Hospitality ON has drawn up the first ever comprehensive overview of the owners of upscale & luxury French hotels: Who are they? Where do they come from, in terms of nationality and personal/family or corporate background?
While the profile of individual owners may appear quite simple to grasp, it includes very different personalities and backgrounds. This may be explained in part by the profile of the hotel properties they own. Individual, whether they are French or foreign, are very present at charming hotels such as castles and historic residences that pepper the French countryside, upscale chalets in mountain resorts, and “boutique hotels” in cities. These properties generally stand out for their smaller capacity. Therefore, upscale and luxury hotels that are privately owned offer 34 rooms on average, compared to a French standard of 70 rooms per hotel in this range. Thus, while 6 in 10 properties may be privately owned, private individuals control only 29% of France’s upscale and luxury rooms. The more modest size of hotels makes the initial investment more affordable, all the more so since the profitability of operations can be uncertain, particularly when hotels are distant from cities and key tourist destinations. But to be affordable the hotel still has to be put up for sale, which may not happen as there are veritable hotel dynasties. For example, the Valbray family at the Château des Briottières, near Angers, and the Grinda family (ex-Schmitz) at the Hôtel Westminster in Nice have passed the love and ownership of their property down for 6 generations.
And yet, not many upscale hotels are owned by French noble families, who missed the key turning point of the Belle Epoque, when the first wave of luxury hotel development was driven by the rising grande bourgeoisie. Later waves of development also allowed some personalities and families to durably establish themselves in the local hotel landscape, notably the 1970s on the French Riviera or in the Alps with the “White Gold Rush”, as many hoteliers were able to capitalize on their success. But in most cases the wealth of private individual owners of luxury hotels was acquired through personal or family businesses prior to the hotel’s purchase.
Many are former or current industry leaders, from a variety of sectors: logistics, pharmaceuticals, consumer goods, automobile parts, chemistry, mechanics, fashion/clothing, perfume, house linens, household appliances, stationery, fertilizer, agro-food or slaughterhouses… This profile is particularly widespread among private French owners and also applies to some international owners. Michel Reybier, owner of the very prestigious La Réserve hotels in Paris and Ramatuelle, made his fortune with the sale of the group Aoste (charcuteries Aoste, Justin Bridou, Cochonou…). Ian Lundin, Swedish billionaire from a family in the oil and mining industries, is now president and CEO of the family group and owner of Jiva Hill Park Hotel in the Ain, near Geneva. Further from industry, but close to the business world, show business personalities, particularly from cinema, television and sports, often stimulate media hype by investing in a hotel property. After all, if Jean Reno, Boris Diaw or Arthur are shareholders in a property doesn’t that mean something about its quality?
Below the radar, individual hotel owners more often hail from real estate, finance, retail and F&B, which is quite logical. Real estate market players may develop hotels and, in some cases, decide to keep them in their portfolio. This is particularly true for developers in the regions where they benefit from a strong local footprint, such as the Ponsot family in Toulouse that continues to hold the reins at LP Promotion (see our “social wall” on the previous/following page). In finance, most hotel owners are former bank or hedge fund managers like the Briton Stanley Fink, former CEO and deputy chairman of the hedge fund Man Group today a majority shareholder (alongside Philippe Capezzone) in the hotels K2 and Kilimandjaro in Courchevel.
Retail is a core business activity of hotel owners that may surprise those who are unfamiliar with the hotel sector. There are close ties between connecting the hotel industry to the retail sector and mass distribution in particular. Hotels and supermarkets have jointly led several major revolutions experienced by the service sectors in recent decades: rise of standardized chains, central buying offices, franchising, separation of real estate from operations… so it is actually not surprising to see individuals who have built their fortune on a supply of supermarkets and hard discount retailers on the list of owners of upscale and luxury properties (although in smaller proportions than on lower range hotel segments). In Tarbes, for example, the RexHotel is owned by Jean-Claude Knaebel, who runs several franchised Leclerc supermarkets in the region.
Finally, the synergies between the hotel and restaurant industries are evident. For chefs and restaurant owners, accommodations offer an important extension to their core business and make it possible to boost profitability, in addition to the service provided to the client who may spend the night after enjoying a gastronomic meal. Offering upscale accommodations is therefore a natural additional business for well-known chefs like Anne-Sophie Pic in Valence or Georges Blanc in Vonnas, and for Michelin-starred restaurants located outside major agglomerations.
Regardless of where they began, many private actors decided to invest further in the hotel world: some built large franchise portfolios in partnership with hotel operators to boost their performance. Their portfolios may include, though not exclusively, upscale & luxury supplies. This is true for example for Ferré Hotels in Rennes, the largest hotel franchisee in France that is also active on the upscale segment (excluding luxury hotels and palaces). It owns, among others, the Catalogne Hotel Paris Gare Montparnasse (formerly Concorde Hotel, 354 rooms) and Concordia Hôtel Le Mans Centre Gare. With units often located in major agglomerations, franchisees own more than 12% of France’s upscale and luxury hotel supply.
