The group B&B has succeeded in positioning itself on the French hotelscape since its beginnings in 1990. The economy brand is now preparing to roll out its new hotel concept to accelerate development. Thanks to financial support from its new owner, investor Eurazeo, today the brand is picking up speed and is en route to conquer Europe.
B&B has come a long way since its creation by François Branellec in 1990. Starting with two hotels in Brest and Saint-Malo, B&B has succeeded in developing a European network. Today the group has an inventory of 113 one-star hotels in France and the beginnings of a network in Germany. The brand is one of the main protagonists on the increasingly competitive economy hotel market. “A fine success,” remarks Didier Laporte, Marketing & Sales manager for the group. And it is not just a fine success in terms of implantation but for its shareholders. The figures speak for themselves: the chain’s global occupancy rate for the year 2005 is 73%, up slightly, whereas the segment overall is tending towards stagnation. Its average daily rate is more than 39 euros. And the turnover is up by 4.7% for the same period.B&B has not forgotten its domestic market, however. Well established in western France, the brand is seeking new territories in the East in order to consolidate its positioning. Thanks to this development that B&B was able to increase its share on its principal market, the Business segment. “From Monday to Wednesday, we often post no vacancies and turn clients away. The future lies in the growth of the number of properties. We have our sites set on twenty regional metropolises and, of course, Paris. And we don’t shy away from possibilities for vertical integration with existing brands that could adopt our new concept.” The weight of its shareholder is an undeniable advantage for attracting other more modest operators.Such good economic health has not attracted investors. The economy hotel chain sector is experiencing strong growth, to the detriment of independent hotels, in particular, which are tending to die out. In addition to strong performance, it conserves above all strong development potential. In 2003, these arguments seduced Duke Street Capital. The Anglo-Saxon investment fund bought the shares owned by the finance company Branellec (Sofibra) in Galaxie SA, the owner of B&B. This LBO (Leverage Buy Out) reached 60 million euros for the acquisition of the shares, to which could be added the assumption of debt to the tune of 40 million euros. Part of the management, Georges Sampeur, chairman of the board, joined this co-buyout. “It was a takeover. The story did not stop with this buyout,” explains Didier Laporte. “Today we are entering a more industrial phase without losing the charm of our hotels, nor our proximity to clientele which is our brand’s strength. Our managing directors and our employees actively participate in this acceleration. They are fully involved in the turn we are taking.”The first stage in reinforcing B&B’s positioning: reposition the brand. Starting in June 2004, the management of B&B concentrated on the brand and its product. “A study was conducted both inhouse and externally. The outcome was very interesting,” delights Didier Laporte. With a basic observation: “our oldest clients know the quality of our product, but this quality isn’t valorised enough”. Second observation, strategic for the future: 70% of clientele at B&B properties are Business clientele. Logical consequence: growth engines may be found among leisure clientele, to complement the hotels’ “Monday to Sunday” occupancy.In order to capture this clientele that is crucial to its future, B&B doesn’t hesitate to move forward with a new, warmer hotel concept using more wood, a 160 cm wide bed covered with a comforter, attractive colours – starting with olive green and Bordeaux, the symbol of the new visual identity, improved signage. Didier Laporte sees the new generation B&B as the prototype of the “econochic” hotel. “We wanted an economy hotel that would be neither austere nor cold, but quality low cost. By combining good quality and a good price we have achieved success.”The group B&B strives for quality and no longer hesitates to show this loud and strong in order to convince the passing tourist. The new signature “Bien pensé pour vous” (Designed for you) transcribes the efforts made by the group to offer its clientele an upscale, super economy hotel service. B&B emphasises its better than average construction: doubleglazed windows offering thermal and phonic insulation; thicker, better sound-proofed walls; air-conditioning. “Our quality is close to that of Ibis at the price of Etap Hotel,” the Sales Manager happily remarks. With one leitmotiv: keep it simple. “Our job is to offer a quality room, a good level of hygiene and a good breakfast. We will not offer a restaurant, which is available in 2*.”Now complete, the B&B in Morlaix acted as a test property. “There is a historic reason behind this choice: it recalls B&B’s origins in