In Banyan Tree investment, AccorHotels builds from the outside

(Guest accommodation at Banyan Tree Sanya)

It's been a year of calculated and feverish investment for France's AccorHotels, and it's not over.

The latest is a new strategic agreement between AccorHotels and Banyan Tree Holdings, a collaboration to develop and manage Banyan Tree-branded hotels around the world. Under the agreement, Banyan Tree will also have access to AccorHotels' global reservations and sales network, as well as its loyalty program Le Club AccorHotels.

To expedite the alliance, AccorHotels is making an initial $16.8 million investment in Singapore-based Banyan Tree, which amounts to a 5-percent stake in the company.

"Our collaboration with Banyan Tree is a great opportunity to complement our business proposition to owners with iconic brands, while always better servicing our guests," said Sebastien Bazin, CEO and Chairman of AccorHotels. "Banyan Tree Holdings has created key leading positions across Asia with luxury resorts, one of the fastest growing segments in the industry. We will bring scale to the network through our ability to develop and manage hotels under the Banyan Tree brands globally, hence strengthening our leadership in the luxury hotel space. We are confident that our investment will create incremental value for our shareholders."

Banyan Tree's portfolio includes 43 hotels and resorts, 64 spas, 77 retail galleries, and three golf courses in 28 countries. Each resort typically has between 75 to 300 rooms.

While Banyan Tree is certainly an upmarket brand, it lacks global recognition and scale, something AccorHotels can provide. Ho Kwon Ping, executive chairman of Banyan Tree, made it very clear that is what he is after and why the deal with AccorHotels is so attractive. Beyond that, global alliances between hotels companies, even competitors, as evidenced by Shangri-La and Taj Hotels' loyalty program tie-up, are becoming more regular.

"This agreement is not only transformational for Banyan Tree, but is also an innovation for the global hospitality industry," Ho Kwon Ping said. "With the current consolidation of mega-hotel companies, smaller but also global players are also seeking strategic alliances with the global giants.

"Our strategic alliance with AccorHotels allows us to remain an independent company, enabling us to continue securing hotel management agreements on our own and yet accelerating Banyan Tree's speed and scope of expansion but with AccorHotels helping us to grow our brands around the world. We believe this agreement will propel our brands rapidly to global reach and range and strengthen our ability to embrace change and innovation in the hospitality industry with a strong global partner. We are excited and committed to this partnership."

AccorHotels' investment strategy in 2016 has been: Invest, Invest, Invest!

In July, it closed on its acquisition of FRHI Hotels & Resorts and its three luxury hotel brands: Fairmont, Raffles and Swissôtel. The deal included 46.7 million new Accor shares and a cash payment of $840 million.

The company's alliance with China Lodging Group (which also operates under the name "HuaZhu"), was finalized in January 2016, and it 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 other aspect of [the alliance] is capturing the Chinese market,” Bhushan continued, calling China—with 120 million outbound travelers—the “largest, fastest-growing outbound market. Eighty-five percent of those travelers stay in the Asia Pacific region, however—and this partnership positions AccorHotels as a market leader for the region."

While AccorHotels has a healthy footprint in Europe, it showed that it still has an appetite in the boutique segment. In early November, AccorHotels bought a 30-percent stake in Germany's 25hours Hotels for $39 million. 25hours Hotels runs seven boutique hotels in Hamburg, Frankfurt, Berlin, Zurich and Vienna, and five more are slated to open in Zurich, Munich, Cologne, Dusseldorf and Paris in the next two years. The company also has expansion plans for Melbourne, Miami and Milan.

"Through this partnership, AccorHotels is investing further in one of the fastest-growing segments in the industry and enriching its offer to achieve scale in this segment," Bazin said.

But it's not all just investing in hotels. AccorHotels has also made moves in technology, specifically the distribution landscape. In April, the company acquired U.K-based home rental start-up Onefinestay for $168 million. At the time of the transaction, Bazin said that in the past the company "made a mistake" when it passed up the chance to invest in Airbnb. “We are accelerating the transformation of our business model to capture the value creation linked to the rise of private rentals and also strengthening our presence in the luxury market with a complementary offer."

Whether or not AccorHotels' investment barrage dissipates on 2017 is yet to be known. What isn't, is that the company—via M&A—has positioned itself where it wants to be for next year and beyond.