Nicolas Sarkozy's next act to be with AccorHotels

AccorHotels

AccorHotels is never boring. Whether it's acquiring a home-sharing platform, investing further in the boutique/millennial segment, or launching its own hostel-hotel hybrid, AccorHotels, today, is anything but your traditional hotel company. 

Even its hires are non-traditional. The French company has added former French President Nicolas Sarkozy to its board, but a company release made it sound like Sarkozy's role will not be nominal. He reportedly will work toward extending Accor's international reach and promoting French tourism, Accor said in a statement

In a meeting that took place yesterday, AccorHotels set up an International Strategy Committee, focused on the development of AccorHotels’ network and brand portfolio throughout the world, as well as on the promotion of French tourism. Sarkozy will presumably lead or help lead this effort. 

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Sarkozy is taking the place of Nadra Moussalem, who served as Board Director, but stepped down subsequent to Colony Capital’s decision to sell its shareholding in Accor. Sarkozy's official title is Independent Director. 

"I am glad to contribute to the development and the international reach of Accorhotels, one of France’s flagship companies. The success of the Group as well as the quality of its management are outstanding assets, shaping AccorHotels into one of the leading showcases of the French economic landscape," Sarkozy said in a statement.

Sébastien Bazin, chairman & CEO of AccorHotels, added, "The Board welcomes this new appointment. The international expertise of Nicolas Sarkozy and his perfect knowledge of geopolitical issues are tremendous assets for the Group."

Sarkozy was president of France from 2007 until 2012, when he was defeated by François Hollande. Sarkozy made another bid for president last year, but it ended when center-right voters pushed him out of his Republican party’s presidential nomination contest.

RELATED: AccorHotels CEO Sébastien Bazin will be a featured speaker at IHIF, March 6-8 at the InterContinental Berlin. He will deliver a lightning talk on the impact of digital technologies on hospitality and how to adapt to a changing market.

AccorHotels' 2016

The appointment of Sarkozy corresponded with AccorHotels reporting its 2016 performance. Consolidated 2016 revenue amounted to €5,631 million, up 2.2 percent from 2015 at constant scope of consolidation and exchange rates (like-for-like), and up 0.9 percent as reported. The increase resulted from positive business levels in most of the Group's key markets: Asia-Pacific (+5.5 percent), Americas (+4.7 percent), Northern, Central and Eastern Europe (NCEE: +4.1 percent) and Mediterranean, Middle East and Africa (MMEA: +3.8 percent).

Growth in the Asia-Pacific region was led by the development over the past three years of 252 hotels operated under franchise agreements or management contracts and by RevPAR growth of 4.9 percent in 2016.

Revenue was down 2.8 percent in France in 2016, with a -13.2-percent RevPAR decline in Paris, where demand was severely impacted by affected by recent terrorism events.

AccorHotels also said it was moving forward with a planned sale of its HotelInvest property business, which Accor said is worth 6.6 billion euros ($6.9 billion). 

"AccorHotels has posted an excellent performance for 2016 in a challenging environment, in particular with record levels of EBIT and numbers of hotel rooms opened," Bazin said. "Thanks to the efforts made by our teams around the world, we have implemented strong operational levers, which enabled growth in earnings to outpace that in revenue. We have ventured out to conquer new markets and offer new services thereby consolidating our leadership position and opening up new horizons for our clients. Carrying out our project to turn HotelInvest into a subsidiary in 2017 will give us significant headroom to seize the numerous opportunities provided by the rapid transformation of our industry."

Some analysts deciphered Bazin's last line to mean that the company wasn't done making acquisitions and would use proceeds from asset sales to fund further M&A, thereby not returning money to shareholders.

"If we tie this in with the appointment of Nicolas Sarkozy, it suggests that Accor intends to do more M&A, so it is unlikely that a significant proportion of the proceeds from the sale of the real estate division will be returned to shareholders," said Berenberg analysts and as quoted by Reuters.

