www.Buy2Greece.com – AccorHotels eyes global growth with deals

AccorHotels COO John Ozinga spoke about the France-based company’s strategy and development plans and gave the rationale for some of the company’s recent deals.

One of AccorHotels’ strategic focuses is to concentrate on its midscale brands, including Mercure. The property shown here is the Mercure Brignoles Golf de Barbaroux, just north of Toulon in southern France. (Photo: AccorHotels)

PARIS—John Ozinga, COO of AccorHotels’ ownership and investment division HotelInvest, said his company is eyeing global growth as its parent company wraps up a wave of major mergers-and-acquisitions activity.

AccorHotels, based in Paris, has 15 brands and an overall room count of 511,517. At press time, its market capitalization was €8.6 billion ($9.6 billion).

The company is aggressively growing its lodging footprint with the April buy of alternative accommodations provider Onefinestay and the pending $2.8-billion acquisition of FRHI Holdings Limited, which includes luxury brands Fairmont, Raffles and Swissôtel. When the FRHI merger is finally completed, it will add 115 hotels and 43,000 keys to AccorHotels’ platform.

In October 2014, AccorHotels acquired a 35% stake of design-led boutique chain Mama Shelter.

Having a large international footprint allows issues in one region to be offset with growth in others, Ozinga said.

In a world of constantly changing economics, Ozinga said AccorHotels sees the need to constantly tweak its offerings.

“Our goal has been to restructure our portfolio and step out of leases, which we can do by different means, by the sale and franchise-back of properties or by renegotiating leases on individual or portfolio bases,” Ozinga said.

Ozinga said AccorHotels completed 48 sale-and-franchise-back deals in 2014 and the number of transactions nearly doubled in 2015.

AccorHotels has bought several portfolios in recent years, which Ozinga said is the preferred approach over acquiring individual properties.

“We are focused on Europe, depending on where opportunities are, and restructuring our portfolio,” he said. “The advantage of doing it this way, of buying portfolios, is it allows us to accelerate the overall process. We did a lot of lease backs for a number of years, but we’ve always opened hotels, too.”

AccorHotels has a firm grasp of which parts of its portfolio need to be restructured, Ozinga said, which allows capital expenditure to be allocated far more strategically. He called this “a virtuous circle that improves operating margins.”

Ozinga said the company will likely do more selling than buying in 2016. In January, the company announced its intent to sell 85 European hotels for an asset value of €504 million ($565.5 million).

Pipeline outlook and China prospects
Projects in the United Kingdom and London are high on AccorHotels’ priorities, Ozinga said. The company has five hotels in the pipeline, including the 313-room Novotel London Canary Wharf and the 196-room Ibis Canning Town, London. Both properties are scheduled to open in 2017.

“We have a very accepted brand family in the U.K., which allowed us to secure projects in very sought-after locations such as Canary Wharf,” Ozinga said.

China is AccorHotels’ largest focus, Ozinga said, which was evident in January when the company struck a deal to obtain a 10.8% stake in Chinese hotel firm Huazhu Hotels Group.

“We have that stake now, and in return we have a massive franchisee in China that will open 350 to 400 hotels over the next five years, together with our combined loyalty programs,” Ozinga said. “It’s definitely a win-win situation.”

Ozinga said he was not worried either about industry cycles or real estate values.

“Economies are different in different countries,” Ozinga said. “Since the year started, we have announced big transactions and executed what we promised to do. We’ll continue to do that.”

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