AccorHotels to Buy Majority Stake in 21c Museum Hotels
- Aug 02, 2018
Paris-based AccorHotels continues making investments in the luxury and lifestyle hospitality sector by agreeing to acquire 85 percent of 21c Museum Hotels, its second U.S. deal in a month.
The purchase price for the majority stake is $39 million, excluding potential earn out. No real estate is included in the deal, which is expected to close by the third quarter.
21c Museum Hotels, founded in 2006 in Louisville, Ky., by philanthropists and contemporary art collectors Laura Lee Brown and Steve Wilson, has combined art museums, boutique hotels and chef-driven restaurants into eight U.S. hotels with three more in development in Chicago, Miami and Des Moines, Iowa. In addition to the flagship on West Main Street in Louisvlle, 21c Museum Hotels are located in Cincinnati; Oklahoma City, Okla.; Bentonville, Ark.; Durham, N.C.; Kansas City, Mo.; Lexington, Ky.; and Nashville, Tenn.
The hotels will be part of the MGallery collection, but their names won’t change and President & CEO Craig Greenberg will continue to run 21c from the corporate headquarters in Louisville. The husband and wife team of Brown and Wilson will retain a 15 percent stake and remain closely involved by providing creative guidance of the art, design and hospitality concept. It will be MGallery’s brand introduction into the North American market.
“We are delighted to welcome 21c Museum Hotels as part of the AccorHotels family of brands, hence strengthening the group’s footprint in North America in a very unique and promising niche. Together we have a tremendous opportunity to grow the 21c brand as well as introduce MGallery into the North American market, building both brand equities and further expanding the full range of unparalleled experiences for our guests,” Kevin Frid, chief operating officer, North & Central America, AccorHotels, said in a prepared statement. “This strategic acquisition marks a new step in AccorHotel’s strategy of being the leading player in the luxury and lifestyle segment in North America.”
Wilson, in prepared remarks, described AccorHotels as the perfect partner and a catalyst for the 21c’s continued growth.
“We are confident that the unique spirit of 21c will not only be preserved, but flourish within the MGallery collection of boutique hotels,” Wilson said. “21c will continue to bring the work of today’s most dynamic and engaging contemporary artists to the public, and this partnership will be a tremendous boost for 21c’s continued development in North America and abroad.”
AccorHotels making deals
The 21c deal comes within weeks of a letter of intent signed in early July by AccorHotels and sbe Entertainment Group for AccorHotels to pay $319 million for a 50 percent interest in the Los Angeles-luxury hospitality company. The transaction would include a $125 million purchase of 50 percent of sbe’s common equity, effectively creating a partnership with Sam Nazarian, sbe founder & CEO. Nazarian would continue to run sbe once the deal closes. The partnership would allow AccorHotels to continue its U.S. expansion, while giving sbe a platform to grow domestically and abroad.
sbe’s portfolio includes the Mondrian Los Angeles, Delano South Beach in Miami and Mondrian Park Avenue in Manhattan.
An investor and operator, AccorHotels is a global travel and lifestyle group that offers guests experiences in more than 4,300 hotels, resorts and residences, as well as in more than 10,000 private homes. It operates in 100 countries and has hotel brands in the luxury, mid-scale, boutique, economy and regional segments. MGallery is among its luxury brands that include Raffles, Sofitel Legend and Fairmont. Popular mid-scale and boutique brands include Novotel and Adagio.
In May, the company and Chilean group Algeciras signed an agreement to acquire the property company owning Atton Hoteles’ 11 assets in Chile, Peru, Colombia and Florida, in a joint venture giving AccorHotels a 20 percent ownership interest. The Atton brands will eventually be rebranded to Pullman, Novotel, MGallery and Mecure properties.
That deal came just weeks after AccorHotels has entered into an agreement to acquire Switzerland’s Mövenpick Hotels & Resorts for $560 million. AccorHotels is purchasing the international upscale hotel management company from Mövenpick Holding and Kingdom Holding in an all-cash transaction. Mövenpick manages 84 hotel properties encompassing more than 20,000 guestrooms across 27 countries.
AccorHotels’ investment activity and expansion push comes at a time when hotel occupancy, which was at a more than 30-year record high at the end of 2017, is expected to continue to be strong as guestroom demand outpaces supply, according to Marcus & Millichap’s 2018 Hospitality Investment Forecast. This year, the annual U.S. occupancy rate is forecast to rise 30 basis points to 66.3 percent. Overall supply is projected to increase 2.0 percent, with most of the additions coming in the upscale and upper mid-scale segments, particularly in New York City, Nashville, Tenn., and Dallas/Fort Worth. The improving economy is also expected to increase business and leisure travel, with Millennials in particular looking for unique and experience-oriented hotel stays.
Image courtesy of AccorHotels