View overlooking Mantra on Salt beach accommodation and pool area with beach in background. Photo: Tourism NSW
The Australian hotel sector will see a major shift in its landscape after the Mantra Group accepted an offer from French-based global giant operator Accor, valued at about $1.2 billion.
In less than a week, Mantra’s management agreed to the Accor offer of $3.96 per share, including a potential special dividend, which will give the overseas group an exposure to Australia’s capital cities and regional areas.
It is the local hotel sector’s biggest deal and will create a wider range of hotel options for tourists, analysts say.
Mantra chairman Peter Bush said the sale was an attractive outcome for shareholders.
“The board believes that the offer price of $3.96 cash per share recognises the strategic value of our business and our success in becoming a leading accommodation provider,” Mr Bush said.
“The offer represents compelling value and provides an attractive opportunity for shareholders to realise this value.”
He said AccorHotels has a global capability and deep skills that will “benefit Mantra’s customers and provide opportunities for our team members”.
Mantra has been the subject of takeover speculation since March this year when there was a run on its shares, although no bid prevailed. The hotel group was floated at $1.80 per share in June 2014 by private equity group CVC Capital and UBS.
It owns and operates more than 125 properties and more than 20,000 rooms across Australia, Indonesia and Hawaii under the Mantra, Peppers and Breakfree brands. It has a high exposure to Queensland’s Gold Coast, which will be in the spotlight when it hosts the 2018 Commonwealth Games.
According to Dransfield Hote research, the Australian hotel market is forecast to grow 3.8 per cent in 2017-19 and 4.4 per cent in 2017-25.
Accor is one of the largest hotel operators in the world with 4200 hotels.
In Australia, under the AccorHotels brand, it operates the Sofitel, Novotel, Grand Mercure, Mercure and IBIS brands and in 2012 it acquired Mirvac’s hotel operations for $320 million. In 2015 Accor bought the Fairmont, Raffles & Swissotel operations. The group last week opened the $500 million Sydney Sofitel Darling Harbour.
Tighter budgets could lead to a shift away from long-haul international travel into the domestic market – fewer planes, more cars; less Cannes, more Cairns.
AccorHotel’s chairman and chief executive, Sebastien Bazin, said his group “have long admired the Mantra business, both in respect of its brands and properties as well as its people and processes”.
“We will be looking to bring together the best of both companies to provide an enhanced experience for our customers and employees in what is an exciting period of growth of the industry in Australia and New Zealand,” Mr Bazin said.
According to Deutsche Bank, the proposed price of $3.96 represents a financial year 2018 price earnings ratio of 21 times.
“If we strip out our estimated one-off uplift from the Commonwealth Games, the bid price implies an 11.6 times earnings before interest, depreciation and amortisation multiple.”
Morgan Stanley analysts said: “We expect any pressure on household costs to bring more trading down to domestic destinations, and we’d expect real resilience from Mantra’s resorts business.
“So tighter budgets and a willingness from the consumer to trade down could lead to a shift away from long-haul international travel into the domestic market – fewer planes, more cars; less Cannes, more Cairns,” they said.