Hotel room FF&E

French-based Accor hotel group is one of the largest hotel operators in the world with a total of 4,200 hotels, and now it can add a few more to its list.

Accor hotel group made a non-binding offer of $1.2 billion to takeover Mantra Group, Australia’s second-largest hotel operator in the small to medium asset sector.

Mantra eventually agreed to a $1.18 billion takeover offer. The offer is more than double what the company was worth when it was listed on the ASX in June, 2014.

In Australia, Accor operates the Sofitel, Novotel, Grand Mercure, Mercure and IBIS brands and in 2012 it acquired Mirvac’s hotel operations for $320 million.

The group is seeking to take advantage of the rising inbound tourism industry in Australia. Their newest asset is the $500 million Sofitel Sydney Darling Harbour.

Mantra, which now controls more than 22,000 rooms, does not own any of its hotels but rather earns fees from managing and operating the properties.

Although manager of Mantra, Bob East, agreed to the offer, it will be up to shareholders to approve the offer in a meeting this year.

Despite the perceived takeover, the Australian hotel sector remains highly fragmented. Accor, the largest operator, still only controls little more than 7 per cent of the market, while Mantra, the second biggest, has around 3 per cent.

The takeover, however, will allow Accor to operate using economies of scale as the sector becomes increasingly competitive with consumers often turning to services such as Airbnb due to their flexibility.