laid out as a single integrated exploitation, monovalence is retained (Cass. 3e civ., 30 June 2004). It is lost where the ancillary activity is independently significant, has its own entrance and its own client base. Ground-floor shops sub-let by the hotel operator to third parties do not exclude monovalence (CA Paris, 2 March 2011).
The Hotel Valuation Method: Pre- and Post-October 2016
The hotel method assesses the potential of the premises — not the operator's actual accounting results. Both versions use theoretical revenue, an occupancy rate, and a revenue-to-rent percentage (taux d'effort). The 2016 revision addressed the structural changes in the hotel sector: management contracts, OTA dominance, and revenue management pricing.
Step 2 — Occupancy rate: for Paris: unclassified 100%; 1-star 90%; 2- and 3-star 75%; applied by reference to comparable establishments.
Step 3 — Taux d'effort: inversely proportional to star rating (see table below). These figures were indicative — other factors could adjust.
Step 2: deduct VAT, OTA commissions, and corporate contract discounts to produce net theoretical revenue.
Step 3: derive "normative turnover" from location/premises characteristics, independent of operator's commercial choices.
Step 4: assess relative contribution of landlord (physical premises) vs tenant (services, brand).
Step 5: revised taux d'effort (see table). Serviced apartment-hotels: 25–35%.
Step 6: downward corrections for exorbitant lease charges. Manager's accommodation assessed by hotel method for the whole premises (Cass. 3e civ., 22 June 2022).
| Hotel category / location | Pre-2016 taux d'effort | Post-2016 taux d'effort |
|---|---|---|
| Palace / luxury 5-star | 10–11% | 12–15% |
| 4-star | 12–13% | 15–18% (city-centre or peripheral) |
| 3-star | 13–15% | 15–18% (city-centre or peripheral) |
| 2-star | 14–16% | 18–21% (standard, moderate ancillary services) |
| 1-star | 16–18% | 18–21% (standard, moderate ancillary services) |
| Prefecture / unclassified | 17–22% | 21–25% (secondary locations, lodging only) |
| Serviced apartments (résidences de tourisme) | — | 25–35% |
The Tenant Works Regime: Article L. 311-1 Code du Tourisme
Article L. 311-1 of the Code du tourisme gives hotel tenants who own the fonds de commerce a statutory right to carry out improvement and equipment works at their own expense, which the landlord cannot oppose even if those works affect the layout of the premises — any lease clause restricting works is disapplied as contrary to public order (Cass. 3e civ., 3 May 2007). The works covered are an exhaustive list: water, gas, and electricity distribution; telephone and media reception; sanitary equipment; drainage; central heating, air conditioning; lifts; kitchen and pantry fit-out; swimming pool construction. Where works affect the main structure (gros œuvre), the landlord must be notified and has two months to respond; silence constitutes acceptance.
The notification must be by registered letter with a plan, specifications, and an estimate (devis). A general lease authorisation to carry out works does not waive the notification requirement (CA Aix-en-Provence, 19 October 2012).
Failure to follow the notification procedure has three consequences: (1) loss of the twelve-year abatement; (2) the works are taken into account from the first renewal (not the second); and (3) the landlord may pursue termination or refuse renewal on grounds of serious breach. Each tranche of works should be notified separately — where works are carried out in phases, each tranche triggers its own twelve-year period (Cass. 3e civ., 13 November 2013).
The Twelve-Year Abatement (Art. L. 311-3)
Where the notification procedure is correctly followed, Article L. 311-3 prohibits any rent increase attributable to the improvements for the current lease, the following renewed lease, and twelve years from the expiry of the two-month notification period. An abatement of 10–50% is applied to the hotel rental value to reflect the tenant-funded improvements during this period. The twelve-year period runs from the date the works are completed, not from the date of the landlord's authorisation (Cass. 3e civ., 13 November 2013). If the twelve-year period straddles two lease terms, the abatement applies for the residual period and the full market value then applies for the remainder.
