Accor’s 25hours stake fuels goal to dominate lifestyle
Accor’s 25hours stake fuels goal to dominate lifestyle
14 NOVEMBER 2016 9:18 AM

Following its 2015 minority-stake buy in Mama Shelter, AccorHotels has a deal in place to buy a similar-size chunk of hip German brand 25Hours. Both, according to sources, will add further muscle to the French firm’s goal of dominating the lifestyle sector.

PARIS—AccorHotels continued its spending spree with a 30% acquisition of German hotel company 25Hours Hotels, which sources said will further cement it as a leading, innovative hotel chain in the lifestyle sector.

Officials at both companies said they see it as a perfect fit.

“We started in this direction many months ago with Ibis Styles, but that was not sufficient,” said Laurent Picheral, AccorHotels’ CEO of HotelServices for Central and Eastern Europe. “Our first ambition is to be the leader in this sector. … Then we want to see what good ideas coming from lifestyle can be complemented in other Accor brands.”

AccorHotels’ first move into this direction, he said, was its October 2014 buy of a 35% stake in Mama Shelter.

25Hours is a different concept, Picheral added, with its hotels being noticeably different from one another.

“They are recreating something new. Like Mama Shelter, its management are ‘intellectual Sherpas,’ always creating, always reinventing the hospitality business, and that is especially needed in the lifestyle segment,” he said. “It is inspiring. We need people like that, creators, thinking about new proposals for our customers and making complements to our portfolio.”

25Hours, he added, “was one of the first in Europe creating this lifestyle. They will be brilliant partners.”

With the French hotel giant’s capital behind the hip brand, global expansion is next on the agenda, according to 25Hours’ Christoph Hoffmann, who will continue as CEO. Previous investment was solely in German-speaking Europe, with seven properties open currently—in Berlin, Frankfurt, Hamburg, Vienna and Zurich.

In its pipeline, signed before AccorHotels’ involvement and due to open in the next two years, are five more—in Cologne, Düsseldorf, Munich, Paris and another Zurich property, which will be the first to open next April.

Hoffmann said 25Hours’ development had been over the last 10 years “organic, with limited resources, and successful.” About 18 months ago, he and his partners knew additional help was required.

“We realized we had created a pretty acceptable brand with a sustainable future, but who do we give it to? We needed a partner that was not private equity-based, not in it for the fast turnaround of money, someone who can invest,” he said.

He said the firm looked at brands with a similar mindset but then met AccorHotels’ CEO Sébastien Bazin, and decided to look no further. “We would not know how to do the kind of things Accor does,” Hoffman said.

Merging of minds
Hoffmann said 25 Hours’ next meeting with AccorHotels is imminent. “We both agree upon wanting to expand in a careful manner,” he said. “Very important thing is the creativity, and the next couple of years we’ll focus on the development part of it, something we’re very keen on.”

In the meantime, 25Hours is setting up an in-house hospitality research lab, and AccorHotels already has one, Picheral said.

“We’ll get together, talk, brainstorm and see if ideas can be duplicated in one of our brands that’s not so standardized, such as Mercure, but that of course might be their (intellectual) property, so we’d get their approval,” he said.

AccorHotels’ latest brand Jo&Joe—launched in September—was cited as an example of its own lab’s ingenuity.

“The labs will create the activity of tomorrow,” Picheral added.

Important to Hoffmann is that AccorHotels is a “powerful machine with big data and effective distribution channels and loyalty programs.”

But Hoffmann and Picheral both emphasized that 25Hours will remain in charge.

“Accor’s aim is to leave us alone. The first thing we discussed was keeping our independence, at least for the time being. I do not mean for the next 20, 50, 100 years. You always have to question yourself at some point,” Hoffmann said.

Picheral said AccorHotels had not insisted on a seat on 25Hours’ board—another aspect of the relationship that could change with time—and it does have the option to buy 100% of the German firm. The company does have two seats on Mama Shelter’s board.

“We are investing in them,” Picheral said, “and if we can help them negotiate better deals and loyalty, then we are here, but not to interfere in day-to-day operations. We can provide confidence … but developing in the lifestyle sector takes time, especially if you want very good lifestyle.”

Accor on buying spree
The 25Hours’ investment continues a busy year for AccorHotels’ capital. In July it completed its $2.9-billion purchase of FRHI Holdings Limited—which gave it brands Fairmont, Raffles and Swissötel—and $150-million purchase of high-end concierge service firm John Paul. The company also recently bought for €148 million ($162.5 million) luxury extended-stay brand Onefinestay, a 30% stake in short-term rental platform Oasis Collections for an undisclosed sum, and a 49% share of upscale resort hotel digital platform Squarebreak, also for an undisclosed sum.

AccorHotels’ minority stakes in several of these companies, including 25Hours, is suggestive of a trial period before perhaps larger ownership stakes are considered. It also follows the modus operandi of recent Chinese capital investment in Western hotel companies, notably evidenced by HNA’s 25% stake in Hilton Worldwide and 28.5% stake in Spain’s NH Hotels.

Harry Douglass, associate director of hospitality at hotel consultancy HVS, said he admires AccorHotels’ continuing, exploratory moves across the industry’s entire spectrum.

“This is fantastic. AccorHotels has taken stakes in fresh, dynamic hotel groups, all of which are key attributes of its wider business. It’s very easy to become commoditized in a large international hotel group. This is not just financial, as you cannot buy that level of experience easily,” he said.

Douglass said AccorHotels’ recent bold moves might make other lifestyle brands think twice before also partnering with the French firm, due to possible conflicts of interest.

“If they can hold onto staff, both should benefit from the intangibles that make these deals exciting, and (the partnership) will probably spark more renewed activity in this sector,” he said.

“Bringing in the power of (AccorHotels) can only help 25Hours look beyond the horizon to see how it can maximize opportunities.”

1 Comment

  • Rain April 27, 2017 10:54 AM Reply

    Wow! So much to love on that page. The bunting, the birds singing, the use of stamps and tickets... And you have the most enviably cool hanngritidw! Totally inspiring : )

Comments that include blatant advertisements or links to products or company websites will be removed to avoid instances of spam. Also, comments that include profanity, lewdness, personal attacks, solicitations or advertising, or other similarly inappropriate or offensive comments or material will be removed from the site. You are fully responsible for the content you post. The opinions expressed in comments do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Please report any violations to our editorial staff.