Buys, earnings affirm Accor’s dual strategy
Buys, earnings affirm Accor’s dual strategy
16 OCTOBER 2015 8:35 AM
AccorHotels buys, sells, is comfortable with most business models and is plowing a lone strategy that just might, some analysts claim, see a sale of one of its two divisions.
PARIS—AccorHotels on 16 October bought a portfolio of 43 hotels (4,237 rooms), all in France, from its principal lease partner, publicly traded real estate investment trust Foncière des Régions. The  €281-million ($321-million) move continues the French hotel giant’s continued transformation of its ownership and investment division HotelInvest, a process that started with the August 2013 appointment of its current CEO Sébastien Bazin.
For AccorHotels, the buy also continues its solitary path in not following most global chains’ strategies of being asset-light. It further underlines the possibility some analysts feel that soon it will sell one of its two divisions—investor and owner HotelInvest or operator HotelServices.
In the company’s third-quarter earnings report published Wednesday, AccorHotels stated that the HotelInvest portfolio comprised 1,327 hotels, of which 58% is in Europe and 94% is in the economy and midscale segments. Since the beginning of the year, HotelInvest has restructured 75 hotels, including the €209-million ($239-million) sale and franchise-back of a portfolio of 29 hotels in Germany and the Netherlands sold on 30 September 2015.
With this deal, that makes 118 hotels, the properties in question having been operated by AccorHotels over the past 10 years or so under variable leases. Most of the hotels are in the economy sector, according to a news release accompanying the deal
In that same release, Bazin said the transaction cemented his company’s position as “Europe’s leading hotel investor in the economy and midscale segments.”
Wide-ranging skill sets
The 43-property buy also suggests AccorHotels is becoming comfortable overseeing a wide range, especially across Europe, of different business models, including owner-operating, leasing and third-party management.
In the United Kingdom, AccorHotels announced on 5 October an agreement with Amaris Hospitality Limited—the recently formed management company of hotels and portfolios grouped together over the past few years by United States’ private equity company Lone Star—to manage 11 hotels (1,617 rooms) under AccorHotels’ midscale Mercure brand. 
That deal, which includes hotels in Aberdeen, Bristol, Liverpool, Manchester and Newcastle, means Accor has approximately 220 properties in the U.K., according to Thomas Dubaere, AccorHotels’ managing director in the United Kingdom and Ireland.
Speaking to Hotel News Now, Dubaere said the immediate goal for the U.K. arm is to have 300 properties with a combined 40,000 or so keys.
“These additional hotels will be mainly, around 80%, in the midscale and economy sector, the other 20% being upscale and luxury. And the good thing about the U.K. is that it is not just about London anymore,” he said.
Dubaere said the growth will be mostly in the Mercure brand, the properties of which would all show personalized touches dependent on their markets. Growth also will come with Ibis, which will all be the same, he said.
“Amaris is a very serious, professional partner,” he added.
“We are not at saturation, and we need to differentiate. People need clear brands, and we are in the perfect position to capitalize on different fundamentals in different markets with our two distinct divisions, each with expertise,” Dubaere said.
One major project up next in the U.K. is a £110-million ($170-million) development in London’s financial district Canary Wharf, Dubaere said. The Novotel property is due to open next year.
“We are now liaising on that as HotelInvest, as it might work better as a franchise. That’s the nice thing about our model—we can optimize each asset as much as possible. Our doors are wide open,” Dubaere said.
Third-quarter health
Overall, AccorHotels continues to see healthy returns.
In its third-quarter earnings, overall revenue increased 2.4% to €1.49 billion ($1.7 billion). However, the company’s major market of France remained sluggish, while Brazil was of concern.
HotelInvest saw a 0.1% increase in revenue to €1.3 billion ($1.5 billion). During the quarter, 55 properties comprising 8,443 rooms were added to the portfolio. Eighty-two percent of the additions are under management and franchise agreements.
HotelInvest revenue derived from its French operations fell by 0.5% like for like.
Bazin said that in light of the third-quarter numbers that AccorHotels would refine the range of its 2015 earnings before interest and tax forecast to between €655 million ($749 million) and €675 million ($772 million). 
According to Bazin in that same news release accompanying the earnings statement, this is “a narrowing around the midpoint of the range given in July.” Then, in its half-year earnings statement, company executives forecasted full-year EBIT to be between €650 million ($743 million) and €680 million ($778 million).
Julien Richer, sell-side analyst, hotels and leisure, at Raymond James, said the market is feeling “very perky” about AccorHotels. He “saw no contradiction in the company’s dual-pronged approach “if at the end of the day their aim is to sell one of their divisions.”
Richer remains bullish about the French company’s prospects.
“Firstly, in this latest quarter, it traded in line with its performance in H1 (2015). Secondly, unlike the clear strategy in the United States, which is more focussed on the asset-light model, Europe is an environment still mainly of independent hotels. And as the only huge European hotel company—IHG has European roots but does not feel like a European company—it is in a unique position to optimize its portfolio by being active in both spheres,” Richer said.

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