Accor announced on Tuesday that it signed an agreement to sell its Motel 6 and Studio 6 chains to an affiliate of Blackstone for US$1.9 billion.
As part of the deal Accor will take an exceptional non-cash loss of €600 million (US$765 million) linked to the early buyout of fixed-lease hotels in its U.S. economy division. However, Accor will reduce its net debt by €330 million (US$421 million) and its fixed-lease commitments by €525 million (US$670 million). The transaction is expected to close in October.
“I am delighted by the transaction signed with Blackstone, which ensures the future of Motel 6 and its teams in North America, where we will remain present with luxury and upscale flagships under the Sofitel and Novotel brands,” said Denis Hennequin, Accor’s chairman and CEO. “This deal will provide Accor with additional resources to address the tremendous growth potential in the Asia Pacific region, in Latin America and in Europe, where the leadership of our brands is one of the key drivers of our future growth.”
In the meantime Accor, Courcouronnes, France, finalized its purchase of Mirvac Hotels & Resorts, Sydney, and has no expansion plans for North America. The sale to Blackstone follows the company’s asset-light strategy. Accor’s U.S. economy division saw a profit of €15 million (US$19 million) in 2011 after posting a €4 million (US$5 million) loss in 2010.
“It was obvious that Accor wanted to sell, they wanted to go asset-light and this is a pretty smart way to do that,” said David Loeb, an analyst with Robert W. Baird & Co. “Blackstone has been very opportunistic in their acquisitions as of late and this is one of them. They probably see opportunities to finance the real estate effectively and capture a nice spread. They are doing that because they see very good fundamentals. When Blackstone is bullish, it means they have looked pretty deeply into the hotel industry’s crystal ball and see good things ahead.”
Blackstone said it plans to invest in the Motel 6 properties and to expand its franchise network.
“We are excited about the opportunity to acquire Motel 6 and we look forward to working with its employees and franchisees. Although Motel 6 will be operated on a stand-alone basis, similar to other lodging investments we have made on behalf of our investors, we plan to invest significant capital in the company’s properties and to accelerate the expansion of the franchise base,” said Jonathan Gray, Blackstone’s global head of real estate.
The Blackstone Group, New York City, also owns Hilton Worldwide and LQ Management in separate private equity funds.