B&B Hotels: A Bright Future after the 500th Opening in Palermo, Italy

By Massimo Terracina

The right occasion to explore the “state of the art” of the French chain, established in Brest in 1989, was the grand opening of the 500th hotel, in Palermo, Sicily.

A thousand or more attendees crowded the incomparable “Le Terrazze del Sole” the rooftop area facing the very Palermo downtown, in the heart of an unmatched “baroque style” city.

“B&B Hotels Palermo Quattro Canti is the 38th hotel we manage in Italy and it marks the 500th venue in the 11 countries we are operating throughout Europe - said the CEO of B&B Hotels, Fabrice Collet, welcoming the guests to the sumptuous kickoff party - and we intend to keep growing with a new hotel every week. Our strategic plan is close to 50 acquisitions per year, and this new “Palermo Quattro Canti” is a milestone we love to kick off tonight: 113 rooms (that will increase to 144 soon) of warm Sicilian hospitality.”
 
That constant growth could be one of the reasons why Goldman Sachs, the U.S. investment bank, is about to become the owner of B&B Hotels, following the European Commission’s green light to the operation, which is evaluated at € 2 billion, in spite of the fact that the current owner, Pai Partners, did not disclose the value of the transaction that is supposed to be finalized in days.

The core business of B&B Hotels is in France with 275 structures, 122 in Germany, 38 in Italy, 31 in Spain, and also with various venues in Poland, Switzerland, Portugal, Czech Republic, Slovenia, Austria, Holland and Brazil.
 
The 2018 budget reached € 580 million  (+18% over 2017) and achieved the opening of further 50 hotels worldwide, reaching a total of 41.800 rooms in 12 countries.
 
“We stick to a business model focused on the “no frills” mode, based on an essential but comfortable and precise service - adds Jean Claude Ghiotti, host of the event as President of B&B Hotels Italy - A perfect example is that latest opening, “Palermo Quattro Canti,” in the very downtown of Palermo, that will rely only on local employees. So will be the rooftop restaurants, first experiment in a B&B Hotels, sitting on the over a thousand square meter terraces, to keep the mood and the local style untouched. Italy is a significant market able to generate more than € 52 million in 2018 and a forecast € 60 million in 2019 with more than 40 hotels expected, on our way to the 50th within 2021.”

The B&B Hotels system is based on 20 years lease contract with single owner, private equity, or every other real estate investor, granting interesting revenues. It is very unlikely that the company acquires the building, but if it is worth, B&B Hotels can invest in such an operation, buying, refurbishing, furnishing and managing the hotel with long term managing contracts to furtherly resell the renewed building.
 
“The average investment is around 2-3 million euros - Ghiotti says - and it gives life to a 3 star hotel which inventory is between 75 and 190 rooms, but of a definitively higher standard according to all the add on we provide to make a better experience for our guests. The revenues for the owner of the building, rented as hotel, is around 5-6% per year. Our expertise allows, in fact, to revitalize shabby or unutilized buildings, as it was Palermo (where we could count on the municipality cooperation and in 3 months from the green light we finalized the process thanks to the commitment with Leoluca Orlando major of the city, very sensible to the tourism and investment side) where we gave the opportunity to the palace to be once again demanded on the market and thus kept the value of the building on the long term.”
 
“Our growing strategy - Ghiotti concludes - sees a tight expansion plan, in Germany, Switzerland, Belgium, Holland, Bulgaria, Portugal, Slovenia and Italy, with a very focused eye on South America, under development (Sao Josè dos Campos, and  2 new hotels to be opened in 2019 in Rio de Janeiro and Sao Paulo), to reach an international portfolio of more than 620 hotel, and 55.000 rooms, as for 1/3 in France, 1/3 in Germany and 1/3 in the rest of the world, Italy included, where there will be 50 hotels within 2021. As for now, the “Bel Paese” features development of 3 new hotels in Siracusa and Catania, in Sicily, and Milano.”