Skift Take

Why go asset light when you can be asset right, or get into "active asset management" as AccorHotels likes to call it?

At a time when most publicly held hospitality companies are pursuing an asset-light strategy where they own little to no real estate, or hard assets, Paris-based AccorHotels has been somewhat of an outlier, buying up a variety of different brands and businesses, from luxury homesharing platforms like Onefinestay to concierge service providers such as John Paul.

AccorHotels’ latest announcement — its intent to buy the remaining shares of its Central/Eastern European hotel operator, Orbis — further bolsters that reputation.

On Monday, the company confirmed reports that it was planning to launch a tender offer of approximately $499 million for the remaining shares of Warsaw, Poland-based Orbis that it doesn’t already own, shares that represent 47.31 percent of the company.

Orbis is the exclusive master franchisee of a number of AccorHotels brands in Central and Eastern Europe, and its portfolio includes 128 hotels in a total of 16 different countries. Of those hotels, Orbis owns/leases 71, or a little more than half of the total properties. The majority of Orbis’ AccorHotels branded hotels are in Poland (65 percent), followed by Hungary (25 percent).

In a release, AccorHotels noted that the tender offer is “unconditional” and that the subscription period for the offer will be opened from December 17 to January 18.

“AccorHotels and Orbis have built a long-term partnership since their first business agreement 45 years ago,” Sebastien Bazin, AccorHotels CEO said in a statement. “As its largest shareholder since 2000, AccorHotels has fully supported Orbis’ growth in Poland, then across Central Europe since 2014, where Orbis has become today a formidable leader. The proposed transaction will enable AccorHotels to accelerate its development in the region. In addition, it will enable AccorHotels to further implement its active asset management policy.”

If AccorHotels ultimately succeeds in acquiring the remaining Orbis shares, the company intends to “consolidate its leadership in Central Europe and improve optionality on Orbis’ asset portfolio management.” And if AccorHotels has at least 90 percent of the share capital of Orbis, it will also “proceed with a squeeze-out of the minority shareholders” of the company.

In an investor’s note, Bernstein Research analysts said that AccorHotels’ offer is “opportunistic and simplifying,” and at a cost that’s 30 percent lower than what they would have paid earlier this year. However, they also wondered if AccorHotels has completely abandoned being a “pureplay asset light” company, shortly after the company spun off its real estate unit, AccorInvest earlier this year.

“If this acquisition goes ahead, this presumably means that Accor is no longer committed to being asset light (Orbis is predominantly an owner/lessee of its hotels),” Bernstein Research analysts wrote. “In which case, we would question why Accor sold off its real estate portfolio at all if it was going to use the proceeds to invest in more real estate? This transaction will make Accor even more cyclical, and would further justify a discount to US pure asset light peers.”

During an investor day on Tuesday, Bazin said, “The minute you decide to go asset light, you have to go all the way,” and he said that if AccorHotels is successful in acquiring all of Orbis, the company “will consider selling the assets of Orbis and pursuing very long-term management contracts.”

Shares of Orbis rose Monday following AccorHotels’ confirmation of its intent to buy up the rest of the company, increasing from $19.90 (75.8 Polish zlotys) to $24.94 (95 zlotys) a share.

Read more about AccorHotels’ strategy in the recently published Skift Research report, “A Deep Dive Into AccorHotels 2018: Measuring Success From Asset-Light to Acquisitions.”

Skift Editor’s Note: This article was updated with a quote from CEO Sebastien Bazin.

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Tags: accor

Photo credit: The Hotel Nemzeti Budapest - MGallery by Sofitel, is one of 128 hotels that Orbis owns, leases, or manages. Orbis

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