A Lifestyle Revolution: The Merger Between Accor And Ennismore Ushers In A New Era Of Hospitality
French hospitality giant Accor entered a new partnership with Ennismore, an innovative, independent operator, in order to form the world's leading lifestyle entity.
In November 2020, French hospitality giant Accor announced that it had entered a new partnership with Ennismore, an innovative, independent operator, in order to form the world's leading lifestyle entity, bringing together two of the sector's biggest players in a game-changing move, which would set the tone for a myriad of exceptional, guest-centric experiences under 12 world-class brands.
Owner of The Hoxton and Gleneagles, Ennismore's merger with Accor, the group behind lifestyle brands including Mondrian, SO/, Hyde, Mama Shelter, 25hours, 21c Museum Hotels, TRIBE, JO&JOE, and more, will result in a combined entity which will keep the Ennismore name.
Sharan Pasricha, founder and CEO of Ennismore, and Gaurav Bhushan, CEO of Accor Lifestyle, will cooperatively lead the new lifestyle entity, of which Accor will own two-thirds and Pasricha one-third. The company will base its headquarters in London. "The essence of this partnership is rooted in benefitting from the scale, size, distribution, network and reach of Europe's largest hotel company, Accor, and the independence, autonomy, authenticity, storytelling, and creativity of Ennismore," says Pasricha.
The young serial entrepreneur founded the business in 2011, and he oversees the overall strategy of Ennismore and its brands. Named as one of Condé Nast Traveller's "50 People Changing the Way We Travel," Pasricha leads a team of over 150 employees in his London and New York offices, and 2,500 across his hotels and restaurants. "The merger is about taking brands and ensuring that they live on in countries around the world, but also that they are purposeful, have meaning, depth and authenticity," he continues. "A compelling culmination, it allows them to flourish under the independent, autonomous structure we created, but also benefit from the global reach and scale of Accor around the world."
The combined entity, at its inception, will comprise 12 brands with 73 hotels in operation with a committed pipeline of more than 110 hotels. Another 70 hotels, and over 150 destination restaurants and bars, are also under active discussion.
Co-CEO Bhushan, who embarked on his career journey at Accor in Australia, has held various positions in operations and finance, followed by hotel development in the Asia- Pacific region. He was appointed Global Chief Development Officer of Accor in 2015, where he was responsible for the group's network development worldwide, as well as M&A and Strategic Partnerships.
Left to right: Louis Abi Abboud, Vice President, Development - Middle East, Accor, and Mark Willis, CEO - India, Middle East, Africa, and Turkey, Accor
Under his leadership, Accor's footprint experienced an unprecedented expansion with the opening of one hotel a day on average. Bhushan is a member of the group's Executive Committee, and he is also currently a board member of Accor Invest, 25Hours, Banyan Tree, Rixos, and sbe.
"I have been fortunate enough to be a part of this journey from the beginning," says Bhushan. "With only two hotels in 2017, we began studying this space quite vigorously. Our main focus has always been analyzing customers' behavior, trying to understand, very carefully, the choices they consistently make. Evidently, there had been a shift from a functional approach, to more experiential one. Hence, our focus was then directed towards building experience-led brands with that notion at the core."
For Bhushan, the pursuit of fulfilling experiences drives today's guest, even if it comes at a higher price bracket. "People will travel very far just so they can savor the right stay. Even if you don't have the best location in town, it's all about crafting that for them."
It was precisely that which had prompted Accor, the largest hospitality company in Europe and the sixth largest worldwide, to aim for a more balanced portfolio. "The group has done an amazing job with the midscale and economy segments, with ever-popular brands such as Novotel, ibis and more. However, as we further build our portfolio and look at where the business world is headed, we're seeking a stronger presence in the luxury and lifestyle domains," he explains. "This partnership enables Accor to be at the forefront of lifestyle hospitality. With it, the group reinforces its offering in one of the fastest-growing segments of the industry. Accor's Lifestyle operations represent five per cent of Accor's fees, but over 25% of pipeline fees. It will continue to be an important piece of the puzzle over the next ten to 20 years, as we consistently maintain this approach to business."
