Accor continues strategy with Orient Express, Mantra
Accor continues strategy with Orient Express, Mantra
15 NOVEMBER 2017 9:22 AM

With recent deals for Mantra Group and Orient Express and the launch of AccorLocal, AccorHotels continues its expansion around the world as it moves into community services and travel beyond hotels. 

GLOBAL REPORT—AccorHotels wants to continue meeting the requirements of the modern traveler and is filling the gaps in its worldwide tapestry, according to sources.

Its recent Mantra Group buy and 50% joint-venture stake in Orient Express are two of the latest examples of the group’s strategy, and earlier today the French hotel firm officially launched its AccorLocal initiative, designed to provide both hotel guests and local communities a suite of local services from local shopkeepers.

AccorHotels CEO Sébastien Bazin has been talking about AccorLocal all year. According to the news release accompanying the launch, the idea is “a local services offer that give shopkeepers the opportunity to offer their products within the group’s hotels; on the other hand, hotels are given the chance to promote their hospitality services to a non-resident clientele.”

These moves all are part of Bazin’s strategy to find new ways to differentiate the company beyond its traditional hotel product.

“In today’s world, either you change or you will be changed,” he said at the South America Hotel Investment Conference held in Buenos Aires, Argentina. “So either you act and then you make some hard decisions and take some risk … (or) somebody is going to be acting for you—that’s somebody called, Expedia, Airbnb, Google, Amazon, Facebook.”

AccorHotels is using its wallet to expand its offerings by acquiring concierge services, luxury home-rental platforms, a traditional luxury hotel portfolio and business-hotel distribution-technology firms. At the same time, the company will add to its coffers again with the sale of some of its AccorInvest portfolio, perhaps as early as the end of this year.

Bazin in the press release championed the move, stating that “AccorHotels is continuing a history of daring and winning moves which has led us to where we’re not expected to go, but to where we do however have absolute legitimacy as a place bursting with life in the heart of the city.”

Orient Express deal
On 4 October, AccorHotels announced it had acquired a 50% stake of the share capital of Orient Express, but no price was disclosed. French national train carrier SNCF previously owned 100% of Orient Express. The deal will allow AccorHotels to develop branded hotels, although neither it nor SNCF were willing as yet to elaborate on what comes next for the brand.

Mathias Vicherat, deputy CEO in charge of the corporate project, communication and image of SNCF Group, said while it’s still too early to discuss the two companies jointly developing hotels, the nature of the long-term partnership is reflected in AccorHotels’ acquisition of half of Orient Express SAS, which he added has its own operational team.

“Each of the two groups will contribute their respective expertise to this shared structure,” Vicherat said.

Orient Express and AccorHotels appear to be a good match, Vicherat said.

“Orient Express is a historic jewel in the French rail industry’s crown, embodying the art of travel at its best,” Vicherat said. “For SNCF, it was important to team up with a partner that both recognized this heritage and shared this culture. Accor Group inherited Compagnie Internationale des Wagons-Lits, founder of the original Orient Express in 1883. This shared history made the two groups’ partnership a natural step as they set out to bring this iconic brand back to life together.”

Vicherat also explained the difference between AccorHotels’ Orient Express and Belmond’s Venice Simplon Orient Express.

“Orient Express and Venice Simplon Orient Express are two distinct and separate brands,” he said. “Today, SNCF Group has exclusive ownership of the Venice Simplon Orient Express brand and has licensed the Belmond Group to use the brand for their train consisting of 17 historic carriages used by the former Compagnie Internationale des Wagons-Lits, which operated international sleeping-car services.”

Mantra deal
Also in October, AccorHotels confirmed its purchase of Australia’s Mantra Group for 1.3 billion Australian dollars ($992 million), which adds more than 20,000 rooms to its portfolio and more than 125 assets in Australia, Indonesia and New Zealand under the Mantra, Peppers and Breakfree brands. The deal remains subject to regulatory approval and is expected to close by the end of the first quarter of 2018.

During AccorHotels’ third-quarter earnings conference call, CFO Jean-Jacques Morin said company executives are interested in Australia because its supply has been stable and demand has picked up over many years.

“It is a country where (gross domestic product) has been growing for 20 years, and it is a favorite travel destination for Chinese travelers … particularly to the Gold Coast region, where Accor was much weaker than Mantra is,” Morin said.

Morin added the future of AccorHotels’ inclusion of Mantra will be shaped around its management and lease agreements. Mantra currently has 66 assets under a business model called management letting rights, which apply to “strata-titled hotels,” or hotels with multilevel apartment blocks, and serviced apartments.

Tony Ryan, managing director of global mergers and acquisitions at JLL, said AccorHotels’ Mantra deal strengthens the company.

“Mantra is predominantly leisure-focused, Accor is more corporate, and that is strategy behind the buy and the questions it asks from a broader issue of scale, and what scale can deliver,” Ryan said. “That is, loyalty and distribution costs, as well as enhanced revenue from the existing Mantra platform by reducing costs via volume discounts. Mantra has a very efficient condo-hotel platform, enhanced skills that AccorHotels does not have.”

Ryan added that in December 2011 AccorHotels bought Australian condo-hotel firm Mirvac Hotels & Resorts and its 48-property portfolio for €195 million ($230 million), but that the Mantra deal is far larger.

Despite the recent deals, on 9 November AccorHotels decided to pull the plug on its distribution platform for independent properties, according to a Reuters report.

Only approximately 2,000 independent hotels had signed up to the platform, with the company stating at its inception that the plan was to have 10,000 in 320 markets by the end of 2018.

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