AccorHotels has signed to launch its Jo&Joe brand in South America, with a 350-bed property due to open in Rio de Janeiro’s Cosme Velho district in 2020.
The deal came just over a year after AccorHotels took over the management of 26 of Brazil Hospitality Group’s sites, consolidating the French company’s position as the largest hotel company in Brazil.
Accor acquired the six houses that make up the property, for R20m (EUR4.5m). The group plans to invest an additional R30m to renovate and furnish the heritage-listed property. The 70-room Jo&Joe Rio is slated to open in 2020.
“AccorHotels has been investing in Brazil for 40 years, and the purchase of this architectural landmark only strengthens our commitment to the country’s growth. We are betting on this location and will transform it into an incredible place to attract tourists and locals starting in 2020, when it should open,” said AccorHotels’ Latin America CEO, Patrick Mendes.
The company told us: “Brazil is a strong market for AccorHotels and it has a big potential. Today we have almost 300 hotels in the country and our goal is to achieve 500 hotels in South America by 2020. JO&JOE, as a lifestyle brand with a development focused on international and lifestyle cities was interested to have an Open House in Rio. Last but not least, the area itself was totally aligned with the DNA of the brand.
“AccorHotels decided to give something really relevant to Rio de Janeiro. By doing that, we show that we believe in the city potential. Rio receives many tourists from Brazil and abroad and it is a very popular destination.”
The brand has another 50 projects planned by 2020, with the next Jo&Joe hotel to open this year the Paris Gentilly, followed by Rio, Budapest, Krakow, London and Paris Buzenval.
The flag, a hostel offering starts at EUR25 per night, was launched at the end of 2016, targeting “destinations popular with Millennials”. The company was looking for sites in city-centre locations that are close to public transport and less than 15 minutes away from the major points of interest.
The company said that it was open to new-builds or conversions, with a variety of ownership structures available. Jo&Joe offers a number of different sleeping formats, including shared rooms, private apartments or “unexpected accommodation” in the form of yurts, hammock and caravans, which will differ at each venue.
Sébastien Bazin, chairman & CEO, AccorHotels, said: “Jo&Joe represents the very essence of hospitality: welcoming, exciting and beyond our guests’ expectations.”
At the company’s annual results, Bazin said that, while “Rio is still suffering from oversupply and the social tension” the fourth quarter of 2017 had seen performance start to recover.
The BHG portfolio was acquired by AccorHotels EUR60m, including economy, midscale and upper upscale hotels in Brazil’s major markets, especially in Rio de Janeiro and Sao Paulo, complementing well AccorHotels’ existing network in Brazil, and consolidating the Group’s leadership across all segments.
The hotels were due to undergo major renovation and repositioning works and shall progressively be reflagged until the end of 2019 under AccorHotels brands, including ibis, ibis Styles, ibis Budget, Mercure, Novotel, Mama Shelter, MGallery and Pullman, under long-term management agreements.
Bazin said: “Today’s Brazil is a land of major opportunities. This transaction is a new milestone in the history of AccorHotels in this country, where we have been a firm leader for decades. It will bring new landmark hotels as well as an increased brand awareness across all segments. It also anchors a strong and long-term relationship with BHG, one of the largest owners of hotel real estate in Brazil, which will bring incremental growth opportunities going forward.”
Brazil hotels reported a 10.2% year-over-year occupancy increase in January, the highest occupancy increase for any month in the country in nearly seven years, according to STR.
Additionally, Brazil has reported four consecutive months of revpar growth, with three of those four producing a double-figure lift. Prior to that stretch, the country saw 13 consecutive months of revpar declines.
Patricia Boo, STR’s area director for Central/South America, said: “Brazil endured sizeable performance decreases due to the economic recession as well as the fluctuations and new supply impact that came with hosting the World Cup and the Rio Olympics. As the economic environment and hotel supply situation continue to stabilise, hotels are seeing much more reliable demand growth that is helping occupancy levels.
“Because of the mega events of the last several years, we’ve seen a massive supply increase in Brazil’s key cities. However, with new investors, we’ve seen a shift in development to secondary and tertiary cities. That has meant that hotel performance fluctuations have been seen just about everywhere.”
HA Perspective [by Katherine Doggrell]: Jo&Joe was one of AccorHotels’ attempts to take on Airbnb (in addition to the more direct route of buying Onefinestay), creating centrally-located budget properties with a focus on socialising, but light on the traditional hostel feel.
As yet growth has been slow and we wonder whether AccorHotels’ decision to bank-roll this particular site is part of efforts to keep it rolling along and how many more sites the group will consider funding to gain traction.
The battle for Airbnb’s customer is the battle of price, location and also experience. AccorHotels worked with its shadow executive committee to create the brand: 12 Millennials: six men and six women. What they and Penson, a non-hotels architect (and, one suspects, more than one or two others) put together was enough to intrigue the sector at launch. It would be a shame if it did not get the chance to prove itself.