AccorHotels has been busy over the past year growing via M&A; its acquisition of FRHI a prime example

Timeline of Events

On July 1, 2016, AccorHotels announced the sale of a portfolio of 85 hotels to Grape Hospitality, a European hotel platform 70% owned by Eurazeo and 30% by AccorHotels, for €504 million. The portfolio consists of 1 Pullman, 19 Novotel, 13 Mercure, 35 ibis, 3 ibis Styles and 14 ibis budget hotels, all of which will continue to be operated under franchise contracts and will benefit from an ambitious renovation program over the coming months.

On July 12, 2016, AccorHotels finalized the acquisition of the Fairmont Raffles Hotels International Group. This acquisition positions AccorHotels as a leading player in the global luxury hotel market, giving it 156 facilities of the highest quality, 39 of which are under development, and providing the Group with solid expertise in luxury hotel management and marketing, and a substantial footprint in the North American market. A global luxury/upscale division has been created within AccorHotels, and Chris Cahill - a specialist in luxury hospitality who spent part of his career heading up Operations at FRHI - has been appointed to its helm. The deal resulted in an investment by the Qatar Investment Authority and Kingdom Holding Company of Saudi Arabia funds, and the allocation of seats on the AccorHotels Board of Directors to three of their representatives, as well as three independent directors.

On July 12, 2016, AccorHotels announced plans to turn HotelInvest into a subsidiary, with the aim of strengthening its financial resources in order to accelerate its growth, while also providing a legal structure that will ultimately enable third-party investors to hold the majority of HotelInvest's capital. AccorHotels will use the additional financial leeway to develop its two business lines and seize new growth opportunities, thereby maximizing the Group's overall value.

On September 27, 2016, AccorHotels launched its new JO&JOE brand with the aim of revolutionizing the traditional codes of hospitality by blending the best aspects of private renting, youth hostels and hotels. Its objective is to offer its guests a completely revisited and disruptive experience in terms of design, food & beverage, service and customer experience. A total of 50 venues in destinations popular with Millennials are to open mid-term.

On November 7, 2016, AccorHotels and 25hours Hotels sealed a strategic partnership to create the conditions for global development for the brand.AccorHotels is to acquire 30% of 25hours and will be able to exercise a call option on up to 100% of the Company's stock over the next few years.

On November 16, 2016, AccorHotels acquired 79% of John Paul for US$120 million. World leader in concierge services, John Paul today has more than 1,000 concierges with experience built in the most prestigious luxury hotels, available 24/7 to cater to their customers' every request anywhere around the world. John Paul's global network of more than 50,000 partners and its powerful CRM software will allow AccorHotels to provide an even broader choice of services to treat all travelers to the best experience before, during and after their stays.

On December 7, 2016, AccorHotels and Banyan Tree Holdings announced the signing of an agreement for a long-term partnership. AccorHotels will invest an initial sum of SDG 24 million (around €16 million) in Singapore-based Banyan Tree. The two parties undertake to co-develop and manage Banyan Tree hotels around the world. Banyan Tree will also have access to the AccorHotels booking and sales platform and its loyalty program, Le Club AccorHotels.

On December 21, 2016, AccorHotels announced the signing of an agreement with a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA) to restructure a portfolio of 31 hotels (4,097 rooms) in Australia.
AccorHotels is to convert 15 triple-net leases into 50-year management agreements and extend the management terms of an additional hotel to 50 years (i.e. a total of 16 hotels); AccorHotels (HotelInvest) will acquire the real estate of the remaining 15 ibis and ibis Budget branded properties for around AUD$200 million (€137 million).

On January 18, 2017, Accor successfully placed €600 million in seven-year bonds with a coupon of 1.25%. This allowed AccorHotels to take advantage of favorable conditions in the credit market to optimize its financing costs and extend the average maturity of its debt.

On February 5, AccorHotels announced that it had begun exclusive negotiations for the acquisition of 100% of Travel Keys, one of the world's leading players in the luxury private rental market, with a collection of over 5,000 luxury villas spread across more than 100 destinations in the Caribbean, Mexico, Hawaii, the United States, Europe, Asia and Africa. The combination of Travel Keys with onefinestay and Squarebreak will provide AccorHotels with a unique, carefully selected addresses in the luxury private rental market, in both vacation and urban settings.

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