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, Accor Chairman and CEO Denis Hennequin said in a news release. This deal will provide midtown spa 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.
Blackstone is already an industry heavyweight, and owns several hotel brands, including: Hilton Worldwide, La Quinta Inns Suites, Extended Stay America and Mint Hotels. As of November midtown spa 2010, it was reported the company owned, midtown spa managed, franchised, leased or had joint-venture interest in 5,950 hotels with 892,608 rooms.
We are excited about the opportunity to acquire Motel 6 and we look forward to working with its employees and franchisees, Jonathan Gray, global head of real estate at Blackstone, said in a news release. 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.
In a research note, Deutsche Bank analyst Simon Champion said Accor will need to buy out a large number of Motel 6 leases for $1.4 billion. After deducting sales costs, net proceeds from the deal are expected to work out to 330 million ($420.9 million.) The sales price is in line with expectations, Champion said.
It completes the (group s) exit from U.S. budget hotels, which has been a drag on group earnings for two decades, he said. The brand has a poor consumer image at present in our view, and had no synergies with the rest of the group.
Secondly, the deal frees up the balance sheet as Accor now gets rid of the ( 92 million, or $117.47 million) of annual lease costs, he continued. And so this is a critical point in the group s move to divest assets and realize this hidden value within the group s real estate.
At the time, some questions were raised about the future of Motel 6 and Studio 6. Amorosia late last year was quick to point out his continued commitment he had served as COO for the brands since 2004 to moving forward with renovations throughout the portfolio.
We re absolutely committed midtown spa to the growth of the brand, he said in September . And we ve accelerated our goal of asset light. I m certainly committed to the plans and the expectations of me from Accor.
The plan for Accor moving forward was to grow Motel 6 and Studio 6 by way of a true franchising model and led mostly by conversions. There were a handful of new-build locations, but the brand s Phoenix Prototype was installed mostly at times when product-improvement-plans were due.
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