Accor in Talks to Sell $195 Million Stake in Ennismore to Qatari Consortium

Accor said on Tuesday it has begun exclusive talks to sell an 11 percent stake in its Ennismore joint venture to a consortium of Qatari investors. The transaction currently estimates the stake value at $195 million (€185 million).

The transaction would include $21 million of financing by Qatar First Bank. The deal requires regulatory approval and is expected to close by year-end.

The proposed deal would command a price 18 times the 2023 forecasted earnings before interest, taxes, depreciation, and amortization of the combined Ennismore group. In comparison, Accor Group as a whole currently has an enterprise value of 4.23 times its revenue.

"We have long argued that Accor has valuable assets hidden in their business, either because they are non-consolidated and don't contribute EBITDA [earnings before interest, taxes, depreciation, and amortization], or because they are overshadowed by the broader (and more prosaic) Accor portfolio," wrote Richard Clarke and his team at investment research firm Bernstein in a note.

"Accor's presence in luxury and lifestyle is a prime example, with these brands commanding a higher multiple in the open market," Bernstein's analysts wrote. "Potentially a similar deal could be done in luxury (Raffles, Fairmont, Orient Express) to demonstrate their presence in that high multiple segment? We expect further disposal of other hidden assets including JV stakes, the HQ, the Huazhu stake, and AccorInvest over the coming years."

Ennismore is a year-old joint venture between Accor, the Paris-based hotel giant, and Sharan Pasricha, a hotel entrepreneur and founder and co-CEO of Ennismore.

The group of about 130 lifestyle hotels includes 21c Museum Hotel, 25hours, Gleneagles, Hyde, JO&JOE, Mama Shelter, Morgans Originals, SLS, The Hoxton, and other brands, along with more than 275 food and beverage venues such as Paris Society. Hotels and restaurants split the revenue contribution roughly half-and-half.

The deal implies that the Ennismore joint venture has an enterprise value of more than $2 billion. If the planned deal concludes this year, Accor would retain a 62.2 percent stake in Ennismore, having held two-thirds of the unit since its official creation in October. The group has a pipeline of about 100 hotels.