AccorHotels’ €148-million buy of Onefinestay shows that the French company sees profound change in the hospitality arena and looks to provide the widest possible choice for guests.
GLOBAL REPORT—AccorHotels now is in a position to “kill” any opposition coming into the luxury serviced-homes market following its acquisition of Onefinestay, according to AccorHotels Chairman and CEO Sébastien Bazin.
“We will dominate this space,” Bazin said at a small reception held Tuesday evening at a Onefinestay property in London, adding that AccorHotels would aggressively secure the luxury serviced-homes market as its own, and only its own.
“Anyone who thinks that Onefinestay is just another Airbnb clearly does not understand this business,” Bazin said.
In his speech to reception attendees, Bazin said that firms such as Onefinestay have the four attributes needed to succeed in the new hospitality arena:
- They started with a blank sheet of paper.
- They were started by people under 35 years of age.
- They fully understand the digital requirements of the new distribution age.
- They have a flat organization structure, not a hierarchal one.
Companies that do not learn to adopt elements of a flat structure will not survive, Bazin said, who added the two entities would trust and respect each other.
With that, AccorHotels said it would commit a further €64 million ($72.76 million) between now and 2018 to help the London-based firm scale internationally.
Bazin told Hotel News Now that he made the promise to expand the number of cities Onefinestay operates in by 40. Onefinestay operates in five cities now: London, Los Angeles, New York City, Paris and Rome.
Increasing the scope and footprint of Onefinestay will help Paris-based AccorHotels grow its market share and dominate the space, Bazin said.
Bazin told HNN that the roster of 2,600 Onefinestay properties will be added to AccorHotels’ growing booking platform. Just last year the company started to allow handpicked independent hotels on the platform.
The company regards Onefinestay’s business to be worth about €32 billion ($36.38 billion) in the upscale urban leisure market and double that for the upscale business market, once it expands, according to company materials.
Greg Marsh, co-founder and CEO of Onefinestay, told HNN that he started talks with AccorHotels last September and has since been “excited about our new beginning.”
“We talked to a lot of companies about Onefinestay’s next chapter, but pretty quickly we saw that (AccorHotels) just gets it,” Marsh said. “It understands where hospitality is going.”
Guest mix and operations
When it comes to guest mix, Bazin told HNN that the buy will complement the company’s in-the-works acquisition of FRHI Hotels & Resorts, because both address the same luxury guest but at different length-of-stay points.
If guests want to stay for two or three days, likely they will choose a suite; if a week or more, then a Onefinestay home, he said.
Bazin said that if 2% of AccorHotels’ guests also become Onefinestay guests, Onefinestay’s revenue would grow 10%.
On the business side, Bazin said he has a target of having Onefinestay reach break-even point by 2019.
AccorHotels will manage and report Onefinestay separately, effective by its half-year 2016 results in July, according to company literature.
Onefinestay provides services to guests such as regular housekeeping and meet-and-greet. Onefinestay employees provide these services, but Bazin said Onefinestay would be stretched to continue that as AccorHotels’ cash injection ramps up the company significantly.
Bazin said AccorHotels’ employees would increasingly adopt this requirement, pointing to recently instigated initiatives concerning employee training and guest service.
AccorHotels isn’t the only hotel company to show interest in Onefinestay. Hyatt Hotels Corporation tested the luxury serviced-home market last June, when it announced it had invested $40 million in a Onefinestay fundraising round.
Following the news of AccorHotels’ acquisition, Hyatt issued the following statement to HNN, which was attributed to its president and CEO Mark Hoplamazian.
“We wish our friends at Onefinestay continued success. We have learned a lot about their business and this segment in our work together. … Our ‘test and learn’ approach, including our investment with Onefinestay and our exploration of other alternative-accommodation platforms, underscores our focus on understanding our guests and providing them with distinctive, powerful experiences.”
This move also isn’t AccorHotels’ first dip into alternative accommodations.
In February, the company bought a 49% stake in Squarebreak, a French start-up company that offers guests private upscale properties in resort locations throughout France, Spain and Morocco. At the same time, it also bought 30% of Oasis Collections, described as a “curated marketplace for private rentals” and which has a Latin American bent. Its 1,500 assets also include properties in Europe and the United States.