Others go so far as to create their own group, selling their hotels under a single banner and with their own brands. This strategy was followed by market players like the Sibuet family, with Maisons & Hôtels Sibuet, and the Albar-Falco family, with the Paris Inn Group. As this private owner & hotel group profile is fairly widespread internationally and particularly in Europe, this allows many actors such as the Italian Baglioni or the German Oetker to have a place in France’s upscale hotel industry. This owner profile is important because it represents more than 13% of the French upscale and luxury room supply, often with renowned addresses.
Privately owned groups are thus on a par with hotel groups that are not family run, which own just 12.3% of upscale and luxury hotel real estate in France. Whether it is the French champion AccorHotels or other groups in the Top 10 worldwide such as Marriott International or IHG, major hotel groups have sold the bulk of their real estate assets, although a few noteworthy exceptions subsist. But beyond traditional operators, a few actors are beginning to emerge, particularly Asian ones. While the operators of Paris’s palaces have already made a name for themselves, others are just entering France’s market, such as the Chongqing Tianci HotSpring Group, a Chinese group that hails from the Municipality of Chongqing (the biggest city in China after Shanghai and Beijing, with no fewer than 18 million inhabitants in its urban area). It recently became owner of Château d’Esclimont, a 52-room hotel-château in the Eure-et-Loir.
While traditional hotel groups have relieved themselves of their hotel assets to lighten their structure and become less capital-intensive, picking up where the groups let go are listed real estate companies (American REITs, French SIICs…), real estate funds and asset managers. Among the most emblematic, Foncière des Régions / Foncière des Murs -which is already one of the biggest French hotel owners- recently expanded its upscale and luxury portfolio with the purchase of such jewels as the Hermitage Gantois in Lille or the Bourgtheroulde in Rouen. As REITs and real estate companies often work in tandem with asset managers that are partners or part of the group, they also represent a profile of owners that are increasingly interested in the follow-up of operations: although they remain focused on financial cash-flows, they are far from the carte blanche accorded to hotel groups less than a decade ago.
The owners that are most symbolic of the financial investor profile remain private equity. While they are often responsible for major shifts in the sector, in the end they only represent a fairly small share of the upscale and luxury hotel supply (6.7%), with portfolios almost exclusively consisting of large assets in major cities (particularly in Paris and in Nice/ Cannes) able to deliver strong cash flows. Major names in the industry, such as Blackstone, have invested in French upscale & luxury hotels. Private Equity is an area that remains the preserve of North Americans.
Sovereign funds, meanwhile, are naturally associated with the image of princes, emirs and other Middle Eastern sovereigns. Even if sovereign funds from other countries such as Singapore are also in the French hotel industry, GCC countries dominate thanks to sovereign funds managed by the royal families. One of the most emblematic of this owner profile is the Sheikh Nawaf Bin Jassim Bin Jabor Al-Thani, who is already at the head of several French palaces and recently joined the Board of Administration at AccorHotels.
Finally, some hotel owners have an original, or absolutely atypical profile such as the American Legion, an association of American veterans that owns Pershing Hall in Paris. Some government administrations, both foreign and French like the Mairie de Biarritz (with the Hôtel du Palais), own the real estate and business enterprise of upscale & luxury hotels. But the list of owners also includes hotel schools (through their training hotels), banks and collections companies, airlines and other large businesses, often with hotels close to their headquarters or a major site.
Hotel owners thus represent a diverse lot that is a far cry from being the only investors, who altogether (private equity, REITs, real estate & sovereign funds), only control one-third of the upscale and luxury room supply in France, versus 2/3 for hoteliers, whether they are private, franchised, family groups or major operators. It may also be observed that 55% of rooms on the segment are thus managed by individuals or families, although professionally managed companies have developed in recent years and currently own 45% of the upscale & luxury supply.
This distribution illustrates a hotel landscape that is much more mixed in terms of nationalities of upscale owners than sensationalist news in the media would have the world believe. Twothirds of upscale and luxury rooms (and more than 8 in 10 hotels) in France are still French-owned, even though this share has dropped in recent years. It is however necessary to emphasize that the panorama is quite different in the first two luxury hotel poles that are the Ile-de-France and the Alpes-Maritimes, where nearly half (respectively 46% and 52%) of rooms in upscale, luxury & palaces are owned by international market players. This share is driven up by the presence of Middle Eastern owners, who control 17 to 18% of rooms, with a much greater share on the palace segment in particular. North America is also very present in Paris and Nice/Cannes, through hotels with a large average room count compared to French standards: 344 rooms in Ile-de-France and 153 rooms on the Côte d’Azur. European (not French) owners are not only present in major agglomerations, but also at more intimate addresses in the mountains or regions that are holiday destinations (vineyards, countryside in the South of France, regions filled with castles…), whence their more limited size; 82 rooms on average. Finally, it may be observed that while Asian owners have already begun to gain power in hotels in the Paris region, with 9% of rooms in the Ile-de-France, they, inversely, have a very weak presence in the AlpesMaritimes (less than 1% of the supply). All these elements combine to create a heterogeneous picture of hotel owners in terms of profiles and nationalities, operations and type of assets. Considering the changes this universe has been going through over the last decade, and current dynamics, the world of luxury hotel owners may well continue to expand...
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