Exorbitant Charges and Downward Adjustments
Where the lease transfers charges that normally fall on the landlord, the gross hotel rental value is reduced accordingly. Standard adjustments: major structural repairs under Art. 606 Civil Code borne by the tenant (3–15%, subject to Pinel reform restrictions); compliance works borne by the tenant (cost spread over 18 or 9 years, typically 6–12% per year); building insurance and taxe foncière borne by the tenant (deducted at actual amounts paid). The standard market-value adjustment provision of Art. L. 145-8 does not apply to hotel single-use premises — the adjustments are made within the hotel method itself (Cass. 3e civ., 5 October 2017).
Non-Renewal and Tenant's Departure
Article L. 311-4 of the Code du tourisme contains two important rules. First, the tenant is not required to restore the premises to their original condition on departure — restoration clauses (clauses de nivellement) are prohibited and ineffective. The landlord takes the premises back in their current state. Second, where the landlord refuses renewal, the eviction indemnity under Art. L. 145-14 of the Code de commerce is calculated taking into account the plus-value added to the fonds de commerce by the works listed in Art. L. 311-1 — producing a higher eviction indemnity for hotel tenants who have invested in the premises.
- Single-use status (Art. R. 145-10): hotels are exempt from Arts. L. 145-33 and L. 145-34 — no five-criteria assessment, no rent cap. Mixed activities: bar/restaurant for same clientele = monovalence retained (Cass. 3e civ., 30 June 2004); independent activity with own entrance/clientele = monovalence lost.
- Hotel method: based on premises potential, not actual accounts. Pre-2016: rack rate → occupancy rate → taux d'effort (10–22%). Post-2016 (from 1 Oct. 2016): achievable rate (not rack rate); OTA commissions deducted; normative turnover; revised taux d'effort (12–25%+). Manager's accommodation: hotel method applies to the whole (Cass. 3e civ., 22 June 2022).
- Tenant works — notification required (Art. L. 311-1/L. 311-2): registered letter with plan, specifications, and estimate. Works affecting structure: 2-month landlord response period; silence = acceptance. Lease clause restricting works is disapplied (Cass. 3e civ., 3 May 2007). Notify each tranche separately — each triggers its own 12-year period.
- 12-year abatement (Art. L. 311-3): 10–50% abatement on hotel rental value during current lease + renewed lease + 12 years from works completion date (not authorisation date — Cass. 3e civ., 13 Nov. 2013). Non-notification: abatement lost; works taken into account from first renewal; risk of termination.
- Departure (Art. L. 311-4): no restoration obligation — clauses de nivellement are prohibited; landlord takes premises as improved. Eviction indemnity: enhanced by plus-value from Art. L. 311-1 works. Exorbitant charges: deducted within the hotel method itself — Art. L. 145-8 does not apply (Cass. 3e civ., 5 Oct. 2017).
The hotel valuation method, the Art. L. 311-1 notification procedure, and the twelve-year abatement calculation all require precise documentation and timing. We advise hotel landlords and tenants on every stage of the renewal process, works notification, and eviction indemnity disputes.
Book a ConsultationThis article is for general information and educational purposes only. It does not constitute legal advice and does not create a lawyer-client relationship. Laws and regulations may have changed since publication. Always seek qualified French legal advice on hotel leases in France.
Key Legal References
Single-use premises: derogatory rent regime by reference to sector custom; exempt from Art. L. 145-33 criteria and Art. L. 145-34 cap
Mixed activities with same clientele: monovalence retained
Hotel tenant statutory right to carry out listed improvement works; landlord cannot oppose
Lease clause restricting works under Art. L. 311-1 is disapplied as contrary to public order
Notification procedure: registered letter with plan, specifications, and estimate required
12-year abatement: rent increase attributable to notified works prohibited; 10–50% abatement applied
12-year period runs from works completion date, not from date of landlord’s authorisation
Non-notification: works taken into account from first renewal (not second); abatement lost
No restoration obligation on departure; eviction indemnity enhanced by plus-value from Art. L. 311-1 works
Manager’s residential accommodation: hotel method applies to the whole of the leased premises
Art. L. 145-8 standard market-value adjustment inapplicable to hotel single-use premises; adjustments made within the hotel method
