Paris Inn Group wants to be the third-largest operator and owner in France and Europe and has restructured to seek equity, revenue increases and the expansion of its luxury Maison Albar Hotels brand.
GLOBAL REPORT—Oaktree Capital Management has played a major part in the financing and growth trajectory of Paris Inn Group’s restructuring that on 1 January resulted in five distinct divisions within the French hotel firm. Sources added the deal marks one of the largest investments in the French hotel industry during the pandemic.
High on the priority list now for Paris Inn Group is the global expansion of its in-house luxury brand Maison Albar Hotels.
The new umbrella structure, named Centaurus, is managed by Jean-Bernard Falco, president and founder of Paris Inn Group; VP Céline Falco; and Managing Director Grégory Pourrin. The goal is to grow the firm to become the third-largest operator in France and Europe, after Accor and Louvre Hotels Group.
One division will focus on ownership and operations of Maison Albar Hotels. Oaktree’s managing directors Vincent Catherine and Hugo d’Avout d’Auerstaedt stated in an email to Hotel News Now that the investment firm is fully supportive of Centaurus’ “ambitious development strategy” to grow the luxury Maison Albar brand internationally.*
Oaktree, a Los Angeles-based investment firm, is also considering subscribing to a €115.2 million ($141.3 million) bond issuance, convertible into preferred shares, to be issued by the new Centaurus group structure as part of the group refinancing and target structuring, they said.
Paris Inn Group, founded in 2005 and currently with a portfolio of 35 hotels under management, reported earnings before taxes in 2019 of more than €100 million ($122.6 million) and has almost €1 billion ($1.23 million) of assets under management.
Paris Inn Group’s principals said in the email the deal will “continue to develop our group in the post-crisis period, which will inexorably begin in a few months, with renewed ambition to reach €1 billion of turnover by 2030.”*
Maison Albar has six hotels in development (one in Côte d’Ivoire, two in China and three in France) and eight in operation (four in France, one in Portugal and two in China, the last of which opened at the end of 2020). Its flagship property is the Maison Albar Hotels Le Pont-Neuf in Paris.
In China, the group partners with investment firm Betterwood Lifestyle Lab.
The other four divisions created in the new restructuring and deal will focus on:
- hotel management and operations under the Paris Inn Group;
- hotel firms wholly or majority owned by the Albar, which bought its first hotel in 1923, and Falco families via a subsidiary named Centaurus Participations Majoritaires;
- hotel firms partially owned by the Albar and Falco families via a subsidiary named Centaurus Partenariats; and
- hotels under lease management agreements via Centaurus.
Pourrin said two years ago he, Jean-Bernard Falco and Céline Falco saw the need to aggregate their holdings and business lines into a vehicle that is much clearer to understand for investors and partners.
“To accelerate the growth of Paris Inn, we understood the first thing we have to do is to create a real group and move several companies to other parts. It was impossible to give satisfaction to all at the end of the day, so we worked with our (advisory) partner Maya to find good finance,” he said.
He added the restructuring partially is aimed at finding more equity for a conversion in Nice, France, and to gain additional cash flow to weather 2021 and the lingering COVID-19 crisis.
Pourrin said he first met Catherine in 2012.
“(Catherine) bought and helped a family to develop a hotel brand in Greece and Spain, and we saw their story was good, very strong. We do not want to sell the (Paris Inn) group, just to grow it, so it requires someone smart beside you when you go build,” he said.
He added that the Albar and Falco families remain at the top of the management structure, with Oaktree as the company’s principal bond partner.
Paris Inn’s growth has been noticeable, even despite challenges in 2020.
“In 2011, Paris Inn’s turnover was €20 million ($24.5 million). Our DNA is to centralize all support functions to optimize the performance of the hotel. There is no in-hotel accounting or sales, and that optimizes (revenue per available room). In 2019, we saw 94% occupancy across all hotels, thanks to cross-selling and optimization, and €100 million ($123 million) in turnover, five times what it was less than a decade before,” Pourrin said.
He said the financial aims of the group, which is considering opening a southern France regional office, will be a long road, but that the French industry is buoyed by general tourism sentiment.
“Recovery will be very quick, at which stage there will be the need for two types of hotels—the ones you need to use, and the ones you want to see and experience something differently and take a picture. That is the type we want to develop with Maison Albar,” Pourrin said.
He said the brand’s hotels will have a maximum of 100 rooms but all the services guests want, just not three or four of each, which will lead to lower average daily rate.
“We can sell rooms at a lower price, €500 ($614) or €600 ($737), in hotels with tailor-made services,” he said.
International growth is key, with the brand’s Porto hotel being the first step developmentally across Europe and then globally.
“You can have an impact on a destination if guests know you have things there they already know, but also something different. We are looking at the large cities, with hotels that are all different and based on where our guests want to find another Maison Albar,” he said.
He added Italy, Russia and Spain have the potential to be the most dynamic markets for the brand and that freeholds are preferred, although leases would be considered in some markets.
“It is a very competitive market, so 10 hotels per year is a good dynamic for us. It could be more if tomorrow we buy a (bolt-on) company with a central organization. We have one opportunity now,” Pourrin said.
*Correction, 7 January 2020: This story has been updated to correct quotes attributed to Oaktree and Paris Inn Group executives.