The Ups and Downs of the Sofitel Hotel as a Part of the Accor Group - Case Study Example

The year 2007 saw a major restructuring for the Accor group with regard to its hotel businesses. The Sofitel group which was classified under the up-market luxury category repositioned itself as a hotel with a French touch. This could be because Sofitel’s origins were in France. (Pouillat and Chabrot). The concept now is that each hotel in the chain will be unique in design and architecture that will be suited to the region where it is run. Two sister brands will be introduced in 2009 namely, Sofitel Legend and So by Sofitel.

During the years 2006 Sofitel sold one French hotel and six hotels in the USA to streamline its operations and to improve cash flow. The US hotels were sold off for 370 million USD. In 2007 two more hotels in the US were sold for 225 million USD to a GEM Realty Capital of which Accor was a joint venture partner. (Press Release: Accor Announces Sale and Management Back of Sofitel Hotels in New York and Philadelphia). Earlier that year, thirty Accor properties in the UK were sold off for 11 million Euros.

“Financially, the transaction will enable Accor to reduce its adjusted net debt by €584 million, of which €172 million will be added to the Group’s cash reserves. It will have no impact on EBITDA but will add €7 million to 2007 profit before tax.” (Press Release: Accor Sells 30 Hotel Properties in the United Kingdom for €711 Million and Signs a Development Partnership with Land Securities, p.1). These are just examples of the selling spree set about by Accor to decrease its net debt and for its major restructuring strategies for the whole group including Sofitel.