Yigit Sezgin, Chief Commercial Officer at Accor, also asserts that the merger will accelerate market penetration for the group. "I'm very excited to be a part of this organization and its developments, especially with our latest announcement regarding Ennismore," he says. "Lifestyle will undoubtedly be the "name of the game' in the hospitality industry for years to come, and Ennismore will be a game changer for Accor. We're very excited to bring these fantastic and fun concepts into the region, as we aim to become the LVMH platform in this field through strong partnerships in food and beverage concepts and lifestyle brands, which will aid us in penetrating this dynamic market at a faster rate."
This is the sentiment that is echoed by Louis Abi Abboud, Vice President, Development - Middle East, at Accor when asked to explain his enterprise's keen interest in the lifestyle domain at this point in time. "The industry is shifting towards lifestyle," he says. "Guests today are looking for brands with purpose, offering a curated and elevated guest experience, with bespoke unique designs, powered by solid destination restaurants and bars that are deeply rooted in local communities. If we are incapable of shifting our offering to meet guest needs, we will no longer be relevant in the market. In short, lifestyle is at the core of Accor's future growth strategy, because this is what both investors and customers are asking for."
Yigit Sezgin, Chief Commercial Officer at Accor
Abi Abboud reveals that Ennismore and Accor's individual lifestyle brands will remain "fiercely independent," and that they will operate autonomously in terms of management, culture, design, etc. Outliers to the industry may think that this proposition might be hard for Accor to actually implement, but he points out that his enterprise has already proved itself in this aspect. "Accor has showcased over the past few years its ability to work and retain some of the most entrepreneurial/ creative minds of our industry, from Christoph Hoffman and Alan Faena to the Triganos. While being a massive multinational, we have managed to allow these individuals to remain fiercely creative, while offering them a global platform to shine on. This is all due to an entrepreneurial spirit and culture triggered down from our leadership at Accor."
Partnerships like these are also not new to Accor, Abi Abboud adds. "In 2014, Accor started acquiring some of the industry's most innovative and quirky hotels brands," he recalls. "We started in 2014 with Mama Shelter, followed by 25hours, then the SBE portfolio, TRIBE, and recently, the crown jewel collaboration with Faena. Regionally, we managed to sign most of these brands instantly post acquisition. The Mondrian in Doha is open, and we're opening SLS Dubai, 25hours Dubai, and Mama Shelter Dubai and Bahrain this year."
"We're planning to shortly announce a Faena in Dubai, an SLS in KSA, and many more. The Ennismore JV will boost our growth by giving us even more credibility in this field." Both Bhushan and Pasricha also believe in the importance of adapting to local markets. "We have an interesting mix of brands, some of which have originated in the US, and others in Europe. There's no question that you have to be sensitive to the local market; our greatest opportunity to do that is through F&B– cuisine. However, while guests may be looking for an international hotel, they still seek one that exudes brand values," says Bhushan.
"For example, the SLS in Dubai will be a beautiful luxury lifestyle hotel, with a positioning that is similar to that we had in Miami or The Bahamas, but with an adapted F&B and entertainment offering to suit the local market," he adds. "Sharan has a lot of experience, and we have a fantastic team in the Middle East led by CEO India, Middle East, Africa, and Turkey, Mark Willis, and Chief Commercial Officer of Accor, Yigit Sezgin, who understand the market very well. We're also exploring partnerships with the best operators in F&B and entertainment. I'm confident that when it comes with brands, teams and partnerships, we'll come up with a world-class product that's nothing short of extraordinary."
For his part, Willis is clearly excited about the impact Ennismore can have on Accor's operations in India, Middle East, Africa, and Turkey. "Setting up Ennismore with a focus on lifestyle as its own segment emphasises the importance of this market for Accor," Willis notes. "Having a lifestyle division with its own dedicated team ensures that focus is given to the brands in regard to expansion and property openings."
While Ennismore will be having its own team led by Pasricha and Bhushan, Willis says he and his team will also be throwing their weight behind the new venture. "Of course, we will support all Ennismore activities in our region with our full team, be it with openings or operating hotels," Willis says. "We're extremely committed to making sure Ennismore is a success, not only in our region, but also globally."
