Self worth is a funny thing and its relationship with actual worth even funnier. Depending on how much your grandmother berated you as a child, you’ll have an idea of what your time and general brilliance should equate to in cash. You won’t get out of bed for less than ten grand a day but you might stay in bed and pen the odd email for five grand.
Others may not agree, so it’s best to have some internal reserves to see you through the dark times while you haggle over invoices.
Such are the dilemmas which have been agitating economists for years. It’s no better – and usually worse – in hotelland. The public markets don’t know how to value hotel companies. Private equity only wants hotel assets and then only if the doors are hanging off yet it’s on a private beach in Barbados. High net worths want to take properties out of service for generations and ruin it for everyone.
All of this has been running around in the mind of Accor, a company where the discrepancy between what the public markets think and its own opinion has presented an arbitrage opportunity even the enterprising Trump sons have failed to monetise.
Yet monetising must happen, so last year Accor had thoughts of selling off either the luxury or budget brands, thoughts which were ultimately nixed. This year Sébastien Bazin, chairman & CEO announced that, in the spirits of “pursuing our growth trajectory and operational and financial discipline, while activating new levers for value creation” the group was exploring the possibility of a potential listing of Ennismore, the lifestyle brands portfolio.
He added: “As a key asset for the group, we intend, if this transaction occurs, to retain control while providing it with even more resources to accelerate its development.”
So what is this Ennismore of which he speaks? CFO Martine Gerow was dispatched to talk to the analysts, who were understandably intrigued by the use of ‘IPO’, a term which has not warmed the ears of the sector for some time. However, EY was recently suitably positive around the idea of IPOs, so maybe it’s worth a crack.
Gerow told the assembled that Ennismore was a leading player in the fast-growing lifestyle hospitality segments with 192 hotels and over 500 restaurants and bars.
Accor has developed a reputation as being somewhere which do love to acquire brands but maybe doesn’t always play with them as much as they should once they have them, so Ennismore has done better than many in its stable.
The entity created in 2021 by Accor and Ennismore which operates under the Ennismore name was two-thirds owned by Accor and a third by Ennismore founder Sharan Pasricha. In 2022, Ennismore was valued at more than €2bn when Accor sold a 10.8% of its stake in Ennismore to a Qatari consortium.
Gerow said that Accor would remain the controlling shareholder of Ennismore and that a listing would “enhance liquidity for minority shareholders and provide additional flexibility to support Ennismore’s growth platform” (Ennismore likes to grow through buying stuff).
Those minority shareholders, she said, “had certain liquidity clauses which were essentially exercisable during a certain time frame. We’ve reached that time frame, and this is why we’re now considering and evaluating a potential listing of Ennismore. It’s yet to be decided if Ennismore was to be listed, how that liquidity would be composed of. There’s an expectation that all shareholders probably would have to contribute to that liquidity”.
So, should it list, what are you getting? Back in 2021, when Accor and Ennismore were finalising their joint venture, Accor deconsolidated the leased hotel assets grouped together within a separate structure, created in partnership with a fund managed by Keys REIM, which became the majority shareholder with a 51% stake, the subsidiaries of Accor and Ennismore respectively holding 24.5% of this new entity.
In 2022 this KNSA Hospitality acquired the Mama Shelter Lille. It describes itself as “a lease company with a well established lifestyle hotels” and currently operates 26 properties in Europe (Germany, France, Switzerland, Austria, Italy & Denmark) under 25hours Hotels, Mama Shelter, Jo&Joe, Hoxton & Tribe brands. Yes, those brands.
Earlier this year Keys REIM was acquired by asset manager Atland, just to add a few more feet around the table.
There has been no mention of KNSA being involved in the IPO, so will the Ennismore IPO be just a brand deal? Have Baz and co been inspired by the sale of CitizenM – and other brands – and decided to sell Ennismore but hold onto it at the same time?
It’s no great shock to regular observers of Accor that the group likes to mix it up. Currently in the process of getting out of Essendi, the former AccorInvest, they are now thinking of popping part of the company onto the public markets. Anyone planning a takeover is likely to be deterred, if not actively frightened by the complexity.
Of course regular readers will recall that the only way for Accor to really live up to its promise is to merge with Marriott. Maybe Eric and Don Jr would like to make the introductions.
