Acquisition growth is Accor’s Mantra

AccorHotels has solidified its position as New Zealand’s largest foreign accommodation operator after acquiring Australian-based Mantra Group in a $1.2 billion deal.

The acquisition includes the Mantra, Peppers, BreakFree and Art Series brands, which manage 138 hotels in Australia, New Zealand, Hawaii and Bali.

AccorHotels is best known for operating Novotel and Ibis hotels.

The French group’s AsiaPacific chief executive, Michael Issenberg, called the deal ‘‘the latest chapter in the strong growth story of AccorHotels in the region’’.

‘‘Since our launch with Novotel Sydney on Darling Harbour in 1991, AccorHotels has become the largest hotel group in the Pacific, and Australia has always played a key role in that story.’’

AccorHotels will operate more than 900 hotels and resorts throughout the Asia-Pacific region after the deal is closed, 330 of them in Australia.

In New Zealand, AccorHotels operates 42 hotels, nine of which come from the Mantra Group acquisition.

Chief operating officer Simon McGrath said the deal would create new opportunities for the company’s staff, partners and guests.

‘‘We believe that tourism is critical to the economic growth of the region and future job creation and this deal will allow us to further develop the industry.’’

McGrath said the company would continue to develop and grow the existing Mantra, Peppers and Breakfree brands while potentially introducing new ones as well.

He said there was a lot of new investment coming into New Zealand cities, particularly Auckland and Queenstown.

McGrath identified Mantra Group’s partnerships with 10,000 strata-title owners, where individuals were able to purchase rooms and suites, as a key characteristic of the business’s innovation.

While AccorHotels operates the largest number of hotels in New Zealand of any company, the biggest owner of hotels is New Zealand’s CP Group.

According to a 2016 JLL report, CP Group owned 17 hotels, equating to a market share of 8 per cent. It said 11 of CP Group’s hotels were run by AccorHotels, including the Sofitel hotels in Auckland and Wellington.

The Mantra Group leadership team will continue to be based in its Gold Coast office, reporting to chief executive Bob McGrath who has led the company since 2007. Millionaire property magnates the Chow brothers will delist their property firm, and merge it with their private company.

John and Michael Chow are the dominant owners of Chow Group Ltd (CGL), and made the decision after New Zealand stock exchange operator NZX Ltd announced plans to scrap its junior equity markets the NZAX and the NXT.

The brothers have made an estimated $75 million fortune from brothels, hotels and commercial property deals, and manage an 18-strong property portfolio valued at more than $200m.

John Chow said it made no sense for the company to move to the NZX, as there were higher costs and new rules.

‘‘We can attract enough private funding without having to trade on a public platform to attract further funding.’’

The funding would come from local and international private equity investors who were being approached, Chow said.

In November 2015, the Chows launched a reverse takeover bid for NZAX-listed cash shell RIS Group.

The brothers see themselves as major players in the property industry, with an aim of managing $1 billion of property by 2020.

Property remains the brothers’ core business, making up 90 per cent of their assets.

CGL completed the takeover of RIS Group in February 2016. At that time, the asset value of CGL was about $7.6m. After the company bought shares in 16 Park Avenue, the owner of residential and accommodation buildings in Auckland, the total assets of the company jumped to $18.66m.

The company’s maiden profit, announced in 2016, topped $8m. At the time, John Chow called it a ‘‘tremendous start’’ for the group.

About 90 per cent of the shares in Chow Group are owned by the Chow brothers.