Spurred on by its failure to secure France’s prestigious ‘palace’ designation which recognises a top luxury destination, The Paris Ritz will close for a major renovation. Expecting to take around two years to complete the upgrade will attempt to thrust the city’s best known luxury hotel into the 21st century.

Owned by Egyptian tycoon Mohamed Al Fayed, the five-star hotel was regularly frequented by the likes of Charlie Chaplin, Coco Chanel and Ernest Hemingway and is most famously the place where princess Diana and Al Fayed’s son, Dodi, dined before their fatal car crash in 1997.

Having not had a refit since 1979 the $164 million refurbishment will incorporate a total redecoration of all the hotel’s bedrooms in its trademark tones of pink, almond green, yellow and sky blue, as well as equipping it with a new garden restaurant and fitting out its 160 rooms with “the latest technology”.

To some observers the renovation plans are long overdue.

‘It was a waste to see a hotel with such a location, with such a history, in a state like this’ said Vanguelis Panayotis, head of development at the MKG Group hospitality consultancy.

‘To justify this kind of price, you really have to offer quality on a par with the competition’.

In recent times the luxury hotel market in Paris has become increasingly competitiven. In 2010 two state-of-the-art Asian luxury hotels, the Shangri-La and the Mandarin Oriental, opened in the French capital, whilst other established Parisian luxury hotels like the Hotel de Crillon, Hotel le Bristol, Le Meurice Hotel Paris, Plaza-Athenee and Le Royal Monceau have either already undergone a full refurbishment or are currently in the process of one, raising the stakes for the Paris Ritz.

All 460 employees at the hotel have all been promised their jobs back after the renovation has been complete. In the meantime 320 have taken up a generous severance package offered by the hotel.