French hospitality giant’s new global chief development officer for the Premium, Midscale and Economy division discusses the metrics, markets and money that will help enable the group to reach its 1,200-hotel growth target.
MIAMI – Accor Chairman and CEO Sébastien Bazin has set a five-year goal of adding 1,200 hotels to the company’s current portfolio of nearly 5,500 properties spread over 46 brands worldwide. Camil Yazbeck and his team will be doing much of the heavy lifting to reach that target.
Named chief development officer-Premium, Midscale and Economy division when this French hospitality icon split its hotel operations into two distinct divisions earlier this year – one for luxury and lifestyle flags, the other for their premium, midscale and economy brands, Yazbeck heads the development team tasked with building out the company’s network of world-class brands ranging from economy to upper upscale that already includes nearly 5,000 hotels (90% of Accor’s total property count) and 1,000-plus more in the pipeline.
Adding dots on development maps is just the first line on his task list. “We’re currently number one in most regions of the world except North America and China,” said Yazbeck in an interview at the CHRIS/HOLA conference held here in late May. “My job is not just to sign or develop hotels for the sake of adding properties. Every project has to be profitable in its market. It has to be in the right market. And it has to demonstrate how it will contribute the future growth of the premium, midscale and economy brands.”
This dual French-Lebanese citizen who resides in London has a unique c.v. to make that 60,000-ft. strategy actionable for existing and prospective investors and developers.
Over his 25 years in the hospitality industry, he focused on all aspects of hotel management in a variety of roles throughout the world. Yazbeck acquired extensive experience moving up the ranks in hotel management, in pre-openings as well as the extended-stay market, within independent and branded hotels. He held several senior leadership positions with international hotel companies (including Westmont Hospitality Group’s in various investments).
He developed an in depth read on owners’ wish lists and pain points more recently as partner and investment director-hospitality and leisure for Patron Capital, the leading Pan-European private equity real estate investor, representing approximately €4 billion of equity across several funds and related investments, including more than 60 multi-branded hotels throughout Europe.
Yazbeck gained comprehensive knowledge of the investment side. He led all aspects of origination, acquisition, underwriting, execution and asset management of hospitality related investments. That included redefining hotel segmentation with the global expansion of Generator Hostels and the subsequent €450 million sale of the 14-property Generator portfolio in 2017, as well as buying 26 Ramada hotels in the U.K., which he negotiated to rebrand with Accor’s Mercure flag with the subsequent successful sale. Having successfully executed most of the hotel investments with Patron, Yazbeck joined Accor.
He offered this a holistic look at the market now shaping the opportunities he intends to capture.
Yazbeck offered this holistic look at the market now shaping the opportunities he intends to capture.
Hotel Investment Today (HIT): You’re “selling” a broad menu of opportunities. Who’s buying? Why are they buying? And how are their expectations changing?
Camil Yazbeck (CY): It depends. Private equity will normally hold for a five-year period before selling a more stabilized asset. An institutional would hold it for 10 - 12 years, while high net worth individuals will hold it for a very long time. That’s important for us since we see substantial opportunities in in Mexico, Caribbean and Latin America – markets that still have a number of these investors. Sovereign wealth funds around the world have long hold periods on stabilized assets which are deemed less risky, based on IRR, while family office always hold for a long period, because it's about wealth creation for them.
However, the family office often takes more risk to realize higher rewards. Some family offices might consider a more stabilized opportunity, but they will only do it on the basis that there is value add to be had, making the deal more opportunistic. And then within five to seven years, they refinance. This is where they make value on the money that they invested just like private equity, but then they keep it for longer term holds. And they keep it for their family wealth creation, etc. So yeah, there's a lot of there's a variety of owners and we have to understand their individual goals.
We're signing so many deals in Saudi Arabia... it's like parts of Brazil with no hotels.
Camil Yazbeck
HIT: What’s the outlook for getting the financing to get the development deals done?
CY: Currently, financing is difficult. So if you’re trying to find the right financing at the right pricing, good luck. Even so, banks are not actually reluctant to lend money. It’s just that their cost of capital is high, and they have to reflect that in their underwriting.
Let's put it this way globally. Currently, we are finding much more development in areas like Southeast Asia, where it's direct, all cash, Middle East and quite a lot in Eastern Europe There's a lot of really beautiful resorts in amazing areas in these countries as well as areas being restored. In some other regions, it's more challenging because of the financing and debt situation. That said, anything premium, midscale and economy will have an easier time when it's a conversion of an existing asset because it has a better ESG impact and requires less financing. That's why, across all three segments, we're seeing a lot of conversions because they cost less.
HIT: Are we expecting to see a robust deal pace to help drive development?
CY: In the current context, deals that require financing are very scarce. As you know, asset pricing is still extremely high because no one is obliged to sell. There are non-performing loans and a few things coming to the market, but banks are holding tight thus far. You’ll see some deals, maybe even a couple of big ones out there from time to time. But it's not the market that you typically would see after a big financial crisis like in 2008. Banks are better capitalized than in previous downturns.
That said, you will always find ground-up opportunities in some areas where development potential is new, like Saudi Arabia. We're signing so many deals in Saudi Arabia and they're starting from scratch. It's like parts of Brazil, Paris or London with no hotels. It's a great opportunity. We can grow in destinations like this and grow in the right and sustainable way.
New brands such as our Handwritten Collection are going to infill with a different kind of growth potential, especially on the conversion side. We launched that in January of this year and we already have 15 secured signings and 150 deals under negotiation. If I’m an independent owner who put my blood, sweat and tears into a hotel, I don’t want a standardized product that kills my own design and neighborhood connection. I want to be part of a collection that lets me tell my story. We’re going to let owners do that. We’re not going to ask that they change their hotel’s identity or be standardized. We just ask the hotel be of very good quality, have good design and connects to its neighborhood. This could prove really interesting.
HIT: What’s going to drive flow through to owners?
CY: As our Chairman and CEO Sébastien Bazin has said repeatedly, the hotel has to prioritize the local market. If the local people, the local neighborhood come and visit your hotel, your international traveler will follow suit. Beyond that, brands have to take a closer look at ROI. What we're doing is designed but not extravagant. That means focusing on only what’s needed – from selecting just the authentic design elements that reflect local inspiration to concentrating on the right F&B concepts that will attract the local neighbor, the person who would want to come to our hotel and visit, eat and enjoy an experience there at the same time guests do. With that, you have all the social elements that that are ticking the boxes.
What’s important is that diversified company such as Accor backs up this local execution with global strengths that benefit the owner. With 10,000, restaurants and bars around the world that are working really well, we can help owners match concept and opportunity as well streamline costs. We can work with an owner to create the concept or bring one of our restaurant brands off the shelf to make sure that they are maximizing every square inch. If you want to maximize EBITDA, you have to consider all the options. That’s why we have coworking as an option and why we can diversify risk with extended-stay, long-stay, branded residences, F&B concepts, wellness and global membership in all our loyalty programs.
That diversification in the product base can also help on the financing side. When you put all of these revenue drivers together, the amalgamation definitely compresses the cap rate. It’s a no-brainer.
At the end of the day, the owner can connect a lot of opportunities to drive returns. And, that is the point.