AccorHotels has teamed up with Katara Hospitality to set up a $1 billion fund that will focus on hotel investment in the sub-Saharan African region. The investment fund will initially be financed with $500 million raised from debt and co-investments. Over the next five to seven years, both parties will contribute the remaining $500 million in equity – Katara Hospitality will contribute an additional $350 million, while AccorHotels will contribute $150 million.
The fund aims to invest in 40 hotels (or 9,000 rooms) in greenfield and brownfield hotel projects, as well as into converting existing hotels. The hotels will be Accor-branded, ranging from economy to luxury market positionings. In Africa, AccorHotels operate 12 brands, including Fairmont, Sofitel, Novotel and ibis.
Katara Hospitality’s roots can be traced back to the establishment of Qatar National Hotels Limited in 1970. The company has since evolved into a developer, owner and manager of hotels in Qatar, and other parts of the world. Katara’s hotel portfolio includes 39 owned and/or managed hotels spread across the Middle East, Europe, North Africa, Asia, and the US. Some of its iconic properties around the world include New York’s Plaza Hotel (an Accor/Fairmont operated property), The Savoy London, and Raffles Hotel Singapore (also an Accor-operated brand after the acquisition of Raffles, Fairmont and Swissôtel in 2016). The company aims to achieve a target of 60 hotels by 2026. In North Africa, Katara owns the Renaissance Sharm El Sheikh Golden View Beach Resort, Egypt and the Tazi Palace Hotel, Tangier, Morocco. This venture will help launch its growth into sub-Saharan Africa.
AccorHotels is a Paris-based global hotel company that has made several acquisitions of hospitality and other related companies in recent times. The group’s recent acquisitions include a 50 per cent stake in South Africa’s Mantis Group and the Swiss-based Mövenpick Hotels. According to the 2018 Africa Hotel Chain Pipeline report by W Hospitality Group, the hotel group has 123 hotels (22,451 rooms) currently operating in Africa. It plans to add 37 hotels (10, 059 rooms) over the next five years, with 36 per cent (3,648 rooms) of this currently under construction. Accor opened 11 hotels (1,634 rooms) across Africa, in 2017.
Where many global hotel operators aggressively pursue an asset light strategy, Accor seem to be making pragmatic investment decisions to own assets. Earlier in 2018 the company spun off AccorInvest, its property investment arm. It sold a 55 per cent stake of its AccorInvest business to Saudi and Singaporean sovereign funds and other institutional investors for $5.3 billion. Richard Clarke, a senior analyst for European hotels and leisure at Bernstein Research estimated that Accor could earn “approximately 30 per cent of its income from asset ownership, far higher than its asset-light peers [such as] IHG, Hilton, etc.”
This is not the first time AccorHotels has been involved in a major hotel deal in Africa. In 2015, the hotel group signed a 50 hotel deal with Angolan insurance and investment company, AAA Activos, in a deal to brand and operate the hotels. This would have increased the branded hotel supply in Angola by more than 6,200 rooms. However, the hotel group reportedly broke ties with AAA Activos in February this year.
Sébastien Bazin, Chairman and CEO of AccorHotels, said in a press statement about the fund, “I am thrilled to announce this key alliance with our outstanding business partner Katara Hospitality. Having been present for over 40 years in Africa, we also know that there are increasing and sizable needs for quality hospitality…”
“Through this fund, we will match the expertise of Katara Hospitality together with AccorHotels’ world leading brand portfolio to accelerate our dynamic growth trajectory in the Sub-Saharan region. Above all, by this initiative we demonstrate our shared intention to support sustainable development over the long-term on this continent”. – Bazin, AccorHotels