François-Xavier Bourgois

With 15 hotels under six chains located in the centre of major French cities, Oletis is a key player in hotel franchising across France. The hotel group's founder and Chairman and Chief Executive Officer, François-Xavier Bourgois, tells us about its business model and development strategy.

How did your business begin?

François-Xavier Bourgois: In 2001, after seven years at leading hotel groups, I wanted to set up my own business. My idea - which is now the Oletis group's business model - was to buy independent city centre hotels, renovate them, revitalise the staff, establish a brand and run them as a franchise. At the time, there were very few chain hotels in urban centres, while demand was high. A new generation of customers wanted the service and comfort standards guaranteed by a brand name without remaining confined in a hotel room on the city outskirts. The challenge was to convince the chains to affiliate independent hotels that did not meet all their standard criteria (number and size of rooms, own restaurant, car park). Our partners nevertheless quickly understood that this system enabled them to extend their coverage and win new customers. I started out by buying a hotel in Paris, opposite the Gare du Nord, and then on the back of this initial success I acquired around 10 other hotels, each time with a specific roundtable of investors.

Why did you create the Oletis group?

F.-X.B.: In 2007, I wanted to step up the pace of growth, particularly in order to seize the many acquisition opportunities arising with an entire generation of independents going into retirement. I also wanted to extend the concept to towns in provincial France.

Rather than proceeding on an ad hoc basis, I decided to create a new legal structure, bringing together investors within a single holding company to buy a number of hotels.

Thanks to the many contacts I had made over the previous five years, I was able in particular to count on the support of a leading shareholder, who himself was the founder of an international hotel group.

What is Oletis' "method"?

F.-X.B.: We work according to opportunities. We take over urban hotels that we believe are under-exploited. Once we have identified a target, we choose the hotel chain we want to affiliate it to, depending on the local market and the existing offering, the positioning we want to give the new product and the purchase price. The challenge is to get the right brand in the right place. We only work with leading franchisers that have attained critical mass and are hotel operators themselves. These partners include the Accor group and all its brands, Intercontinental (Holiday Inn), Louvre Hotels (Campanile, Kyriad) and even the Marriott group. We then draw on the strength of these networks and our hotel management and revenue management expertise. We also capitalise on synergies, in particular with regional managers who oversee several hotels, regardless of the brand.

What are your main development focuses?

F.-X.B.: Having ensured the durability of our business model during the early years, we have made trade-offs in terms of properties. We have sold hotels in smaller towns in order to focus on major French cities. We do not want to develop in other countries as there is still a lot to do in France. We have also changed the profile of our acquisitions. To begin with, we bought primarily the business. Today, with the help of our size, we look mainly at hotels for which we can also acquire the freehold. In addition to a higher level of liquidity on resale, this means that we can control the leases and works.

Why did you take on Crédit Mutuel Equity as an investor?

F.-X.B.: I have worked with CIC since I bought my first hotel in 2002. We have always enjoyed a relationship of trust and so I naturally turned to Crédit Mutuel Equity (formerly CM-CIC Investissement) when I wanted to carry out a capital increase in 2015. I thought it was relevant to add an institutional partner to my roundtable of private investors. But an institutional investor that has been able to maintain a very operational view of the company and offers unparalleled responsiveness.

What the partner says

photo of Philippe Traisnel

Our partnership with the Oletis group goes back to 2015.

When we met François-Xavier Bourgois and his teams, we quickly identified the Oletis group's targeted and relevant positioning and the many growth opportunities offered by the hotel sector in France.

Crédit Mutuel Equity invested in the Oletis group at the end of 2015 on the occasion of a capital increase to finance partly the acquisition of new hotel properties. Since then, the group has pursued its development policy with rigour and professionalism. Following the disposal of certain historic assets, the group recently made new acquisitions including Hotel Maison Rouge in the centre of the city of Strasbourg in late 2017.

As partners of the Oletis group, we also appreciate its development model, based on both improving the operating performance of recently integrated hotels and owning freeholds when the opportunity is there. This strategy greatly facilitates the operation of hotels over the long term and constitutes a real advantage in successfully steering the group's expansion.

€40m of revenue

15 hotels in operation

311 employees

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