Brest. Another advantage: the hotel is a 30 minute drive from headquarters”. Convinced by the initial results, the group is now undertaking the widespread unfurling of this concept. A vast renovation plan was developed with an ambitious goal: realise this metamorphosis in two and a half years at most. The hotels that have reached “ten years of good and loyal services” will be completely renovated. This programme is already underway at twenty or so properties in Grenoble, Strasbourg, Saint Etienne. Simultaneously, the other properties will be lightly renovated so that 70% of the concept – the new logo first and foremost – is implemented in order to preserve the supply’s homogeneity.B&B’s Leisure strategy is not without consequence for the group’s development goals. Its desire is to get closer to city centres in order to capture weekend clientele. The current location of properties is mostly on the outskirts of large cities and close to business parks. “Only 50% of our properties fit the group’s new strategy," explains Didier Laporte who expects a great deal from the evolution of this ratio: “by getting closer to city centres we will enter the different markets from the top while growing brand awareness”.After that, the group’s growth rate will accelerate with, in the future, the perspective of 200 properties in France. “It is our goal to put 1,500 rooms on the market each year until the end of 2008 (Editor’s note: the average capacity of a B&B hotel is 70 to 75 rooms) and to double our inventory to reach 14,000 rooms,” hopes Georges Sampeur, CEO of the group Hôtels B&B, the new name of ex-Galaxie. The previous General manager of Carlson Wagonlit Tourisme, who rose to the helm of the company during the takeover of the group by Duke Street, is preparing to steer the economy brand into a new stage. To implement this, he will receive support from a new ally, Eurazeo, as the exit of the British investment fund was faster than expected.In July 2005, just two years after taking over the reins of the hotel group, Duke Street Capital resold its shares to the number one listed French investment company, that manages more than 5 billion euros in assets. This operation was accompanied by complete refinancing of the group’s debt and its credit lines through Natexis. “We were able to lighten our financial costs and release an additional budget allowance to finance development,” explains President & CEO Georges Sampeur. The group now has a budget of 140 million euros (versus 105 million lines of credit in 2005), plus 15 million euros in additional revolving credit to accelerate its expansion. “We have the means to achieve our ambitions. Eurazeo truly has the will to make B&B one of the leaders of the economy hotel industry on a European scale,” rejoices the President.The future of B&B also lies outside France. A 50 million euro budget should be consecrated to reinforcing the brand’s presence in Europe, near the big cities, with higher capacity hotels —averaging 150 rooms— than in France. Central Europe, Benelux, Switzerland, Spain or Portugal: B&B has many targets. “They are markets of opportunity,” outlines the Sales & Marketing director. Even if, in the long term, the group does not exclude succeeding in developing veritable networks in these countries. Like what the group began in Germany with the start of a network across the territory. The chain has already attacked this market with 8 operational properties. But until now B&B’s business there has not been flourishing. “In two years our new General manager succeeded in reversing the trend”. The result of this positive action: the business is profitable and B&B has entered a new phase of development. After Frankfurt in April, a property opened just outside Munich at the beginning of the summer. “We hope to grow from ten properties to thirty in three to four years,” explains Georges Sampeur.B&B has not forgotten its domestic market, however. Well established in western France, the brand is seeking new territories in the East in order to consolidate its positioning. Thanks to this development that B&B was able to increase its share on its principal market, the Business segment. “From Monday to Wednesday, we often post no vacancies and turn clients away. The future lies in the growth of the number of properties. We have our sites set on twenty regional metropolises and, of course, Paris. And we don’t shy away from possibilities for vertical integration with existing brands that could adopt our new concept.” The weight of its shareholder is an undeniable advantage for attracting other more modest operators.
This article was published over a month ago, and is now only available to our Premium & Club members
Access all content and enjoy the benefits of subscription membership
and access the archives for more than a month following the articleRegister
Already signed up? Identify yourself
An articleBuy the article
A pack of 10 articlesBuy the pack
Already signed up? Already signed up? Already signed up? Already registered? Login here!