One of Europe's leading hotel investment companies, Covivio currently owns 311 hotels with assets worth €6.4 billion. Located mainly in France, the UK and Germany, as well as in Southern Europe and the Benelux countries, these hotels are operated by major hotel groups through leases - in 62% of cases - or management or franchise contracts for the properties. Sébastien de Courtivron, Covivio's Deputy Managing Director of Hotels, takes an enlightened look at the evolution of hotel groups and their brands.
Do you have a special relationship with one hotel group rather than another?
Sébastien de Courtivron - Covivio works with all groups and all their brands. We work together and talk to everyoneThese include Accor, B&B, Louvre Hotels, Radisson, IHG and Hilton, Minor with NH and Anantara. Our portfolio is therefore fairly balanced, with one third budget hotels, one third mid-range establishments and the final third at the top end of the market. This gives us a fairly broad knowledge of the different hotel segments.
As an investor, how do you see hotel groups diversifying their brands?
S. de C. - The advantage of this diversity of brands is that we can always find one that matches the hotel, its environment, the customers it is looking for, and its services, whether or not it has a restaurant, a spa, etc. This gives us greater flexibility and allows us to offer our customers a wide range of services. This gives us greater flexibility and enables us to offer a diversified and renewed range of products to our customers. For example, we will ensure that we offer different hotel ranges and brands in the cities where we operate.
Are there certain hotel brands that interest you more than others?
S. de C. - No brand is good or bad. There are opportunities in every hotel group. Today, because we have greater exposure to operations through direct management of the business, we have a global vision and are interested in the overall development of sales, not just accommodation. As a result, we are interested in by brands that fit in with our strategy with a genuine culture of service, of customer experience, which thinks of the experience as a whole and not just limited to the room. For example, Hilton has positioned itself in a new niche with Motto, and Marriott is doing very well in the lifestyle sector with Moxy. We are keeping a close eye on all these brands.
Groups such as Hilton, Marriott and Hyatt still have a relatively small presence in France compared with the number of hotels they operate worldwide. How do you explain this?
S. de C. - They had to adapt to the French market. It's a bit like McDonald's, which arrived in France with its strict American standards before finally launching French versions of its burgers. Hilton and Marriott came with their own specifications to be applied to 100%. But, for example, fire safety standards are not the same in France as in the United States. So a blocking factor for some buildingsparticularly in Paris. This is one of the reasons why these groups have fallen behind, as they could almost only focus on new construction. Today, their standards have become more flexible and more local. And I'm speaking from experience, as we've just opened the Hilton group's first site in Lille this summer!
When do you decide to move from one brand to another, from one group to another?
S. de C. - When we renovate, it's to enhance the product. This often involves changing brands and/or operators to find the best option, enabling us to renew the offer and the experience. In particular, this means the example of the Lille Hilton, formerly a Crowne Plaza. With the franchise contract coming to an end and renovations to be carried out, we opened the door to see which brands might be interested and interesting for the city, and Hilton was chosen.
This summer Covivio signed an agreement with AccorInvest (editor's note: the former real estate arm of the Accor group, which became a fully-fledged group in 2017, specialising in hotel investment and operation) for the reorganisation of the ownership of jointly-owned hotel properties. How far have you got?
S. de C. - It will be finalised at the end of November. We have had discussions with AccorInvest, particularly following the pandemic, to see how we can help them restructure. As part of this, we have agreed to recover some forty businessesWe also sold them the walls of around fifteen properties on our side. This deal led to the creation of our WiZiU hotel management platform, which includes 14 of these new hotels in addition to those acquired in 2016 when we bought SLIH, which included 10 properties, mainly in the north of France. By regaining control of this operational part of the business, we can working on renovation projects by incorporating not only a move upmarket in the product, but also our decarbonisation policy.
Can we therefore expect to see transfers of these establishments to other brands or groups?
S. de C. - This may lead to a switch to another operator in some cities. But in other areas, the Accor brands are the strongest and we are delighted to be working with them. In the case of key assets for this group, such as the Mercure Tour Eiffel, the Ibis Styles Bercy and the Ibis Cambronne Tour Eiffel, the current management contracts will also continue and we are delighted to be working with them. we are going to renovate some of these assets. On the other hand, we will examine with Accor a possible change of brand while remaining within the Accor fold. Our ambition is always to have the best brand for each market and type of asset, while respecting our CSR policy.
What exactly is your CSR policy?
S. de C. - Through its office property business, Covivio has already been committed to this issue for many years. Today, the priority is to make our hotel portfolio greener! We have extrapolated the Group's strategy so that Covivio's hotel business is moving in the same direction. Our aim is to reduce our CO2 per room of 90% by 2050. This trajectory means that we have to ask ourselves questions every time we renovate, about materials, energy and the work to be done. As far as energy is concerned, we are trying to replace the existing gas boilers with heat pumps. At the same time, we are studying the use and optimisation of water consumption and all energy-related issues in the rooms.
Is hotel labelling part of your strategy?
S. de C. - Yes, in two ways. 94% of our portfolio has already received environmental certification, with a target of 100% by 2025. At the same time, the hotels we own are in the process of obtaining environmental certification. Green Key" certificationan operational certification system to be set up in 100% of our fleet by the end of 2025.
The Covivio group has hotels, but above all office buildings. Are there any bridges between the two worlds, given that more and more former offices are being converted into hotels?
S. de C. - Covivio is committed to strengthen its presence in the hotel sector. A market that will continue to be buoyant, and one in which the Group has strong convictions. There are bridges between the office and the hotel, in terms of design, services and customer culture.
Do you already have something in mind?
S. de C. - We have a number of projects under consideration. We're looking to see whether certain office buildings that have become obsolete in their market would be more attractive. once repositioned in a hotel. To achieve this, we are working hand in hand with Covivio's office development teams, taking into account Covivio's carbon trajectory, the benefits of this repositioning for the neighbourhood in which the building is located, for future customers and, of course, for the asset itself.
Do you have any development objectives?
S. de C. - No, we don't have a precise number of hotels to reach, because we invest when we think it's right to do so in line with our development plans. With the pandemic, Covivio has not invested in new acquisitions for some time. But, in parallel, the plan announced with AccorInvest involves €393 millionThis is no small step, and our roadmap is mapped out for the next two to three years. So this is no small step, and our roadmap is mapped out for the next two to three years, at least as far as the property and funds are concerned. For all that, the hotel market is buoyant. We plan to relaunch investment, but more in leisure hotels, in Southern Europe, to rebalance our portfolio, which is essentially urban and located in France and Northern Europe.
You mentioned CSR earlier. Does your travel policy also take this dimension into account?
S. de C. - Absolutely, it's very much linked to the environment. We only travel when we have to, and preferably by train in order to be able to get around. limit air travel. We have the great advantage of working in Paris, where many hotel operators have their headquarters or offices. We don't systematically visit the hotels, except when we are dealing with acquisitions or renovations, as it is difficult to manage them remotely. We remain consistent with our carbon policy and study travel according to location.
