AccorHotels’ $2.7 billion purchase of Fairmont Raffles Hotels International was the biggest of many investments and acquisitions the company made within the last year. AccorHotels
Skift Take: AccorHotels is buying up and/or investing in a lot of other companies in its pursuit to become an entirely new breed of hotel company.
If it feels to you as though AccorHotels has made a new deal every few weeks or days for the past year, you wouldn’t be far off the mark.
Indeed, the Paris-based hospitality company has completed a number of investments over the past year, snapping up other hotel brands or entering into partnerships with them, getting into alternative accommodations, and acquiring adjacent businesses that can supplement its core hospitality business.
It’s only April now, and already the company has announced five deals and partnerships for 2017. In 2016, the company had approximately eight of those transactions, the largest of them being its $2.7 billion purchase of the Fairmont, Raffles, and Swissotel brands.
What follows is a closer look at each of AccorHotels’ most recent acquisitions and/or investments, including some insight into why and how each one plays a part in the company’s plans to be a new kind of hotel company.
Joining the Alternative Accommodations Revolution
Unlike its peers, AccorHotels hasn’t been shy about actively investing in or even buying alternative accommodations providers. While the rest of the hotel industry is content to say that sharing economy businesses like Airbnb and the like aren’t much of a threat, or that they cater to a different clientele, AccorHotels CEO Sebastien Bazin thinks that kind of thinking isn’t just bad but “irresponsible.”
“It would be absolutely foolish and irresponsible to fight against any new concept, offer, or services like this, let alone fighting against the sharing economy,” Bazin told Skift shortly after the company announced its $168-million purchase of onefinestay. “This is where the world is leading us. All of those new services are very powerful and very well implemented and executed. You need to embrace it.”
In addition to buying onefinestay last year, Accor also made a 49-percent investment in Squarebreak, a French-based high-end vacation rental platform that specializes in Europe, and 30-percent investment in Oasis, a Miami-based platform for “home meets hotel” lodging.
Earlier this year, Accor also announced its intent to buy Atlanta-based Travel Keys, a private vacation rental broker with more than 5,000 villas worldwide. Accor has said it expects to close this deal by the second quarter of 2017.
With each of these investments, it’s clear that AccorHotels is positioning itself for a long-term advantage over its peers, and even Airbnb itself, especially now that Airbnb also owns its own private, luxury vacation rental platform too. When combined, each of AccorHotels’ investments fill out a comprehensive portfolio of alternative accommodations, from upper upscale (Oasis and Squarebreak) to luxury (onefinestay and Travel Keys).
Source: AccorHotels financial filings
Expanding Its Luxury Portfolio
Another area in which it’s clear AccorHotels wants to grow its portfolio is its collection of luxury hospitality brands, a sector where Bazin has admitted AccorHotels has previously lacked strength and expertise. Now, however, with AccorHotels’ multi-billion-dollar purchase of the Fairmont Raffles Hotels International (FRHI) in 2016, as well as its strategic partnership and 5-percent investment in Banyan Tree, the company is proving it’s a formidable player in the luxury space.
Last year, the company carved out its own luxury division, AccorHotels Luxury Brands collection, to be led by veteran luxury hotelier Chris Cahill who previously served as COO of FRHI until 2012. This division includes the Fairmont, Raffles, Swissotel brands, as well as the Sofitel, Pullman, and MGallery brands, among others.
And while AccorHotels’ partnership with Banyan Tree could prove challenging, the company is already seeing success since its acquisition of FRHI last summer. During AccorHotels’ full year 2016 earnings presentation, Bazin said, “Within barely seven months we have signed 20 new contracts at Fairmont, Raffles — more than they had signed over the last two years in fact.”
Forming Very Strategic Hotel Partnerships
In addition to AccorHotels’ partnership with Banyan Tree, the company has also made a number of focused investments in other hotel companies — Huazhu, 25hours Hotels, and Rixos Hotels — in an effort to grow the company’s presence in these global regions (China, Germany/Europe, and Turkey).
