French hospitality giant Accor has announced plans to split the business into two divisions, which will focus on the operation and ownership of hotels, respectively.
The formation of the HotelServices and HotelInvest arms marks a sharp reversal of the company's previous intention to sell many of its assets to reduce debt and concentrate on expansion in the Asia-Pacific region, leaving investors muted.
"Accor is a strong and unique group poised to derive benefit from rich opportunities," said Accor chairman Sébastien Bazin, in the first major announcement since his appointment as the group's CEO in September 2013.
"However, it deserves a much higher ambition to create sustained value. It requires the in-depth, rapid transformation of its business model and its organisation, as well as a clear and long-term vision, and to stay the course.
"With this new strategy, our aim is to unlock Accor's full potential through its two core activities and maximise value creation for shareholders," he added.
HotelServices will operate 3,600 properties under 14 brands including Ibis, Novotel and Sofitel. Boosting operations and franchise fees will be its focal points.
HotelInvest will be a hotel owner and investor division, responsible for the ownership and purchasing of hotels, while widening profit margins at 1,400 buildings in which the group has an ownership stake. With the new strategy, Accor intends owned hotels to account for 75% of its net operating income, up from the current 50%.
Accor will now be managed by an executive committee that will include five regional heads of operations. A statement released by the group says the new focus will allow the company to reduce costs by giving managers more flexibility in decision-making.