AccorHotels grows in Asia via alliance and M&A

In spite of the economic tumult of the last decade, France's AccorHotels has successfully grown every brand in its portfolio across China. In Greater China, AccorHotels currently has 189 operating hotels across 13 brands in 72 cities.

The company's alliance with China Lodging Group (which also operates under the name "HuaZhu"), finalized in January 2016, brought some 86 AccorHotels-branded properties under the Huazhu structure. “The deal is transformational for Accor,” AccorHotels Global CDO Gaurav Bhushan told HOTEL MANAGEMENT earlier this year, calling China—along with the U.S.—“the largest and most important hospitality market globally.” 

The benefits were immediate: In the first quarter after the alliance was finalized, China Lodging Group's net revenues rose 18.8 percent year-over-year to $223 million, exceeding the high end of the guidance. The group credited its year-over-year average daily rate increase of 2.5 percent to a "more favorable brand mix with an increased proportion of midscale and upscale hotels."

FREE DAILY NEWSLETTER

Like this story? Subscribe to IHIF!

The hospitality industry turns to IHIF International Hotel Investment News as the must-read source for investment and development coverage worldwide. Sign up today to get inside the deal with the latest transactions, openings, financing, and more delivered to your inbox and read on the go.

HuaZhu opened 800 hotels in China in 2015, Bhushan said, and will continue to develop its own brands as well as Accor’s midscale properties. Currently, the two companies are aiming to open 50 economy and mid-scale hotel brands for ibis, ibis Styles, Mercure and Novotel across mainland China under Huazhu alliance over the next three years.

In July 2016, AccorHotels acquired the Raffles, Fairmont, and Swissôtel brands under the FRHI banner, adding 155 hotels and resorts to the company's global network, including nine properties in Greater China. The portfolio under the luxury and upscale division now includes Raffles, Fairmont, Sofitel Legend, SO Sofitel, Sofitel, onefinestay, MGallery by Sofitel, Pullman and Swissôtel.

But not every connection with China has been positive. Just days before the the FRHI deal was completed, Shanghai-based Jin Jiang International Hotels—which held an almost 16-percent stake in AccorHotels—attempted a takeover of the European company, forcing AccorHotels to scramble to block the move. As of the fourth quarter, no further progress has been made on the attempt.  

This year, AccorHotels opened 15 hotels under the Fairmont, Sofitel, Pullman, Novotel and Mercure brands. Next year, the group will open another 15 hotels across Greater China, including the Fairmont Chengdu, Fairmont Wuhan, Sofitel Guiyang Hunter, Sofitel Foshan, Pullman Zhouzhuang Resorts & Spa, Pullman Baotou and Grand Mercure Zhengzhou Xintian Town.

Beyond China

As of the past spring, AccorHotels had 160,000 rooms set to open in the coming years—a record for the company. Nearly half of these will be located in the Asia Pacific region, Bhushan said at the time. 

Over the next three to five years alone, AccorHotels will add 300 hotels in the Asia-Pacific area to its portfolio across all segments, bringing its total network to 1,050 in the region. "Asia-Pacific is one of our top-performing markets," Arif Patel, VP of sales, marketing and distribution in India for AccorHotels said over the summer. 

Suggested Articles

GSD Group acquired the rights to build video game-themed Atari Hotels in the United States, with the first to break ground in Phoenix.

The new Arbor prototype is meant to minimize costs while incorporating natural elements.

As well as acquiring a stake in the company, The Silverstone Cos. has also gained exclusive rights to development in Asia.