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The initial investment is worth $17.3 million (€16 million) and AccorHotels has the option to purchase an additional 5 percent.
The two companies will work towards expanding the Banyan Tree brand around the world. Banyan Tree will also have access to AccorHotels’ global reservations and sales network, as well as its loyalty program Le Club AccorHotels.
Banyan Tree has 43 hotels and resorts, 64 spas, 77 retail galleries, and three golf courses in 28 countries.
The deal increases AccorHotels’ presence in the luxury end of the market and follows the purchase of Fairmont Raffles for $2.7 billion, which completed this year.
Sebastien Bazin, CEO and Chairman of AccorHotels said, in a statement: “Our collaboration with Banyan Tree is a great opportunity to complement our business proposition to owners with iconic brands, while always better servicing our guests.
“Banyan Tree Holdings has created key leading positions across Asia with luxury resorts, one of the fastest growing segments in the industry. We will bring scale to the network through our ability to develop and manage hotels under the Banyan Tree brands globally, hence strengthening our leadership in the luxury hotel space.
“We are confident that our investment will create incremental value for our shareholders.”
Ho Kwon Ping, Executive Chairman of Banyan Tree, said: “This agreement is not only transformational for Banyan Tree, but is also an innovation for the global hospitality industry. With the current consolidation of mega hotel companies, smaller but also global players – many family-controlled – are also seeking strategic alliances with the global giants.
“Our strategic alliance with AccorHotels allows us to remain an independent company, enabling us to continue securing hotel management agreements on our own and yet accelerating Banyan Tree’s speed and scope of expansion but with AccorHotels helping us to grow our brands around the world.”
Skift spoke with Gaurav Bhushan, chief development officer of AccorHotels, who explained why the deal was set up the way it was: “The deal really has two parts. We’re investing in a company that has good growth potential and is a good investment. Securing global development rights for Banyan Tree brands, that is obviously a very important part of the deal. As is being part of the AccorHotels portfolio of luxury brands, and having distribution through our distribution system, and being a part of the loyalty program. To have a strong brand and network like Banyan Tree available to our luxury customers is a grate value add for our loyal customers. There were several factors involved in this deal: the investment side, the development rights, and the distribution and loyalty component. They all go together, really.”
Bhushan added that AccorHotels sees tremendous growth potential for Banyan Tree not only in Asia but also in the Middle East and in Central America and the Caribbean, as well as some destinations in Europe.
He also noted that distribution will work both ways, meaning that customers can book Banyan Tree hotels on AccorHotels’ site, and customers can also book select AccorHotels properties on Banyan Tree’s site, too.
“It will work both ways,” Bhushan said. “People will be able to book Banyan Tree hotels on the Accor platform and also be able to book Accor hotels on the Banyan Tree platform. It may not be all the hotels, however. We will probably restrict it to a certain type of hotel and possibly the luxury hotel portfolio — we still have to work that through — but the objective is definitely to cross-sell each others’ brands.”
AccorHotels’ purchase of a minority stake in Banyan Tree follows a number of other deals made by the Paris-based hotel company in 2016.
Earlier this month AccorHotels bought concierge and loyalty provider John Paul and in November it invested in boutique brand 25hours Hotels. It also spent $168 million on upmarket Airbnb competitor Onefinestay.
Bhushan said AccorHotels isn’t interested in acquiring scale for scale’s sake, even if consolidation is a popular trend throughout the hotel industry this past year.
“We have a strategy to grow our portfolio of brands to create scale, but it has to be logical, it has to be accretive. You will see that all the acquisitions and investments we are making are focused on the luxury, resort, and lifestyle segments. They are things we’ve identified sometime ago as key growth areas to complement our portfolio. Our previous network was mostly economy and midscale in Europe. Luxury, lifestyle, and leisure are key areas of growth to be a balanced hotel company, and that’s the hotel strategy we continue to follow. Having a comprehensive network and portfolio of brands drives direct distribution through our website and it builds our loyalty program.”
He added, “Look, we’ll continue to look. We’re not out there buying for the sake of buying. We’re pretty careful in what we invest in or buy. But we are always open to looking for accretive opportunities — either from a network or brand perspective.”
With contributions from Deanna Ting.