Originally Posted by
moondog
Given the choices, I'd much prefer to be asset light than asset heavy in the current environment....much easier to walk away when you aren't swimming in hundreds of millions of dollars in debt.
Easier to walk away, sure, but I don't think the shareholders of Accor are planning to just shut down the business and walk away. People will start to travel again.
As a shareholder, I would prefer to be an owner of a hotel that includes the real estate. The asset light management model that many chains use is fully dependent on the revenue stream from operations, and your investment can plummet quickly. If you are backed by a real estate asset which isn't going anywhere, you are more diversified, and your holdings will retain more value during a downturn like this. But it doesn't really matter, because the current model is the only one possible for Accor anyway (and most other chains).
Purchasing all of the properties under Accor's brands is way beyond their ability. Ownership of real estate requires pockets much deeper than what Accor, and many other hotel chains, currently have. Take the Canadian Fairmont properties for example. It would require billions to acquire that real estate, and that's just for a dozen or so properties here. What would it take to buy up 5,000 hotels around the world? Most of the Canadian Fairmonts are actually owned by the pension funds of the Ontario and Quebec provincial and municipal employees. These are very expensive and long term real estate investments suited to organizations with vast amounts of money to invest. These hotels are not owned by highly leveraged firms taking out mortgages and investing in property. These hotels survived the great depression in the 1930s, and survived complete hotel closures for a few years during WWII. The properties will survive this too, and will be around long after Accor is gone.
The ownership of hotels and the management of them are just two completely different businesses, suited to different types of investors.