Earlier this week, AccorHotels announced yet another investment, marking the company’s second major deal for 2017, following its intended purchase of Travel Keys. The Paris-based hotel company said that, in an effort to expand its growth in the upper upscale and luxury market, it would enter into a long-term joint venture with Antalya, Turkey-based Rixos Hotels.
Rixos operates 20 resorts and hotels primarily in Turkey and the Middle East, and has also invested in Turkey’s largest entertainment center, the Land of Legends theme park which opened in July 2016.
Under this partnership, AccorHotels will eventually own a 50-percent stake in the joint venture management company and will integrate 15 Rixos properties into its network. The remaining five city center hotels will be reflagged to AccorHotels brands and will be managed by Accor. Rixos is also planning to add a second hotel in Dubai and two other properties in Abu Dhabi and the Maldives by 2018, and this partnership also includes management of the hotel within the Land of Legends theme park.
During a press conference on March 6, AccorHotels CEO Sébastien Bazin said, “In order to penetrate such a large but difficult country, you can only do it if you find the right partner with whom you can interact with, who you can take the risk [with].” He added, “Everything worked from the very first day. No second guessing a lot of trust a lot of respect a lot of common will to build something together.”
When Skift asked Bazin, during the same press conference, about the risks of investing in a company that has such a large concentration of its portfolio in Turkey, where recent geopolitical events, including a military coup and a number of terrorist attacks, Bazin did not give a response.
Turkey’s tourism industry, in particular, has had a very tough year. In 2015, the country was the sixth most visited destination in the world, earning some $31.5 billion in tourism dollars. But last year, the country saw a 30-percent drop in visitor numbers from January to November, from 34.8 million visitors in that same period in 2015, versus just more than 24 million in 2016.
If Bazin’s previous comments about investing in regions that might be deemed too risky for others is any indication, however, it seems he is confident about the longer-term returns from an investment like this one.
During AccorHotels’ fourth quarter and full year earnings presentation last month, he spoke of the company’s decision to invest heavily in Brazil, saying, “We’re not overlooking Latin America because we are also the strongest of all hotel groups in South America, another 26,000 rooms, a lot in Brazil because it’s very often in difficult times that we should invest. It’s a good time to invest in Brazil even though we don’t know whether to take a year, two years, three years to turn the situation around. It’s important to know when to invest.”
He added, “When you look back on all that’s happened, should we have invested in the U.S. four years ago? Should we have invested in Spain three years ago? And sometimes we think, yes, well, maybe we should have done that except that at that time, at that particular point in time people having the courage to invest except that we do and we are investing in Colombia, Chile, Uruguay, Argentina.”
Given AccorHotels’ completed acquisition of the Fairmont, Raffles, and Swissotel brands and the company’s decision to establish a Luxury Brands collection last year, it’s clear the company is also focused on growing its portfolio of luxury hotels, in addition to building up its reputation as a major luxury player.
In a prepared press release announcing the joint venture, Bazin said, “”This new partnership has many benefits for us. It enables us to become a leading resort operator in a growing market and to complement our offer with attractive leisure destinations to our guests and loyalty members. And moreover, we are going a step further in our ambition to be the best provider of multi-nature services to guests by operating hotels in major entertainment complexes which offers new opportunities both in terms of customer experience and of development strategy.”
Fettah Tamince, founder and chairman of Rixos said in the same statement, “Our collaboration is part of Rixos’ objective for further expansion and growth globally with a strong partner in the hospitality industry. Combined with our partner’s strong brand portfolio, reservation and sales network supported by a wide range of digital marketing activities, Rixos will expand its current geographic footprint & customer base. It is also a great opportunity for our customers to benefit from our participation in Le Club AccorHotels, which is recognized as one of the most powerful loyalty programs in the industry with over 100 million members.”
Skift Europe Editor Patrick Whyte contributed to this article.