PARIS (Reuters) - AccorHotels (ACCP.PA), Europe’s biggest hotel group, will make further acquisitions in coming years, using cash from the sale of a majority stake in its property business rather than paying a special dividend, its chief executive said on Friday.
In February, the company agreed to sell 55 percent of its AccorInvest property business to sovereign and institutional investors for 4.4 billion euros ($5.4 billion).
The French company, with more than 4,000 hotels ranging from luxury Sofitels to the budget Ibis brand, has said the deal would boost growth and help it fight rising challenges posed by companies such as Airbnb and online travel agents.
When it announced the AccorInvest sale, the company said it would return cash to shareholders through 1.35 billion euros in share buybacks within 2 years.
However, there had also been hopes that the deal would still trigger a special dividend.
“We decided it would not be appropriate to have a special dividend,” chief executive Sebastien Bazin told the Accor annual shareholders meeting on Friday.
Having spent more than six billion euros on acquisitions since 2014, Bazin said AccorHotels will continue to focus on smaller, bolt-on deals in coming years, possibly lifting its portfolio of brands to 40 within 5 years from a current 25.
He also reiterated the company’s goal to double operating profit and possibly its share price within five years.
Bazin, who took over in August 2013, has been cutting costs and expanding in China and the luxury hotels market, with AccorHotels having bought FRHI Holdings, the owner of London’s Savoy and New York’s Plaza hotels.
The group has also invested in new areas such as concierge services.
AccorHotels clinched a deal last year to buy Mantra Group Ltd MTR.AX for A$1.18 billion ($908 million) to create the biggest hotel group in Australia, and this month it bought a 50 percent of Mantis Group, the South Africa-based hospitality group.
On Friday, Ctrip.Com International Ltd (CTRP.O), Asia’s biggest online travel firm announced a tie-up with AccorHotels to boost offerings to their joint clientele. The deal will allow Ctrip’s over 300 million registered users to access AccorHotel’s global portfolio of brands.
Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta