AccorHotels to buy stake in German boutique hotel chain 25hours

PARIS (Reuters) - AccorHotels ACCP.PA is buying a 30 percent stake in Germany's 25hours Hotels for 35 million euros ($39 million), stepping up its expansion in the fast-growing market for "boutique" hotels that shun the replicated styles of mass-market brands.

The logo of French hotel operator AccorHotels is seen on top of the building company's headquarters in Issy-les-Moulineaux near Paris, France, April 22, 2016. REUTERS/Gonzalo Fuentes/File Photo

25hours Hotels, which will continue to be run by chief executive and co-founder Christoph Hoffmann, runs seven boutique hotels in Hamburg, Frankfurt, Berlin, Zurich and Vienna.

Five more are slated to open in Zurich, Munich, Cologne, Dusseldorf and Paris in the next two years, while it also has expansion plans in Melbourne, Miami and Milan.

“Through this partnership, AccorHotels is investing further in one of the fastest growing segments in the industry and enriching its offer to achieve scale in this segment,” AccorHotels Chief Executive Sebastien Bazin said in a statement.

Boutique hotels are usually small, stylishly-designed, upmarket hotels that have proved particularly popular with “millennials” - the tech-savvy generations born after 1980.

Leading hotel operators such as AccorHotels and rivals Marriott MAR.O, Hilton HLT.N and InterContinental IHG.L are focusing increasingly on millennials, whom they expect to be the biggest single group of hotel customers by 2020.

Accor's Bazin has long warned of the threat to traditional hotel operators from companies such as Airbnb and online booking websites such as Expedia EXPE.O, which are popular with millennials.

Airbnb offers travelers the options to stay in flats rather than hotels, which are often cheaper, and Airbnb said last month that guest arrivals in Paris - its biggest market - had risen this summer despite an overall decline in foreign visitor numbers due to security fears.

AccorHotels will be able to add 25hours Hotels to its existing Mama Shelter boutique hotels brand, while the deal also follows AccorHotel’s launch in September of its ‘Jo&Joe’ youth hotels brand.

AccorHotels cut back the upper end of its 2016 profit target range last month after its French and Belgian operations were hit by security fears following militant attacks in those countries.

($1 = 0.9042 euros)

Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta and Mark Potter