AccorHotels' 50% stake in SBE Entertainment Group will open
new markets for both companies: It gives Paris-based Accor a stronger foothold
in the U.S. luxury lifestyle sector and enables SBE to tap into Accor's 45
million member loyalty program and global network of developers.
For Accor, one of the world's largest hotel companies, the
$319 million agreement to purchase 50% of SBE, which operates some of North
America's most prestigious lifestyle brands, including SLS and Delano, is the
latest in a buying spree that has included not only traditional hotel brands
but a home-sharing company and a concierge service.
The companies said Accor will acquire the 50% of SBE's
common equity, held in part by Cain International, for $125 million, while SBE
founder Sam Nazarian will continue to own the remaining 50% and retain
operational control. The company will keep its headquarters in New York.
In addition, Accor will invest $194 million to acquire
preferred equity owned by the two firms.
Sebastien Bazin, chairman and CEO of Accor, said the
investment "marks a new step in expanding AccorHotels' footprint in this
fast-growing segment in key U.S. cities such as Miami, Los Angeles or Las Vegas
and in other international destinations. The 'new luxury' is all about
exclusive experiences and incredible lifestyle concepts, and SBE brands have
the perfect know-how that will complete perfectly the AccorHotels portfolio."
Founded in 2002, SBE develops, manages and operates hotels,
residences, restaurants and nightclubs. Its hotel brands also include Mondrian,
Hyde, the Originals and Redbury Hotels.
By the end of 2018, SBE will operate 25 hotels, mostly in
North America, as well as 170 restaurants and entertainment venues around the
Accor operates hotels in more than 100 countries, although
the majority are in Europe and Asia.
Hospitality consultant Bjorn Hanson said SBE "has the
expertise in boutique and lifestyle, more than almost any other lodging
company. ... If it is not the future, it is a future."
Hanson added that SBE also has the expertise and reputation
on the food and beverage side "to create experiences, and that's what
Accor is known for."
The move is the latest in a series of investments and
acquisitions by Accor, which in recent years purchased Fairmont Hotels &
Resorts; luxury home-sharing and home-rental companies; the luxury concierge
service John Paul; and co-working, dining, events management and digital
Bazin also recently confirmed that the company is
considering a minority investment in Air France-KLM.
Hanson called the company's recent moves interesting. Asked
about the risks of such broad diversification, he said, "With risks come
rewards. It certainly has created visibility for Accor. It certainly has
created a level of excitement as the industry and travelers talk about Accor.
"So even before the business and integration issues, it
seems to be having a positive effect."