Home > International Directory of Company Histories > Accor S.A. - Divesting Assets in the Middle and Late 1990s

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Divesting Assets in the Middle and Late 1990s

Accor's rapid expansion lost some momentum in the mid-1990s as its debt accumulated and a recession hit the travel industry. One of the first signs its steamrolling expansion would not continue was the loss of Accor's 1994 bid for a majority stake in the four-star Meridien hotel chain. Although Accor found funding through the Saudi hotel financier Prince Al Waleed, the company's bid still fell short.

In 1994 Accor sought to reduce its debt and free up funds for further expansion by selling some of its real estate and noncore businesses. Its principal strategy was to sell its expensive hotel real estate, but to continue managing the properties through leases. The same year Accor sold several Dutch Wagons-Lits enterprises and in 1995 sold its catering operations. Despite its divestments, Accor's nonhotel businesses were taking an increasingly prominent position in the conglomerate. The Carlson and Wagonlit Travel partnership was thriving, with sales rising from FRF 19.4 billion in 1993 to FRF 21 billion in 1995. Europcar, Accor's joint venture with Volkswagen, had become Europe's largest car rental company; in addition to its car rental fleet, by 1995 the company had 3.2 million leased vehicles. Net overall income for Accor had been rising since its 1993 low of FRF 423 million, to reach FRF 923 million in 1995.

Accor's hotel operations, however, remained the company's mainstay. By 1997 Accor operated 2,605 hotels with 289,200 rooms around the world. Sales from its hotel operations rose 16.6 percent in 1997 to FRF 18.6 billion. The company had placed its hotels in two groups: the business and leisure group, which consisted of Mercure (with 43,000 rooms), Novotel (with more than 50,000 rooms), Coralia (with 23,500 rooms), and Sofitel (with 20,500 rooms); and the economy group, which consisted of Motel 6 (84,500 rooms), Ibis (45,000 rooms), Formule 1 (22,000 rooms), and Etap Hotel (13,000 rooms). Accor continued to open new hotels, especially internationally. Its Asia-Pacific subsidiary, which the company had launched in 1993, controlled 144 hotels in 18 countries by 1996. With 56 more projects in the works, Accor Asia-Pacific had become that region's leading hotel group; its Africa/Middle East group operated 99 hotels by 1997, and its Latin America group, 89 units.

In 1997 the company's founders, Dubrule and Pelisson, reorganized the management of the company to reduce their involvement in the day-to-day decision making. The two chaired the new supervisory board but ceded the management board to Jean-Marc Espalioux. The same year, the merger of the travel agency businesses of Accor and Carlson was completed, making Carlson Wagonlit Travel one of the largest travel agencies in the world. Accor unveiled a restructuring plan in 1998 to substantially reduce its debt load through workforce reductions, selling numerous hotel properties in the United States and Europe (in favor of leasing them), and selling its Spanish concession restaurant subsidiary, General de Restaurantes S.A. Proceeds from these measures fueled expansion in the Asia/Pacific region and the 1998 acquisition of Postiljon, a Dutch hotel group the company planned to incorporate into its Mercure chain.

As the century drew to a close Accor made another pivotal move into the U.S. hospitality industry, buying Red Roof Inns for $1.1 billion. Red Roof, considered a step or so above Motel 6, brought in revenues of more than $375 million in 1998 and net income of more than $34 million. Accor had raised the majority of the funds by selling hundreds of its Motel 6 properties in lease-back deals to generate cash for the Red Roof Inn purchase and other hotel properties in Western Europe and Australia. Accor also entered a joint venture with the Moroccan and Tunisian governments to build and manage resorts and spas in those countries, with an investment of at least $250 million in 1999.

1. Introduction
2. Early History: The 1960s and 1970s
3. New Ventures in the Early 1980s
4. Continued Expansion in the Late 1980s
5. Acquisitions in the Early 1990s
6. Divesting Assets in the Middle and Late 1990s
7. The New Millennium: The Early 2000s
8. Principal Subsidiaries
9. Principal Competitors
10. Further Reading
11. Copyright Page
12. About Page