PARIS—Accor’s acquisition of a 35% stake in lifestyle chain Mama Shelter represents new territory for the Paris-based global hotel owner and operator.
First is the brand itself. Accor’s existing portfolio lacks a design-oriented flag. (The chief designer of Mama Shelter is world renowned Philippe Starck).
Second is the acquisition. Accor also has little history of acquiring minority stakes in standalone brands, as evidenced by the company’s other partnerships:
- a 50/50 venture with Pierre & Vacances-Center Parcs Group in the serviced-apartments Aparthotels Adagio brand founded in 2007;
- 51% in Hungary’s Pannonia; and
- 52.7% in Poland’s Orbis, although on Thursday the management of Orbis received an offer from Accor for Orbis to buy out its 38 existing and eight planned hotels.
Also, in 2004 Accor bought a 29% stake in all-inclusive hotel company Club Méditerranée, commonly known as Club Med. Executives sold most of that stake two years later in an effort to refocus on core assets; the remainder was sold in 2009.
Sébastien Bazin, speaking with HNN, paused to think as to which section of Accor—HotelServices or HotelInvest—its Mama Shelter investment would sit.
“It would be from the HotelServices side,” the chairman and CEO said. “These are management agreements in which we are investing in (pipeline) bricks and mortar.”
The financial terms of the deal were not disclosed.
Complementing partners
The three Trigano family members at the helm of Mama Shelter— brothers Jérémie and Benjamin and father Serge—are all naturalized Americans, and Benjamin has called Los Angeles home for many years. They are familiar with Accor and the global hospitality space, as Serge’s father Gilbert Trigano was CEO of French resort company Club Méditerranée between 1963 and 1993.
Mama Shelter has four properties in France (Bordeaux, Lyon, Marseille and Paris) and one in Turkey (Istanbul) with a total of 633 rooms. The company’s five-year pipeline includes properties in: Amsterdam; Barcelona; Lille (France); London; Los Angeles; Mexico City; New York City; Seoul; and a second Parisian hotel, according to a joint news release.
The Los Angeles (to open next February) and New York City Mama Shelter properties would give Accor an 11%-plus boost to its hotels in North America. Accor has eight hotels with 2,833 rooms in the United States and eight hotels with 1,883 keys in Canada since selling its interest in Motel 6 and Studio 6 to Blackstone Real Estate Partners VII in May 2012.
Director General and Co-founder Jérémie Trigano said the brand represents a “niche that Accor does not have.”
“But what they do possess, of course, is a database of some 40 million customers,” compared to Mama Shelter’s database of approximately 200,000, he added.
Under terms of the partnership, Mama Shelter will be able to access Accor’s distribution and development networks, “so for sure we will be benefiting from their expertise in purchasing,” Trigano said.
Some of the above pipeline already had been in development before Accor came on board, according to Trigano, whose family along with equity partner Michel Reybier started the company in 2008.
“When you are a smaller entity, (new hotels) take more time to develop, and key in this business is to expand faster. Our challenge will be to keep ourselves unique, both in staff and spirit,” he said.
Bazin said Mama Shelter generates much of its revenue via restaurants and related outlets.
“Mama Shelter has 70% of its business in food and beverage and secures high margins. There is in that definitely something from which Accor can learn, and also there is a distinct energy at Mama Shelter, lots of tattoos and piercings and one of the most innovative hotel families, so Accor absolutely wants to be part of that,” Bazin added.
“We know that Accor will be an amazing partner. Conversations started only a few months ago, and they told us, ‘Do what you do best and if you need us, ask us what we do best and can do for you,’” Trigano said.
Next week executives from Mama Shelter and Accor will meet investors in Dubai, United Arab Emirates, to go over ideas, pipelines and other developments, Trigano said. Mama Shelter executives will concentrate on growing the company’s base in Europe but also will look at possible sites in Asian and Latin American cities.
Analyst’s take: It makes sense
Simon Mallinson, executive managing director, Europe, Middle East and Africa, at Real Capital Analytics, said Accor’s investment makes sense in this business climate.
“The hotel investment landscape has become a lot more competitive in recent quarters. In the third-quarter 2014, European transaction volumes hit €3.8 billion ($4.8 billion), up 67% on the same quarter last year, while in the last 12 months volumes have been €26.1 billion ($32.9 billion, up 22% on the previous period).
“With this level of activity and competition, I can certainly see why accessing new product via a deal such as this would be attractive to Accor. (It) gives them a proven new product line with little of the development costs,” Mallinson said.