Accor and Ennismore have announced they are entering into exclusive negotiations to form a new lifestyle operator in the hospitality sector.
Through this all-share merger, a new autonomous and fully asset-light entity will bring together a decent portfolio of brands, including The Hoxton, Gleneagles, Delano, SLS, Mondrian, SO/, Hyde, Mama Shelter, 25h, 21c Museum Hotels, TRIBE, JO&JOE, and Working From_.
The new entity will be headquartered in London and will take the name Ennismore.
Sharan Pasricha, founder and CEO of Ennismore; and Gaurav Bhushan, CEO of Accor’s lifestyle division; will become co-chief executives of the combined entity.
Accor will be the majority shareholder of the new entity, with Pasricha holding a substantial minority position.
At its inception, the combined entity will comprise 12 brands with 73 hotels in operation, with a committed pipeline of more than 110 hotels and around another 70 hotels under active discussion, along with over 150 destination restaurant and bars.
Based on the current network and pipeline, the new lifestyle platform should achieve an EBITDA of more than €100 million ($163.2 million) by mid-term, and result in cost synergies of approximately €15 million ($24.5 million) per year.
In order to form this joint venture, Accor intends to buy out partners SBE, Mama Shelter and 25h.
The new company will hold all the leased assets under the combined entity’s brands, and the deconsolidation of the existing leases will have a positive effect to the tune of €52 million ($84.9 million) on Accor’s consolidated net debt in 2020.
Accor’s lifestyle operations today represent roughly five per cent of the group’s fees and over 25 per cent of its pipeline fees.
The group said growth will be accelerated, building on a strong footprint in Europe and the US, and a rapidly expanding presence in the Asia Pacific, the Middle East and South America supported by Accor’s development teams.
The deal is expected to close in the first semester of 2021 and is subject to an employee consultation process and customary regulatory authorisations.
Accor chairman and CEO Sébastien Bazin said: “Lifestyle, entertainment, places with a soul have been at the heart of our development and growth strategy over the last years.
“Partnering with Ennismore’s founder, Sharan, and his great teams will take our lifestyle ambition to a new and exciting level.
“With this combination, we are leading the hospitality industry by creating the largest and fastest-growing ecosystem of world-class brands.
“Lifestyle is a sector fuelled by passionate and daring entrepreneurs, constantly pushing the boundaries of a reinvented vision of travelling the world. I am proud Accor has been able to join forces with many of the most creative and talented ones.
“This new powerful combination is set to become the engine of our exciting future growth.”
Featured image source: Mondrian Los Angeles