Accor Plans to Separate, Sell Majority of HotelInvest Unit

  • Move comes after Accor completes purchase of Fairmont brands
  • Assets have climbed more than 25% to $7.8 billion since 2013

Accor SA, Europe’s biggest hotel operator, will separate its HotelInvest unit and plans to eventually sell a majority stake in the subsidiary to free up funds for the parent company to expand and improve existing lodgings.

“The project would enable HotelInvest to initiate a new phase of dynamic growth, by consolidating its existing asset portfolio through renovations, extensions and repositioning, expanding its network through acquisitions and hotel construction, and implementing an assertive asset turnover strategy,” Paris-based Accor said in a statement on Tuesday. HotelInvest will remain part of Accor.

Accor’s assets rose to 7 billion euros ($7.8 billion) last year from 5.5 billion euros in 2013, when it set up HotelInvest to buy properties after reversing a previous plan to sell assets and focus on management. Accor may sell as much as 80 percent of the subsidiary, Kepler Cheuvreux analyst Andre Juillard wrote in a note to clients on Wednesday.

Separating HotelInvest increases the possibility of mergers and acquisitions involving HotelInvest and HotelServices, which operates Accor’s lodgings, Barclays analysts including Vicki Stern wrote in a note to clients. “This is a particularly live issue in light of the recent stake acquisition by Jin Jiang.” The Chinese investor owns about 15 percent of the hotelier.

Accor rose as much as 4.9 percent in Paris trading, the most since July 1. The stock was up 3.8 percent at 39.04 euros as of 9:21 a.m.

Accor completed the acquisition of the Fairmont, Raffles and Swissotel brands on Tuesday for shares and cash from Prince Alwaleed Bin Talal’s Kingdom Holding Co., Qatar Investment Authority and Oxford Properties Group Inc.

The acquisitions of the brands will put Accor in a better position to compete with Marriott International Inc. and Hyatt Hotels Corp. as it seeks to attract a greater breadth of guests, Bloomberg Intelligence analysts Margaret Huang and Tim Craighead wrote in a June note.

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