AccorHotels to turn HotelInvest property business into subsidiary

By Dominique Vidalon and Pascale Denis

PARIS (Reuters) - AccorHotels (ACCP.PA), Europe's largest hotel group, announced a plan on Tuesday to turn its HotelInvest property business into a subsidiary prior to opening a majority of the unit's capital to institutional investors.

The plan, expected to be completed by the end of the first half of 2017, would give AccorHotels greater financial leeway to speed up growth, Chief Executive Sebastien Bazin said in a statement.

Bazin told Reuters he expected a dozen French and international institutional investors to be interested in HotelInvest and that he hoped for a valuation of at least 7 billion euros (£5.8 billion), which is the gross asset value HotelInvest reached in 2015.

The world's fifth largest hotel group has been undergoing a reorganisation under Bazin, a private equity specialist, who took over at AccorHotels in August 2013.

His first move at AccorHotels was to split the company into two divisions - HotelServices and HotelInvest - to separate its operating and franchising business from its real estate ownership activity to boost profitability.

Between 2013 and 2015 the gross asset value of HotelInvest rose to 7 billion euros from 5.5 billion euros and its operating margin climbed to 7.8 percent from 4 percent.

The restructuring fuelled speculation that Bazin, who left U.S. private equity firm Colony, then one of AccorHotels's biggest shareholders, could later seek to spin off the group's property business.

Bazin told a conference call he did not expect HotelInvest to be listed in its first five years.

AccorHotels will provide further details on the plan at an Investor Day in early October.

"By making it possible to bring in new investors for part of our business, this project will significantly increase the resources available to the group to consolidate the respective leadership positions of HotelServices and HotelInvest, while also enabling us to continue to leverage synergies between the two business lines," the statement said.

The news comes as AccorHotels shareholders earlier on Tuesday approved a plan to buy the owner of luxury hotels, including London's Savoy and New York's Plaza, in a deal worth $2.7 billion (£2 billion) that will raise the group's U.S. profile.

(Reporting by Dominique Vidalon, edited by Astrid Wendlandt and Adrian Croft)