French group Accor to sell US budget hotel business to Blackstone for $1.9 bn
22 May 2012
French hotel group Accor has agreed to sell its troubled US budget hotel business for $1.9 billion to private equity firm Blackstone Group, as part of its plan to focus on growth in Asia.
The Paris-based hotel chain will sell its US Economy Hotels Division to an affiliate of Blackstone Real Estate Partners VII, for $1.9 billion.
The network includes Motel 6, the iconic North American brand, and Studio 6, an extended-stay economy chain that comprises 1,102 hotels with 107,347 rooms in the US and Canada.
The business had revenue of €532 million last year, and operating profit of €15 million.
The sale will reduce the debt of Europe's largest hotel chain by approximately €330 million and its fixed-lease commitments by €525 million. The group will register an exceptional non-cash loss of €600 million ($766 million) linked to the early buyout of fixed-lease hotels.
''We are excited about the opportunity to acquire Motel 6 and we look forward to working with its employees and franchisees. 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,'' said Jonathan Gray, global head of real estate at Blackstone.