SLS Dubai Hotel & Residences
Willis is also hopeful about more of such mergers happening in the future, especially for an industry that's still recovering from the effects of the coronavirus pandemic that struck in 2020. "I do believe we will see more partnerships taking place in the future in the travel and hospitality industry," he says. "The last year has really shown us how working together strengthens the entire industry."
Speaking with respect to the MEA specifically, Willis believes such collaborations will also prove enticing to patrons in the region, with them able to look forward to unique properties, which will bring a complete new look and feel to the hospitality landscape. "We want to ensure that the brands stay true to their DNA, with some local influence, which relates to their location. With brands such as Faena, SLS, 25 Hours, guests can expect to see the unique propositions which stand out in terms of look, feel and service provided to them." And what would venturing into new markets while maintaining brand essence require? Pasricha explains: "We enter every market with a great deal of confidence in our product, but with equal humility coming into every city. The best part of my job is to meet people, talk to them about what we're trying to do and make it very relevant to the type of guest and cultural intricacies."
"Nothing we do is copy and paste; in fact, at times, I feel like we need more standardization– to make our lives easier, in the least. However, by no stretch of the imagination would that ever be the case." Pasricha describes every product, experience, food and beverage outlet, and service market delivery under Ennismore as locally adapted, which he sees as the best part of the company's journey. "You're the best reflection of the city you're in; that often means transporting people outside their environment, and into our world. It's fun to transfer this to the exciting Middle East market."
Bhushan agrees; with his experience spanning over a decade in the market, he recounts how he had witnessed growth in the Middle East, and especially Dubai as the Emirate evolved into the incredible destination that it is today. "We have a massive-scale trajectory of opportunity in this global city; I'm super excited about our prospects here."
Pasricha highlights how following local guidelines in cities like Dubai has been crucial throughout Ennismore's journey, and how it will continue to play a major role. One of the elements of creating localized experiences, digitization, had been further highlighted during the pandemic. "We're always trying to stay one step ahead. A lot of customers directly engage with our channels; we get a disproportionate amount of business off that, and that's how many of our F&B outlets have become destinations in their own right, as opposed to just being a part of a property– it's a good indicator of how localized we are.
Looking back at a time when talks of the merger began to flourish, an active dialogue and a commitment to creating purpose-driven brands fueled Pasricha's discussions with Bhushan and Accor CEO Sébastien Bazin. The entrepreneur, who had spent most of his career building brands and telling stories that underline authenticity, believed that Accor had been adopting this exact approach with its acquisitions. "If you allow these brands to grow, while they are still under their founders' leadership, but within a structure that's autonomous –it generates a powerful recipe for building this business at scale– and that is something that hasn't been done before."
Sébastien Bazin, CEO, Accor
While most groups tend to form lifestyle divisions within larger companies, Pasricha remarks, the Paris-based group's leadership had understood the importance of an independent vehicle– one that was based on creativity and exceptional F&B programming. "That really enables us to ensure that every brand we have has a mission, a purpose, a reason for being," he says. "That, coupled with the might of Accor's distribution and global development team and network around the world, is what makes this the most compelling lifestyle partnership that this industry has seen in decades."
To form the new company, Accor will pay $300 million for the remaining 50% of sbe Group and take full ownership of sbe– of which it had acquired a 50% stake in late 2018. sbe includes the Mondrian, SLS and Hyde, as well as F&B brands Cleo and Carna by Dario Cecchini. These brands will be at the center of the global lifestyle platform. Accor also plans to buy out its partners in Mama Shelter and 25hours.
"What we're trying to do, is to have the best of both worlds," says Bhushan. "The autonomous portion caters to what the customer can touch and feel; everything from brand experience and product, to design, social media, and marketing would fall under this facet, which requires very specific skillsets and mindsets for operations and development."
Ennismore, with the support of all of Accor's regional hubs, is set to drive customer-centric areas through a heavily brand-focused setup. "Our goal is to fully utilize Accor's presence in every single market; this requires a synergy between the new entity and on-the-ground finance, sales, revenue management, and more, not to mention technical services from highly skilled teams in every region," adds the Accor Lifestyle CEO. "We're putting together an unrivalled portfolio of unique brands, which appeals to owners, partners and guests, supported by the greatest set of talents in the industry, state-of-the- art distribution and tools, and a common ambition to continue to grow and innovate."