The first of these was with China-based Huazhu, which is listed on Nasdaq as China Lodging. In January 2016, Accor struck a deal with Huazhu to work with the company to grow its portfolio in China and in doing so, it signed contracts for 70 hotels in 2016 alone in China, three times more than the company did in 2014, and with another 150 in Accor’s pipeline. As part of Accor’s partnership with Huazhu, Accor also took a 10-percent stake for $193 million in the share capital of Huazhu, and Bazin joined Huazhu’s board of directors. That investment, Bazin said, has more than doubled to be worth $390 million as of February of this year.
“That’s because this market cap has increased from €1.9 billion to €3.9 billion on the NASDAQ, the market cap,” he said. “And the last year in China, we probably made much more than we made in China over the last 35 years. That was exactly what we told you we would do a year and a half ago when we talked with you about this partnership in China.”
In November 2016, AccorHotels announced it had made a 30-percent investment in Hamburg-based boutique/lifestyle chain, 25hours Hotels, in an effort to help that brand grow globally. 25hours Hotels CEO Christoph Hoffmann told Skift that AccorHotels wants to help his brand grow in markets that include Asia and the U.S. and to increase the brand’s distribution channels.
In March 2017, the company also announced a long-term joint venture with Antalya, Turkey-based Rixos Hotels, which operates 20hotels primarily in Turkey and the Middle East. Under this partnership, AccorHotels will eventually own a 50-percent stake in the joint venture management company and will integrate 15 Rixos properties into its network. The remaining five city center hotels will be reflagged to AccorHotels brands and will be managed by Accor.
Adding Complementary Services
AccorHotels’ ambitions of being a new breed of hospitality company are also reflected in its investments into complementary service providers like concierge service John Paul, and soon enough, events specialist Potel & Chabot.
During the company’s most recent investor presentation, Bazin said the addition of John Paul, in particular, would play a major role in how people interact with AccorHotels as part of its efforts to provide services for locals who live and work near the company’s hotels. Accor bought an 80-percent stake into John Paul in November 2016.
“What can I offer them by way of service?,” Bazin asked the audience. “Food and beverage? Dry cleaning? Key service? Leave their luggage? Recover a rental car? Drop it off? When you enter that universe, you say, ‘My God, I have everything that the digital world wants.’ I have John Paul [concierge services] where I can interact with them. [We’re] changing, radically, your mindset, and entering revenue that can grow 20 to 30 percent a year.”
In March, AccorHotels announced it would partner with Edmond de Rothschild Investment Partners to buy French events company Potel & Chabot, which operates major sporting events like the French Open tennis tournament and the 24 Hours of Le Mans endurance race. If Accor is successful in the deal, it will own 40 percent of the company, its partner will own 51 percent, and the remaining 9 percent will be retained by current majority stakeholder 21 Centrale Partners.
AccorHotels has said that an investment in Potel & Chabot would help the company develop new food and beverage offerings for MICE (Meetings, Incentives, Conferences and Events) guests, as well as locals through a concierge service. Investing in the company would also open up opportunities for Accor to offer exclusive experiences at these events for its loyalty members.
Following AccorHotels 2015 acquisition of Fastbooking, which allowed the company to open up its booking platform to independent hotels who are not otherwise affiliated with AccorHotels, the company has also made a number of recent investments into driving even more hotel bookings, both for its own properties and those independents whom it works with via Fastbooking.
Both of these very recent investments include the April 3 acquisition of VeryChic, a website platform that specializes in flash sales for hotel rooms, and the April 5 purchase of digital specialist Availpro for an undisclosed amount.
All three of these investments (Fastbooking, VeryChic, and Availpro) demonstrate Accor’s commitment to being a trusted third-party provider of services for independent hotels, and not just the hotels it directly operates or manages.
Graphic Design: Ping Chan