AccorHotels grows U.S. footprint with 21c Museum Hotels deal

AccorHotels isn’t slowing its growth strategy any time soon. This year alone, the Paris-based hospitality giant signed deals to acquire Atton hotels across Chile, Peru, Colombia and Florida; Switzerland’s Movenpick Hotels; a 50-percent stake in South Africa’s Mantis Hotels; and completed its integration of Australia’s Mantra Hotels. Now, the company is setting its sights on a region where it has a decidedly limited presence: the American Southeast and Midwest.

To accomplish this, AccorHotels has signed an agreement to acquire 85 percent of 21c Museum Hotels, the Louisville, Ky.-based hospitality management company that combines museums and hotels into a unified concept. The purchase price for the stake is $51 million, including a potential earn-out payment. No real estate is included in this acquisition.

The news comes just over a month after AccorHotels announced plans to take a 50-percent stake in Sam Nazarian's SBE Entertainment Group, which also owns the Morgans Hotel Group. 

Why 21c?

21c Museum Hotels was founded 12 years ago by art collectors Laura Lee Brown and Steve Wilson, who rehabilitated a series of 19th-century warehouses in Louisville's downtown arts and theater district to open the first property under the brand name. The idea grew into eight hotels open in Bentonville, Ark.; Cincinnati; Durham, N.C.; Kansas City, Mo.; Lexington, Ky.; Louisville; Nashville; and Oklahoma City; with three more in development in Des Moines, Iowa.; Miami; and Chicago. The boutique properties combine contemporary art museums, hotels and chef-focused restaurants, catering to the growing trend of localized “experiential” travel.

The plan makes sense. For the first half of 2018, AccorHotels properties in North America, Central America and the Caribbean recorded a “sharp increase” of 15.9 percent in hotel services management and franchise revenue—a strong incentive to expand further in this market.

At the same time, the luxury and upscale segments—21c Museum Hotels sits at the luxury level—reported the second-highest occupancy across AccorHotels’ properties in the region during the first half of the year, indicating strong demand for more properties within this segment. The agreement, along with the SBE deal, will open up new destinations across the U.S. for AccorHotels and its 145 million loyalty members.

21c Museum & MGallery

Once the deal is finalized, the eight open 21c Museum Hotels will join AccorHotels’ boutique MGallery collection, marking the debut of the MGallery brand in the North American market. 

As part of the agreement, AccorHotels will support 21c Museum Hotels in terms of development opportunities, increased sales and marketing exposure, and access to its distribution network. “Together, we have a tremendous opportunity to grow the 21c brand, as well as introduce MGallery into the North American market, building both brand equities,” said Kevin Frid, COO for North & Central America, AccorHotels, in a statement. “This strategic acquisition marks a new step in AccorHotels’ strategy of being the leading player in the luxury and lifestyle segment in North America.”

21c Museum Hotels co-founders Brown and Wilson, who stepped down as CEO last September, will retain a 15-percent stake in the company, and are expected to remain “closely involved” in supporting the brand. Since stepping down, Wilson has acted in an advisory capacity to help develop the brand further and expand its collection of contemporary art. The brand will continue to be led by President and CEO Craig Greenberg, and the brand’s corporate headquarters will remain in Louisville.

“AccorHotels is one of the world’s leading hotel operators and will be a perfect partner and catalyst for 21c’s continued growth,” Wilson said in a statement. “We are confident that the unique spirit of 21c will not only be preserved, but will flourish within the MGallery collection of boutique hotels. 21c will continue to bring the work of today’s most dynamic and engaging contemporary artists to the public, and this partnership will be a tremendous boost for 21c’s continued development in North America and abroad. We are extremely excited to see what the future holds.”

The transaction should be completed in the third quarter of 2018.