In terms of revenue, Accor has stated that the lifestyle platform should achieve earnings of over $120 million by midterm, with the project resulting in significant cost synergies of approximately $18 million per year. Without a doubt, such partnerships in times of pandemic tend to take on a whole new meaning. For the Ennismore founder, the catastrophic aftermath of COVID-19 for travel and tourism, with its substantial effects on hospitality, may have paved the way for a new collective energy reallocation.
"Whereas we love running multiple projects and operations, the pandemic shines a spotlight on the importance of streamlining efforts," Pasricha remarks. "Scale matters: if you combine the pipeline and portfolio that Accor brings, along with our offerings, and the collective ambition of our global development teams, then you have created great opportunities for the coming years."
He believes that, given the nature of how Ennismore's business model is split between stays and F&B, recovery is bound to be quick. In fact, even more so than it would be for traditional hotels, he opines.
"Food and beverage programming is incredible across our properties; they also boast just the right mix of business and leisure, which sets us apart and avoids categorization and compartmentalization within those segments. As restrictions are lifted across countries and geographies, the lifestyle segment will be the fastest to recover, which places us at the forefront as we see markets re-emerge." Ennismore is in the right industry, at the right time, the Accor Chief says. With F&B constituting half of the group's revenue, and the performance of lifestyle brands' strength in markets, guests have been flocking to the French company's properties in pursuit of the right experiences.
"While the pandemic has been devastating," says Bhushan, "I look to the future with a lot of confidence because, when the market bounces back, we'll be at the forefront." The pandemic has prompted an increased attention to younger, more dynamic age groups, which research has shown are the most keen on travelling and lodging in the wake of COVID-19.
According to Bhushan, Accor's brands, from very high-end and luxury lifestyle, to more affordable names such as Mama Shelter, 25hours and Tribe are booming across all price points. "At the heart of what we're trying to do, is to deliver an experience that's consistent with that brand, and appeal to the modern, young traveler."
Abiding by the business-first model, Pasricha explains how, during the past 10 months, every operator has had to digitize and get off the curve faster than had usually been the case. In Europe, a shift to QR codes, digital payments, as well as safer options across the board reflect flexibility, but the human factor has never lost its importance for the lifestyle entity. "We're in the business of making sure our guests are inspired by what we do every day. You can do some of it through tech, but what we do –by large– is experiential, as we appreciate that human element."
With an unwavering trust in the GCC market, Bhushan also asserts that Accor had not missed a beat in terms of development. "Take Saudi Arabia, for example; with the Kingdom's vision, they have doubled down on investments and moved faster during the pandemic than before. We're inking deals for big, new projects as we witness how they transform nation into a key tourist destination."
Brooklyn's Hoxton Williamsburg hotel, one of nine Hoxton properties worldwide
Source: The Hoxton
The lifestyle connoisseur has also lauded the UAE government's efforts in mitigating the effects of the pandemic, ensuring a steady flow of travel, with Dubai honoring its status as a global hub. "This region has evolved and reached a level of maturity where everyone understands the value of tourism. The greatest comfort that the decision-makers in these countries understand that tourism is key to their future," he says.
Accor is also active in Qatar, having recently partnered with Katara Hospitality, a global hotel owner, for the two-fold signing of Raffles and Fairmont hotels. "I consider Accor's Mondrian Doha to be the best hotel in the capital," remarks Bhushan.
Speaking about Ennismore's upcoming openings, Pasricha references SLS Dubai Hotel & Residences, which is set to welcome guests, residential, hotel and local alike, in the second quarter of 2021. In addition to the project, which is led by Bhushan, a 25hours property will be opening at the Emirate's bustling One Central featuring close to 500 keys.
The Accor Lifestyle CEO concludes his interview on a very positive note: "The luxury business is as strong as ever; the pandemic has reinforced the significance of hotels as safe havens. For that reason, and beyond, irrespective of their brands, properties must offer experiences. The desire to travel is an innate one, and I'm reassured by what I'm seeing, because it proves to me that, no matter the circumstances, human beings will always seek just that."