Accor buys Mantra for $1.2b

Accor buys Mantra for $1.2b

8 June 2018

AccorHotels has bedded down its $1.2 billion takeover of the Mantra business, making the French-based operator one of the largest players in the Australian hotel sector, reports the Sydney Morning Herald.

The deal saw Mantra, which has 138 hotels in Australia, New Zealand, Hawaii and Bali, with brands such as Peppers, BreakFree, and Art Series, delisted from the ASX on June 1.

AccorHotel guests will now be able to stay at a range of hotels from five-star luxe to resorts to family friendly properties. The ability to buy hotel rooms as investment assets and rent them back as hotel rooms at Mantra sites will remain intact under the AccorHotel deal.

The Australian Competition and Consumer Commission approved the takeover of the country’s biggest hotel operator chain in March, concluding that the two groups operated in different market segments, says Business Insider.

The deal will give Accor, which first came to Australia in 1991 with the Novotel at Sydney’s Darling Harbour, 330 properties across Australia. It is the largest hotel group in the Asia-Pacific region with 900 hotels and resorts.

The $3.96 a share cash offer meant Mantra had implied market capitalisation of $1.182 billion.

The business has around 22,000 rooms and more than $8 billion in assets under management, and an annual turnover of more than $660 million.

Mantra will continue to operate as a separate, Queensland-based business under Accor’s ownership, with Mantra Group leadership team on the Gold Coast reporting to them.

“Mantra’s brands and properties perfectly complement the AccorHotels network and will enable us to provide new destinations and new experiences for our guests,” said AccorHotels Pacific COO Simon McGrath.

The deal comes at a time when the national hotel sector is undergoing a demand-led development boom. This has raised some concerns of a potential over-supply, although operators say Sydney, in particular, is still under-supplied.

Melbourne has seen a plethora of new hotel openings in the past year, but due to its wide-ranging sporting and cultural events, occupancy is close to 90 per cent.

Accor will use its dominant market position to drive tourism growth in regional centres amid the best operating conditions in decades, Asia Pacific chairman and chief operating officer Michael Issenberg told the AFR.

Mr Issenberg said the completion of its $1.2 billion takeover of Mantra Group this week would help “bring in visitors and spread them around the country”.

“One of the attractions of combining Accor and Mantra is that our networks are complementary. Mantra is more represented in regional areas, particularly in Queensland while we are stronger in the capital cities,” he said.

“We want visitors to Australia to discover what the whole country has to offer,” he said.

Ownership of Mantra gives Accor added firepower in its battle with Airbnb for visitor’s wallets through Mantra’s big holiday apartment letting business, which includes such landmark properties as Gold Coast high-rise tower Soul operated under the Peppers brand.

Accor, like its competitors Marriott and Wyndham, has been buying up smaller hotel rivals to give it scale to not only compete with Airbnb, but also drive more direct bookings through its loyalty programs as they look to reduce the high-cost of using online travel agents such as Expedia, TripAdvisor and

Tony Ryan, managing director of global M&A at JLL Hotels and Hospitality, said the Accor-Mantra tie up had really put the spotlight on Australia. “Australia is now seen as a major global destination for hotel M&A,” said Mr Ryan, who acted as Accor’s commercial advisor on the deal.