AccorHotels buys 5% in Singapore’s Banyan Tree, boosts luxury portfolio

Image sourced from AccorHotels website

AccorHotels has bought an initial five percent stake in Singapore’s Banyan Tree Holdings as part of Accor’s current strategy to strengthen its luxury hotels portfolio to give a boost to its earnings.

The move follows similar deals by AccorHotels, which is Europe’s largest hotels group, in the luxury sector, such as its $2.7 billion acquisition of FRHI Holdings, which owns the Fairmont, Raffles, and Swissotel brands, and its takeover of UK serviced home rental company Onefinestay.

AccorHotels will invest 24 million Singapore dollars ($17 million) to buy a stake of 5 percent in Banyan Tree upon the conversion of a mandatory convertible bond. AccorHotels has the option to buy an additional stake of approximately 5 percent.

Luxury hotel operators can earn profit margins that are two to three times higher than those of budget hotels, and AccorHotels is hoping that expanding in this upmarket part of the industry will boost its profits, which have come under pressure due to security concerns impacting Europe.

“We are confident that our investment will create incremental value for our shareholders,” said AccorHotels chief executive Sebastien Bazin in a statement, commenting on the Banyan Tree deal.

AccorHotels has more than 4,000 hotels, resorts and residences worldwide. Its luxury portfolio now comprises Raffles, Fairmont, and various Sofitel brands.

Banyan Tree Holdings has 43 hotels and resorts under the four brands of Banyan Tree, Angsana, Cassia and Dhawa, as well as 64 spas and three golf courses in 28 countries.

Accor shares were down 0.2 percent in early session trading. The stock is down by around 13 percent so far in 2016.

AccorHotels cut back the upper end of its 2016 profit target range in October after its French and Belgian operations were hit by security fears in the third quarter.

Also Read: Singapore: Rowsley to acquire hotel manager Ariva for over S$10.6m

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Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.