The multinational hospitality group AccorHotels agreed to sell a 55% stake in its hotel property business, AccorInvest, for $ 5.3 Bn, with significant stakes acquired by the Public Investment Fund of Saudi Arabia, Singapore’s public sovereign wealth fund GIC, Credit Agricole Assurances, Colony NorthStar and Amundi Private Equity Funds. The transaction is subject to antitrust and regulatory approvals and is expected to be finalized in Q2 of 2018.
AccorHotels was in reorganization since 2013 when chairman and CEO Sébastien Bazin, a private equity specialist, took over. The company was split into two divisions: HotelServices, a hotel operating and franchising arm, and HotelInvest, real estate ownership, and property business. The property arm HotelInvest was spun off into a separate legal entity in 2017, AccorInvest, in order to attract new investors. Through the sale, Accor wants to free up cash for acquisitions, renovate existing properties and fund new developments. The deal is designed to prepare the Group for the challenges facing the world’s biggest hotel companies: rising competition from digital platforms like Airbnb and a squeeze on margins from online travel agents such as Priceline and Expedia.
The luxury AccorInvest properties included in the sale will be operated by AccorHotels under 50-year contracts, with 15-year renewal options, while hotels in the midscale and economy segments will be subject to 30-year contracts. Following the closing of the transaction, AccorHotels intends to implement over a two-year period a share buyback program of up to € 1.35 Bn, around 10% of its share capital based on current market capitalization. Bazin suggested the company would be willing to further reduce its holding in AccorInvest in the future. The company expressed confidence over prospects for this year and over potential returns to investors once the property deal is sealed.
Accor is a French hospitality group with more than 4,300 hotels operating under 28 brands, ranging from the luxury Sofitel to the budget Ibis brand. The company employed 250,000 people in 100 countries and had revenues of € 5.6 Bn in 2016.
AccorInvest is the world leader in hotel real estate, with a current portfolio of 891 hotels and nearly 30,000 employees across 27 countries. The majority of these hotels are located in Europe, in the economy and midscale segments. Of the total, 324 are owned and 567 are operated under fixed or variable lease terms.
