Mövenpick buy fills segment, regional niches for Accor
 
Mövenpick buy fills segment, regional niches for Accor
30 APRIL 2018 8:48 AM

AccorHotels continues its wave of acquisitions by announcing plans to buy the Swiss brand Mövenpick in a deal with Mövenpick Holding for 560 million Swiss francs ($565.3 million).

LONDON—AccorHotels has once again reached into its wallet, this time announcing plans to buy Mövenpick Hotels & Resorts for 560 million Swiss francs ($565.3 million).

The Swiss hotel group is owned 66.6% by Mövenpick Holding and 33.3% by Saudi Arabia’s Kingdom Holdings.

The deal is subject to regulatory approval but expected to close in the second half of this year, according to an AccorHotels news release accompanying the announcement, which added the deal constitutes a 14.9-times 2019 earnings before interest, tax, depreciation and amortization multiple before synergies and including transaction costs.

Sébastien Valentin, SVP of investor relations and financial communication at AccorHotels, said the acquisition of Mövenpick is in line with recent commentary from AccorHotels officials.

“We said we would dedicate 60% of the cash proceeds of the part sale of AccorInvest to (mergers and acquisitions) activity and that the strategy would be hotels-driven,” Valentin said.

“And we also said that what we had in mind was local and regional targets that would consolidate (AccorHotels), strengthen existing leadership and prevent any new entrants to take market share,” Valentin said.

“(The deal) works from a segment, geographic and economic standpoint,” Valentin said.

A spokesman at Mövenpick said its hotels, which he said had 16,000 employees worldwide, would still be operated under the Mövenpick brand name.

Mövenpick’s own news release on the deal said the firm operates more than 20,000 rooms in 84 hotels. Its pipeline consists of 42 hotels to open by 2021.

This is the second deal in recent history between AccorHotels and Kingdom Holdings. AccorHotels bought FRHI Holdings, and its Fairmont, Raffles and Swissôtel brands, from Kingdom in July 2016 for a price tag of $2.9 billion.

The Saudi Arabian company is managed by Prince Alwaleed bin Talal, who was recently in the news when he was arrested by the Saudi authorities and placed under house arrest at the Ritz-Carlton Riyadh until 27 January.*

Portfolio power
Tea Ros, managing director of Zürich-based Strategic Hotel Consulting, said she was not surprised by the announcement.

“That Mövenpick has been acquired, that itself is not surprising,” Ros said. “The writing was on the wall for some years. The size of the group meant it was a good target, and Mövenpick will see a lot of value partnering with a larger group.”

“There also is that natural link with Kingdom,” Ros said.

“For Mövenpick moving forwards, this is something that will help them. They were facing a little bit of threat of being left behind. In the Middle East and Asia, where they have done a good job, that is not such a problem, but elsewhere this will help them,” Ros said.

AccorHotels’ Valentin said more attractiveness came from the fact Mövenpick is a predominately asset-light model, with70 hotels under management contracts and 14 under leases.

“That, too, is in line with what we do. From a segment standpoint, Mövenpick “was the last hole in the racket, fitting the niche between (AccorHotels brands) Novotel and Pullman. Mövenpick is in the upscale segment,” Valentin said.

“Part of the rationale for us is that (Mövenpick’s) existing portfolio is impressive. It shows the brand has strong momentum,” Valentin added.

Where Strategic’s Ros sees some concern perhaps arising is around the possibility of the cannibalization of some markets.

“A fair number of owners might not be entirely happy, unless (AccorHotels) can really demonstrate savings in costs,” Ros said.

“Mövenpick is one of those brands that owners would sign with because they could provide something unique. In the Maldives, for example, a Mövenpick is coming, and one of the reasons to sign that was there was no Mövenpick. Now there also is a Fairmont and other AccorHotels’ properties,” Ros said.

Valentin disagreed that the deal would cannibalize markets and said the only turmoil could be in Saudi Arabia, which is undergoing social and political changes.

Mövenpick is to open later this year the Mövenpick Resort & Spa Kuredhivaru in the Maldives, according to the Swiss group’s website.

“I think this (problem) will specifically apply in resort destinations,” Ros added.

There remains a lot of cash from the AccorInvest deal.

“We still see spaces,” Valentin said, who referred to unnamed targets in Latin America, Africa, Asia and the Middle East.

*Correction, 30 April 2018: This story has been updated to provide the correct date of Alwaleed bin Talal's release.

3 Comments

  • Bob April 30, 2018 2:55 PM Reply

    Great Article!

  • Michael April 30, 2018 3:37 PM Reply

    I agree, very useful.

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