Forget Versailles. There are new palaces in town

John Lichfield on Paris's obsession with super-luxury hotels

Recession? What recession? Despite the lingering economic crisis, Paris is turning into a real-life Monopoly board upon which foreign players are scrambling to build luxury hotels.

Four new five-star hotels will open in Paris in the next 15 months, increasing the number of €700 (£600)-a-night-plus rooms in the French capital by 70 per cent. At least another two super-luxury hotels – known in Paris as "palaces" – are at an early planning stage.

The first new "big red token" will be placed on the giant Monopoly board of Paris in a few days' time. The Royal Monceau, previously a not-quite-top-class hotel near the Arc de Triomphe, has been transformed by the celebrated French designer Philippe Starck into a hotel, art gallery and club for what he calls the "smart tribe".

Who are the smart tribe? The answer appears to be the cooler, more reflective (or more pretentious) kind of movie and rock stars, the arty super-rich, and the people who want to be like them and near to them. Think Carla Bruni, rather than Paris Hilton. Or George Clooney rather than David Beckham.

The new hotel, gutted and rebuilt at a cost of €100m, is now a monument to high-class chic: a jumble of chandeliers, contemporary art, prints by celebrity photographers, primary colours, dark wood, shining metal and artfully scattered art magazines.

The hotel has its own luxury cinema for private showings with broad, leather armchairs and gourmet pop-corn. The 100 seats are coloured a smart ivory grey, except for one, which is a shocking shade of cerise. (Très Philippe Starck.)

The hotel (85 rooms, 54 suites, 10 prestige apartments, three restaurants, a swimming pool, a health club) will have its own art exhibitions and its own art book shop. It will provide a guitar in each room and offer free guitar lessons.

Starck said this week that the hotel – now owned by the sovereign fund of Qatar and managed by the Singapore-based Raffles hotel group – was an "attempt to recreate French modernity".

After dominating global design until the 1930s, he said, French creativity had "lost its way in the 1950s". The Royal Monceau was his attempt to say what "real French modernity should look like ... artistic, delicate, open, poetic".

Although the Royal Monceau Raffles is the first new hotel on the Monopoly board, three others will follow rapidly. All are being built, or rebuilt, with Asian or Middle Eastern capital. All are aimed at various segments of the "nouveau très riche" market: Asian business tycoons, Middle Eastern princes, Russian oligarchs and minor oligarchs and, the newest arrivals, wealthy Brazilians.

The next to open will be the Shangri-La, an 81-room hotel created by the Hong Kong-based Shangri-La group from a private mansion on the Avenue d'Iéna (with stunning views over the Seine to the Eiffel Tower). The exact opening date in early December will depend on the advice of an expert in Feng shui (the ancient Chinese art of planning for happiness).

Another Hong-Kong based hotel group will open the Mandarin Oriental (138 rooms and suites) next summer on the Rue Saint-Honoré, close to the Tuileries gardens and the Louvre. Great works are also going on to convert the old Majestic Hotel on the Avenue Kléber – latterly a French foreign ministry conference centre – back into a 200 room "palace". The new hotel, a few steps from the Etoile and the Arc de Triomphe, will be called the Peninsula-Majestic.

Like the Royal Monceau, this is an investment by Qatari Diar, the sovereign fund of the government of Qatar. It is expected to open in early 2012.

How can there be a market for so many luxury hotel rooms in Paris at a time of global economic crisis? Not everyone is suffering, it seems. According to the Boston Consulting Group, the number of dollar millionaires in the world increased by 14 per cent last year to reach 11,200,000. (Imagine a country the size of Belgium entirely composed of millionaires.) If you are a newly-minted Indian or Brazilian or Russian millionaire, your ambition is probably to display your wealth where millionaires have always displayed it.

Paris is littered with beautiful sites and shops and expensive restaurants but it is, surprisingly, under-supplied with top-of-the-range hotels. It has only seven establishments in the super-luxury class, compared to 14 in London.

Last summer, a rich Russian or Brazilian who wanted to spend a few days in Paris might have discovered that there was "no room at the palace". Occupancy of the Magnificent Seven – the Meurice, the Ritz, the Crillon, the Plaza Athénée, the Bristol, the Park Hyatt and Le Fouquet's – was over 90 per cent. The first five of these hotels are long-established. The remaining pair have been built, or upgraded, in the last eight years.

Building new Parisian "palaces" – a term that will become an official "sixth hotel category" by the end of this year – was obviously a good idea. But did too many people have the same good idea at the same time?

Philippe Starck thinks not. "These hotels are complementary, not in competition," he said. "The Royal Monceau is intended for one tribe, the Smart Tribe, people who appreciate quality, not just luxury. The other hotels will be aimed at other tribes."

Other people in the global hotel industry are more doubtful. Prices at the Royal Monceau will range from €780 a night to €20,000 for a 400-square-metre suite. The highest price at the Plaza-Athénée is €22,000 a night. The consultancy group Jones Lang LaSalle Hotels warned recently that the avalanche of high-price rooms in the next couple of years could "send the occupancy of the weaker establishments below 60 per cent". Some traditional, or would-be palaces, might be forced to offer "lower prices to generate a higher volume of clientele".

All of the luxury hotels in Paris – both the established and the new – are within 30 minutes' walk of one another on the Louvre-Champs Élysées axis or on one of the 12 avenues poking out from the Étoile. Which of them might prove to be the "weaker establishments"? Among the older hotels, two need a facelift, according to Le Monde. They are the most celebrated of Parisian palaces of them all: the Crillon, on the Place de la Concorde, owned by an American company and perennially up for sale; and the Ritz, on the Place Vendôme, owned by Mohammed al-Fayed.

There should be some good news for these grand "old ladies" by the end of the year. A government-appointed committee will decide which French hotels qualify officially for the new category of "palace". Only those which have been at the top of the market for at least five years will be considered. The upstarts will have to wait.

In the longer run, Stéphane Botz, hotel specialist at the consultants KPMG, says that the palace boom is "good news for Paris" but "not necessarily for those older establishments, which need to be renovated".

Nor is the building boom over.

The luxury goods group, LVMH, has plans to turn part of the much-mourned Samaritaine department store on the Rue de Rivoli into a luxury hotel by 2014. The Paris headquarters of HSBC bank, on a prime site on the Champs Élysées, was once the hotel in which the bungling spy Mata Hari was arrested in 1917. The building has recently been sold to a wealthy Gulf buyer. There are reports that the bank, which still contains the ornate dining room of the old Élysées-Palace hotel, may be restored to its "palatial" origins.

Anyone for Monopoly?