AccorHotels and sbe Entertainment Group have signed a Letter of Intent and entered into exclusive negotiations for AccorHotels to acquire a 50% stake in sbe. This partnership demonstrates AccorHotels’s strategy to expand its offering in the luxury lifestyle hospitality segment.
Accor will acquire the 50% of sbe’s common equity held in part by Cain International for $125 million. Sam Nazarian – who founded the company in 2002 – will continue to own the remaining 50% of sbe. In addition, AccorHotels will invest $194 million in a new preferred debt instrument that will be used to redeem all existing preferred units, also held in part by Cain International. AccorHotels’ total investment in sbe will be $319 million.
This long-term investment will allow sbe to leverage AccorHotels’ global hospitality platform while remaining an independent luxury lifestyle operator. Sbe will continue to be led by its founder and CEO Sam Nazarian as well as its management team while retaining its global headquarters in New York.
Through this investment, sbe will accelerate its international growth with expansion into new markets outside of the US, including priority growth markets in the Middle East and Latin America.
sbe’s pipeline includes projects in some of the most important global gateway cities such as Atlanta, Chicago, Washington D.C., Dubai, Rio de Janeiro, Mexico City, Cancun, Tokyo and Los Cabos.
Nazarian said: “This partnership with AccorHotels marks a new milestone in sbe’s history. This long-term investment by AccorHotels provides sbe, its customers and hotel owners with greater depth and breadth around the world and supports our collective ambition to be the best lifestyle hospitality company in the market.
“Building on our acquisition of Morgans Hotel Group in 2016, this investment will further accelerate our growth both domestically in the United States and in new markets internationally, particularly in Europe. Myself and the over 7,000 associates at sbe are thrilled and honoured to partner with AccorHotels. Moving forward, sbe and AccorHotels together are committed to bringing our unique lifestyle experiential offering to more destinations.”
“Expanding AccorHotels’ footprint in this fast growing segment in key US cities”
Sébastien Bazin, chairman and CEO of AccorHotels, added: “I am delighted to announce this strategic partnership with one of the most innovative groups in the luxury lifestyle space worldwide. It marks a new step in expanding AccorHotels’ footprint in this fast growing segment in key US cities such as Miami, Los Angeles or Las Vegas, and in other international destinations.
“‘The new luxury’ is all about exclusive experiences and incredible lifestyle concepts and sbe brands have the perfect know-how that will complete perfectly the AccorHotels portfolio.
“We remain committed to providing all our guests with unparalleled service and always renewed experiences around the world”.
Jonathan Goldstein, chief executive of Cain International, concluded: “Cain International became partners to sbe in 2016 providing the investment required at that time to enable the group to expand its footprint of some of the leading luxury lifestyle hospitality assets in the world.
“We are confident that sbe will continue to go from strength to strength with its new partners, AccorHotels; we wish them every success in the future and are proud of the role we have played in their exciting growth story.”
SBE Entertainment’s portfolio
sbe’s accommodation brands include SLS, Delano, Mondrian, Hyde, The Originals (Sanderson, St. Martin Lane, Hudson, 10 Karakoy, Shore Club) and Redbury Hotels. Through its Disruptive Restaurant Group platform, sbe has created culinary brands Katsuya, Umami Burger, Cleo, Leynia, Diez & Siez and Filia and entertainment brands including Hyde nightclub and dayclub, Nightingale, Privilege dayclub Black Orchid, S Bar, Skybar and the Doheny Room.
By the end of 2018 sbe will operate 25 hotels, comprising 7,498 keys with a majority in North America. It currently has a further 20 hotels and residences in its pipeline, as well as 59 standalone restaurants and nightlife venues.
The transaction is subject to regulatory approvals. It should be completed by 31 July 2018.