• Accor pursues sell-off

Accor, which is set to report on fourth-quarter trading figures next week, has started the new year as it means to go on with the sale of its stake in Groupe Lucien Barrière and the completion of a sale and variable leaseback of 49 hotels.

In addition to its ongoing debt reduction strategy, which sees it plan to sell Eu1.6bn of hotel assets over the next four years, the group has announced further growth in the UK, with the signing of 10 hotels under the Mercure brand.

Accor's agreement with Fimalac and Groupe Lucien Barrière will see it sell a 34% interest in Groupe Lucien Barrière to Fimalac for Eu186m and a 15% interest to Groupe Lucien Barrière for Eu82m. Accor will receive the 2010 dividend on its Groupe Lucien Barrière shares, a total of Eu7.35m.

After holding its stake since 1989, the sale marks the second attempt by Accor to make a sale following the cancellation of the proposed IPO in September 2010. The group said that, for its shareholders, the transaction price was equivalent to the price offered in the proposed IPO, net of related costs.

The shares sold back to Groupe Lucien Barrière will be cancelled and capital reduced, leaving the Desseigne-Barrière family and Fimalac owning 60% and 40% of Groupe Lucien Barrière respectively.

Gilles Pélisson, former CEO and chairman of Accor and member of the Groupe Lucien Barrière board, said that the deal maximised shareholders interests "while also completing our strategic refocusing on our core business".

It was under Pelisson that the sale of 49 hotels in France, Belgium and Germany, to a consortium comprised of Predica, a subsidiary of Crédit Agricole Assurances (representing 80% of the transaction), and Foncière des Murs (20%), for a total of Eu378.4m, was first agreed.

Accor will continue to manage the hotels through a variable lease agreement, with the rent averaging 19% of the hotels' annual revenue without any guaranteed minimum. Under the terms of the lease, structural maintenance costs, insurance and property taxes will be paid by the new owner.  The consortium said that the net rental proportional to the turnover should provide an average yield of 6.6% this year. 

The deal, which was agreed at the end of August, includes a Eu47.6m renovation programme, of which Eu3m will be financed by the buyer, allowing Accor to speed up the introduction of its new-generation Etap Hotel and Ibis rooms. 

The company's UK deal, which adds 10 hotels to its UK network, taking it to 43 sites, was done on a franchise basis, with Focus Hotels. This move forms part of Accor's expansion strategy to increase its UK network to 300 hotels by 2015, with Jean-Jacques Dessors, COO of Accor UK and Ireland, commenting: "We are very excited to announce a deal that significantly increases Mercure's presence across the UK. We have ambitious plans for the UK and we are totally committed to extending our Accor network and bringing our expertise in all segments from economy, midscale, upscale and luxury to the UK market."

Peter Cashman, CEO of Focus Hotels and former COO at Choice Hotels Europe, said: "Our strategy in taking on these hotels, many of which were in administration, was to bring them up to a high standard and make them profitable, with a view to finding the right home for them.  I am a passionate believer in matching the brand to the property and we identified Mercure as the perfect partner for these 10 hotels; Mercure will allow them to maintain their individuality and character whilst offering the credibility of one of the most respected international hotel brands."

The hotels had been part of the Real Hotel Group, and had been branded under Choice Hotels International brands, mainly Quality Hotels.


HA Perspective: It was the failure to float Lucien Barriere late last year which was perceived to precipitate the exit of Gilles Pelisson so Denis Hennequin will be relieved to have struck the agreement with Fimalac.

The problem is that the deal has realised barely Eu275m and the stake had been valued as high as Eu700m (although Eu500m was probably nearer the mark) had the IPO proceeded. Hennequin will at least be able to blame the ancien regime this time.

The UK Mercure deal is also welcome news but hardly anything that demonstrates a radical departure from his predecessor. If there is a new strategy, we have yet to see it. Perhaps turning Gallic cliches on their head, it will be evolution rather than revolution.

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