Accor, Europe’s largest hotel company, is merging a quarter of its brands into a new $1bn company with the owner of the Hoxton hotel chain in a bid to move away from a traditional overnight accommodation model that was already being shaken up before the pandemic.
The new entity, which will operate under the Hoxton owner Ennismore’s name, will be two-thirds owned by Accor and a third by Sharan Pasricha, Ennismore’s founder, following the cash-free merger.
It will operate as an umbrella company for Accor’s 10 lifestyle brands including Mondrian and SLS as well as the Hoxton, which owns nine hotels, the luxury Gleneagles estate in Scotland and Working From_, a shared workspace company.
Sébastien Bazin, Accor’s chief executive, said that the venture was “not related to Covid”, but reflected increasing interest from customers for boutique hotels that acted as desirable destinations in their own right.
He defined these as hotels in which more than 40 per cent of revenues came from food, drink and entertainment and where the majority of clientele were locals — something that the Hoxton has pioneered by focusing its efforts on attracting young city dwellers to its ground-floor bars and restaurants.
Mr Pasricha will head up the company as co-chief executive alongside Accor’s chief development officer Gaurav Bhushan.
The group will start out with 73 hotels and an enterprise value of about $1bn, with deals signed to develop 110 other sites, mostly under the Hoxton and Mondrian names. It will also run more than 150 restaurants and is expected to achieve earnings before interest, taxes, depreciation and amortisation of more than €100m “in the mid term”, according to Accor.
To create the new company, Accor also announced on Tuesday that it had spent €300m taking full ownership of sbe, which owns four of the brands that will now operate under Ennismore. Including the sbe transaction, Mr Bazin said Accor had spent less than $500m in total buying the remaining stakes in its lifestyle hotel brands over the past few years.
Last month, Accor said that it had €4bn liquidity to see it through the remainder of the crisis.
Large hotel chains such as Accor and rivals IHG, Marriott and Hilton have accelerated efforts to diversify their operations away from business travel and corporate events fearing that a new-found familiarity with remote conferencing will last beyond the pandemic.
Hilton has rented several of its hotels out as student accommodation, while Marriott, Accor and Radisson have all stepped up efforts to encourage consumers to use their hotels as co-working spaces.
Mr Bhushan said that the pandemic had made Accor “look at a cold hard level about how to drive revenue from every square metre of space”, something that Mr Pasricha added that lifestyle brands such as Hoxton, which derives about 60 per cent of its sales from food and drink, were better suited to.
Mr Pasricha said that he expected about 10 per cent of corporate travel would not return but that hotels such as Gleneagles