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AccorHotels to Acquire 85% Stake in 21c Museum Hotels

21c Museum Hotels to Become Part of AccorHotels Luxury Brands
August 3, 2018
The 21c Museum Hotel in Kansas City, MO, opened two weeks ago. Image Credit: 21c Museum Hotels

AccorHotels, based in Paris, has taken an acquisitive liking to American boutique luxury hotels.

This week, the global travel and lifestyle group agreed to acquire 85 percent of 21c Museum Hotels, a hospitality management company that combines a contemporary art museum with a hotel. The Louisville, Kentucky-based firm operates eight properties with three more under development across the United States.

This agreement allows 21c Museum Hotels to leverage AccorHotels' global hospitality platform while retaining its independent spirit.

The purchase price for the 85 percent stake is $51 million, including a potential earn out payment. No real estate is included in the acquisition. The transaction should be completed during the third quarter of 2018.

The deal follows by one month AccorHotels' letter of intent to acquire a 50 percent stake in Los Angeles-based sbe Entertainment Group for $319 million. The hospitality and residential brands of SBE include SLS, Delano, Mondrian, Hyde, The Originals and the Redbury Hotels. By the end of this year, sbe will operate 25 hotels, comprising 7,498 rooms with a majority in North America

The deals illustrate AccorHotels' strategy to expand its offering in the luxury lifestyle hospitality segment.

In announcing the 21c Museum deal, Kevin Frid, chief operating officer, North and Central America for AccorHotels, said it strengthens the group's footprint in North America. It currently operates hotels in Kentucky, Bentonville, AK; Cincinnati, Durham, NC; Kansas City, MO; Nashville, TN; and Oklahoma City.

"We have a tremendous opportunity to grow the 21c brand, as well as introduce MGallery into the North American market, building both brand equities," Frid said in a statement. "This strategic acquisition marks a new step in AccorHotels' strategy."

Contemporary art collectors Laura Lee Brown and Steve Wilson founded 21c Museum Hotels in 2006 in Louisville, KY. The chain takes its name from the pairing of 21st century art with historic buildings repurposed into hotels and restaurants.

The concept aligns with AccorHotels MGallery by Sofitel brand, a collection of boutique hotels tied to the literature and culture of the cities in which they are located.

"We are confident that the unique spirit of 21c will not only be preserved, but will flourish within the MGallery collection of boutique hotels," Wilson said of the deal with AccorHotels.

Co-founders Brown and Wilson will retain a 15 percent stake in the company, and will remain closely involved in providing creative guidance and support of the unique combination of art, design and hospitality. 21c Museum Hotels will continue to be led by its president and chief executive, Craig Greenberg, with corporate headquarters remaining Louisville.

International law firm Proskauer advised AccorHotels in its acquisition of a stake in 21c Museum Hotels.

Proskauer has represented AccorHotels for more than 20 years in a number of transactions totaling approximately $10 billion, including the sale of Motel 6 and related U.S. economy hotel operations for $1.9 billion; the $1.32 billion sale of Red Roof Inns; the more than $1.5 billion in sale-and-management-back in the U.S. for Sofitel and Novotel properties; and its agreement to invest in sbe Entertainment Group.

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