French hotel firm Accor has announced it will sell 10.8% of its lifestyle hotel division Ennismore.
The minority stake in the division is valued at approximately 200 million euros ($211 million), which gives the entire division a value of approximately 2 billion euros.
Sharan Pasricha, founder and co-CEO of Ennismore, said in an interview with Hotel News Now that the division has 14 brands, 100 hotels in operation and approximately 200 assets in the pipeline.
A group of investors backed by financing from Qatar First Bank have entered exclusive negotiations to buy the stake in Ennismore.
Jean-Jacques Morin, Accor’s chief financial officer and deputy CEO, told HNN that lifestyle hotels have continued to perform above the overall market as the sector emerges from the COVID-19 pandemic.
Morin said the deal helps simplify the Accor and Ennismore stories of a global hotel and lifestyle business that has become asset-light in the past decade.
“There has been a lot of interest in Ennismore as a business, but perhaps there has not been an understanding of what it is in its details. This transaction sends a very strong message of its asset value. It helps in terms of strategy to further simplify its platforms, which now include all-inclusive and Paris Society, much more of a concentrated platform,” he said.
Accor acquired Paris Society for an undisclosed sum in 2017, with its collection of 19 Parisian restaurants, two Parisian clubs and two French hotels now under Ennismore’s co-working and entertainment umbrella.
Paris Society recently opened its first international bar and restaurant, Bar Louie, in London.
Morin said the pandemic has accelerated the demand and interest in lifestyle products.
“We started that story more than five years ago, first with Mama Shelter, then with 25hours, 21c, SBE and Ennismore itself, but the pandemic has made this all much stronger. We showed at our full-year numbers the stronger [revenue per available room] numbers of Ennismore, something to the tune of 10 to 15 percentage points more," he said. “And 50% of the [profit and loss] with Ennismore is [food and beverage]. People have seen they need to better enjoy the lives they did not have for two years."
Pasricha told HNN “key to [Ennismore’s] success is making sure every one of our hotel brands is distinguished, is authentic, is relevant, has a purpose, and we want to make sure that not only that our brands are distinguished from one another, but they are distinguished adequately from their competitors.”
Deal In the Works
Morin added the injection of Qatari capital — a deal expected to close later this year — “crystallizes the equity story of Ennismore and the projection of future cash flow.”
He also said the capital derives from a geographic destination very aware of trends in the industry and of Accor itself.
“The Qataris used to own the Fairmont and Raffles brands. It is testimony to [Ennismore’s] business plan that they have bought into us. They do know us and are very knowledgeable of the sector and lifestyle segments,” Morin said.
In the first major acquisition under the leadership of CEO Sébastien Bazin, Accor in December 2016 finalized a $2.9-billion acquisition of FRHI Holdings Limited and its Fairmont, Raffles and Swissôtel brands from the Qatar Investment Authority, Kingdom Holding Company of Saudi Arabia and Oxford Properties, an Ontario Municipal Employees Retirement System company.
Morin said investors continually reach out to Accor.
“We speak to many. We are always approached, as investors see the company is very agile in its structures and has deep relationships. [Bazin] knows everyone,” he said.
Pasricha and co-CEO Gaurav Bhushan will continue to run Ennismore.
“They’ve done something very nice, maintaining the essence of each brand, keeping the brains behind them and recruiting the right level of employees in the hotels,” Morin said.
In 2021, Ennismore opened the Mondrian Doha, Qatar, and SLS Dubai Hotels & Residences in the United Arab Emirates.
Morin said Ennismore is truly universal now, which includes more diversification in Asia.
“That market currently is more difficult now, but we all know with time it will come back very strongly,” he said.
Alex Brignall, travel and leisure analyst at Redburn, said Ennismore is a good business but the wider investment community is not looking at this particular piece of news as being groundbreaking.
“[The capital investment] proves there is value in it, more so than the multiple being put on Accor as a whole," he said. “That being said, I don’t know whether they would be able to get that value for the whole thing if they sold it, so that is why the market is being a little bit ‘blah’ over the deal."