Nicolas Sarkozy's plan to rent out L'hôtel de la Marine on Place de la Concorde, linked to the revolution, angers historians

Paris boasts so many historic monuments it has been called a living museum. But now Nicolas Sarkozy is under attack for seeking to sell the capital's heritage to luxury hotel chains.

Historians are outraged at government plans to rent out one of France's most important palaces, L'hôtel de la Marine on Place de La Concorde.

A symbol of the nation's bloody history, the palace was the site of the first riots that led to the French revolution in 1789. King Louis XVI and Marie-Antoinette were guillotined outside it.

Designed by the architect Ange-Jacques Gabriel, it is one of the best examples of 18th-century royal architecture and its intact collection of furniture and decor is unrivalled, even by the palace of Versailles. But the state-owned building could be transformed into luxury boutiques, plush suites for billionaires or a hotel with swimming pool.

Last month a discreet advert was posted on the site of the French budget ministry advertising the building for long-term lease to private firms which will be encouraged to renovate it.

The French navy, based in the building since the revolution, will leave in 2014 for more modern headquarters. The government has complained it cannot afford the upkeep of the listed landmark, with its hundreds of rooms and grandiose courtyards.

In an open letter to the French president, published by Le Monde newspaper, a group of influential historians said they were "revolted" by the plan to "flog" the palace and reduce it to a "commercial circus".

Sarkozy, who is under fire for building a much-maligned museum of French history, has often complained the country has lost its memory and connection with the past. "France has not lost its memory, it is selling it!" the historians raged.

The former president Valéry Giscard d'Estaing has joined the protest. Art experts are concerned the rent deal, billed as an open contest, is a stitch-up favouring a multinational finance group advised by a former culture minister. The applications process closes next week.

In a drive to develop French heritage sites, an abandoned outbuilding of the palace of Versailles is to be transformed into a luxury 23-room hotel by a Belgian company. The palace of Fontainbleau, south of Paris, will ask for bids to convert its listed barracks.

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