Scaling a French boutique hotel brand

With Fredric Biousse (Co-Founder) and Linda Hazi (CEO) of Fontenille Collection

Hello everyone, happy Wednesday.

If you’re new here, “In The Room” is a written interview series dedicated to the stories of hoteliers and restaurateurs doing things in a uniquely interesting way.

You may recall that a year ago, LVMH acquired a minority stake in Fontenille Collection, a growing portfolio of charming boutique hotels primarily in France, which signaled conviction in the “experiences over possessions” thesis that also underlines much of The Stanza’s content. It turns out that Fontenille Collection and LVMH share a much longer history beyond the investment.

Fontenille Collection was founded by Frederic Biousse and Guillaume Foucher in 2016. Prior to hotels, Biousse scaled SMCP (the French affordable luxury group that owns Sandro, Maje, and Claudie Pierlot) from €7M to over €700M in revenue. Along the way, he sold a 51% stake to LVMH’s L Capital, which was then sold to KKR in 2013, and then again to Chinese strategic Shandong Ruyi in 2015. After acquiring, renovating, and forming the foundation of the Fontenille brand, Biousse and Foucher brought on Linda Hazi as CEO, who joined after having spent 20 years in beauty retail, most recently as the commercial lead at Sephora France.

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Tell us the story of Fontenille Collection.

Frederic: Fontenille Collection is a new kind of hotel group, one rooted in heritage, community values, and authentic experiences. We created Fontenille nine years ago when Guillaume Foucher, my co-founder, and I decided to acquire a vineyard in the south of France, near Aix-en-Provence, a truly beautiful region.

On the estate, there was a wonderful house that had fallen into serious disrepair. We decided to restore it and turn it into a hotel. At that time, we were traveling constantly. Everywhere we went, we found hospitality that was technically perfect, yet often lacked soul. We believed travelers were looking for meaning and a sense of place in their journeys: in the hotels they stayed in, the restaurants they visited, and the regions they discovered.

So we created a hotel that was not focused on perfection but on emotion. It would be anchored in local heritage, through its architecture, agriculture, and culture. That was the beginning. What started as a small 19-room boutique hotel surrounded by vineyards has grown far beyond that.

Today, we produce about 300,000 bottles of wine a year. From Fontenille in Provence, we slowly expanded and built a network. This network now includes 12 hotels, all of which we own, which is quite rare in this industry. We buy the real estate, renovate it, and operate the hotels with Linda. We now manage 12 destinations.

Linda: Most of our properties are in France, many of them in Provence. We also have two hotels in the southwest, in what we call “Landifornia,” a fantastic surfing destination. One of our properties, Domaine de Primard, is just an hour from Paris. It was once Catherine Deneuve’s country house, an extraordinary home that Guillaume and our architectural team restored. It sits on 40 hectares of beautiful gardens.

We are also present in two other countries. In Italy, in Tuscany, we have a lovely estate that was once the summer residence of the Bishop of Siena, complete with an old church in the center, which is especially beautiful for weddings. In Spain, in Menorca, we have two wonderful and very different traditional fincas.

Soon we will open in Brittany, on the western coast of France, where we are today. It is a magnificent property overlooking the sea. After that, we will open in Burgundy, one of France’s great wine regions. We also have a project in the French Alps, as well as a beautiful five-star city hotel in Aix-en-Provence. And in about two years, we expect to open another property near Florence in Tuscany.

Frederic, you were in the fashion retail business at SMCP before hospitality. Tell me more about why you chose to pivot into hospitality from fashion.

Frederic: It’s true, my background is in retail and fashion, and I am still involved in that world today through a private equity firm (Experienced Capital) I created in France that invests in fashion and beauty brands. I took Sandro when it was very small, doing about €2M in revenue, and it was close to bankruptcy. We grew it to €700M within seven years, expanding into 34 countries. It was very fast growth.

What I see happening in hospitality today mirrors what happened in fashion retail a few years ago. Luxury brands raised their prices so dramatically that they created a huge gap in the market—a space for premium or affordable luxury brands to thrive. The same is true now in hospitality. After Covid, the major palaces and five-star-plus hotels raised their rates to two, three, even four thousand dollars a night. That left open a substantial segment just below, where guests can access the best of luxury at a more approachable price, around 400 to 800 euros or dollars. This segment is highly competitive and relatively easy to target, yet there are very few strong players in it.

Hospitality is, in many ways, an extension of retail. It is about defining a culture, building a concept, replicating it, scaling it, and rolling it out. And everything you learn in retail translates: KPIs, staffing costs per hour, P&L management, growth strategy, training, hiring, and managing turnover. Hospitality has become much more sophisticated with new IT systems, CRM, and AI. The fundamentals of the job remain the same, except that you are no longer selling a product. You are selling an idea, an experience, an emotion.

