The story behind AccorHotels, Grape Hospitality and a €504M hotel portfolio

(Novotel Paris)

Earlier this month, AccorHotels sold a portfolio of 85 hotels in Europe for €504 million to Grape Hospitality, the platform in which it has a 30-percent stake.

The hotels will remain under franchise agreements with AccorHotels and will undergo an “ambitious” renovations program as it seeks to become “a major hotel investment player in the European market.”

The remaining 70 percent of Grape is owned by AccorHotels’ shareholder Eurazeo, with the pair having previously commented that they “may rapidly be joined by a third institutional investor.”

“This operation substantially accelerates the repositioning of HotelInvest assets and appreciably boosts their profitability,” John Ozinga, CEO of HotelInvest, AccorHotels’ ownership division, said. “We are very happy to contribute to the emergence of a sizable new hotel investor in the European market, which will be a strategic partner for the group's future.”

The entity will have access to what were described as “significant resources” to restructure and develop its portfolio, including a budget of more than €100 million for hotel renovations. It will be Accor’s HotelServices’ largest franchisee.

Eurazeo said that it wanted to create “a major hotel investment player in the European market. The goal of Grape Hospitality is to revitalize this hotel portfolio, which features a solid positioning and extensive presence within the various markets. Accordingly, Grape Hospitality will develop the entire hotel portfolio and add to its value by deploying an ambitious renovation program, in addition to a marketing and sales strategy geared towards the local market of each hotel.”

The asset value of €504 million includes: 28 hotels assets and the business interest of all 85 hotels, sold by AccorHotels for €146 million and 57 hotel assets covered by the purchase agreements containing a substitution clause for the buyer signed with Foncière des Régions, Axa IM – Real Assets and Invesco, for a total of €358 million.

The newly created structure will be led by Frédéric Josenhans, formerly managing director of the Mercure and Novotel brands.

The portfolio transferred to Grape Hospitality consists of one Pullman, 19 Novotel, 13 Mercure, and 35 ibis, three ibis Styles and 14 ibis budget hotels. Most of these establishments are located in France (61 hotels primarily in provincial towns and on the outskirts of conurbations), but also in Spain, Italy, Portugal, Germany, Austria, Belgium and the Netherlands.

At the end of 2013, AccorHotels announced that it was splitting the company into two fields of expertise: operating and franchising hotels (HotelServices) and owning and investing in hotels (HotelInvest). The company then acquired a number of hotels, with deals including the €722-million acquisition of 86 European hotels from investor Moor Park and 11 hotels across Switzerland.

The group has also tapped the capital markets twice, further adding to its financial firepower. Both transactions were oversubscribed, suggesting broad approval for Accor’s acquisition strategy, and confidence in the company’s long-term creditworthiness. 

Last summer saw president & CEO Sébastien Bazin declare the asset restructuring of HotelInvest one of five key priorities for 2015, with acceleration a desire; since then, rumors have been circulating the the company was about to move on from its recent hotel acquisitions spree. Grape Hospitality marks the next phase for the group.