AccorHotels years ago rolled up tech vendors to create a technology services company for independent hoteliers called D-Edge. But Accor Chairman and CEO Sébastien Bazin told investors on February 20 that he wanted to find external partners to co-own the software provider.
Then along came the pandemic and all those plans screeched to a halt. Now D-Edge finds itself struggling along with the rest of the travel industry. And Accor’s coveted tech play may stay within the hotel giant’s fold for now until the hotel market shakes out from the damage delivered by coronavirus.
It’s certainly a complete turnaround from when Bazin was touting D-Edge earlier this year. “We’re going to give a bowl of fresh air to D-Edge, where you’re going to have third-party coming in, likely private equity or industrial operating companies providing funds and acquiring either 40 percent, 35 percent, 60 percent,” Bazin said.
“I want Accor to remain as the big industrial strategic partner,” Bazin said. “But I don’t want to be the one putting back more capital into D-Edge because we’re not the best partner for them to grow faster.”
But of course the onset of the pandemic in Europe has delayed Accor’s sale of a stake in Paris-based D-Edge. The subsidiary provides central reservation management software, customer relationship management software, and other services. More than 11,500 hotels covering more than one million rooms use its tech.
D-Edge grew out of Accor’s acquisition of tech firm Fastbooking in 2015 and Availpro in 2017.
D-Edge expanded its revenue at about 15 percent a year over four years to about $55 million (about €50 million) last year, said Pierre-Charles Grob CEO of D-Edge. It generated earnings of about $5 million a year, he said.
He believes that while hotel groups may be slow to bring back full-time employees during the crisis and will want to outsource some of their tech to streamline some of their processes with automation to cope.
LOOKING FOR INVESTORS
Finding outside investors isn’t always easy. Choice Hotels tried for years to find an outside partner for its hotel tech services unit SkyTouch, to no avail.
Parent company Accor announced in January it had signed a deal to be the first customer of a unified central reservation system and property management system that Sabre is building. That raised the idea in some minds that Sabre might become a partner in the separate D-Edge effort, too. But the crisis has delayed Accor’s participation in Sabre’s project, and Sabre seems focused on its own services in the near-term.
No word yet on when Accor might sell a stake in D-Edge to an outside investor. The pandemic has overturned the hotel tech market. So a surprising new cast of potential investors might come forward to join the usual suspects.
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