When Guillaume and I created the group, we were convinced that hospitality was about to change and that there was room for new brands outside the big international chains like Marriott or Accor. So we decided to build a brand of our own. Fontenille now has the ability to grow quickly because it has become a recognizable brand. People know us, they understand our values, they trust us, and they return. That is why about 80 percent of our sales come directly through us. OTA distribution represents only a small share of our turnover because guests call us, book with us directly, and stay loyal.

For me, moving from retail into hospitality was a natural progression. It allowed me to apply everything I had learned and bring something new. It is also why Guillaume and I chose to hire Linda. She was the number two at Sephora in France and was about to become number one. Sephora is one of the best schools in retail, especially in training, people management, and excellence. Bringing that skill set into hospitality allows us to deliver a very strong experience with real efficiency, both in operations and profitability.

I want to double click on something you said earlier, that hospitality is mirroring what fashion retail was many years ago. It has never been easier to start a contemporary, mid-price fashion brand, which is why there are now so many players competing in that space. Similarly, while there is white space at the €400 to €800 ADR segment in hospitality, more groups are emerging and doing interesting things. For example, Ennismore, Experimental Group, Beaumier, Leitmotiv, and others. Coincidentally, many of these groups are French. Do you think hospitality will eventually mirror what we are witnessing now in fashion?

Frederic: Ennismore is, in reality, a set of chains rather than independent brands. Their hotels are very large and highly standardized. Most processes are centralized, and they operate through management contracts. They do not own the assets, so I do not consider them competitors for us.

Experimental is a very nice group. We know them well and like them a lot, but they occupy a different space. They appeal to a younger crowd, with a focus on nightlife, celebrations, music, and strong restaurant concepts. In terms of hospitality itself, we are not really competing. We are doing very different things.

It is true that there are many new players, and I think that is positive. Competition legitimizes the market. We helped create a new segment, and we need strong competitors to prove that this segment is real. Our strategy, however, is to grow quickly and to buy the assets. When we own the real estate, we are at home. We can do what we want, and we are extremely solid financially because we have tangible properties and long-term value behind us.

This stability has been strengthened by two new shareholders who joined our equity. First, we have Caisse des Dépôts, the French national state bank, which is as secure a financial partner as you could hope for. They joined one year ago. And more recently, LVMH came in. They invested four months ago and now own 23% of the company. For us, this is a guarantee of longevity. They chose Fontenille because we are a heritage brand. We buy our assets, maintain them carefully, keep them for the long term, and build value patiently.

There are indeed a lot of newcomers. The same was true in fashion. But there is a significant difference between opening one or two properties and managing 15, 20, or 25. It is not the same level of challenge or expertise.

So our strategy is to move faster than others, capture the market, and position ourselves as a reference player. Because we own the assets, we are much more secure. No one can push us out. No one can sell the properties without our approval. It means we fully control the distribution and the entire vertical chain.

Hospitality, in my opinion, is here to stay. There was a massive shift after Covid in how people behave and spend their money. Hospitality has become a very dynamic, even trendy sector. Many of the newest design trends now originate in hotels and restaurants rather than fashion. That gives us a very large playground. We still operate in a niche, bringing the best of luxury to boutique hotels with 20 to 60 rooms in carefully chosen European destinations, and eventually in the United States. There is room for many competitors. The world is big.

If you look at the United States today, there are almost no boutique hotels left. Ninety-five percent of the market is made up of chains. There is very little emotion, only process and scale. Properties are getting larger. Even Auberge Resorts, which is a beautiful company, is moving toward management contracts and bigger units.

We see ourselves as the French equivalent of Auberge. We want to take the lead in this segment and maybe become the next Auberge for the United States, bringing back the feeling of staying in family-owned boutique hotels with a European sensibility in exceptional locations. So yes, there will be new players. And the more high-quality players there are, the better it is for everyone.

For your first property in Luberon: did you raise money to buy that property? What’s the story behind that hotel?

Frederic: I had recently sold Sandro and Maje. LVMH was a shareholder, then we sold the group to KKR in the United States with Henry Kravis, and later to a Chinese group. When we sold to the Chinese group, I decided to leave. I had a one-year non-compete, and during that time Guillaume and I decided to acquire a vineyard in Luberon.

On that vineyard, there was a beautiful house that we converted into a hotel. I financed everything myself. I have to admit it was a little crazy, because nobody believed we could make a 19-room hotel with two restaurants and a huge park profitable. But it was profitable. We fell in love with properties and decided to keep turning them into hotels. That is how it all started.

I financed the first six hotels myself, with bank support. Then I realized I was too leveraged. Running hotels is demanding and time-consuming. You need to be present, and it is all about people, as Linda reminds us every day. At that point, we invited a few families we knew to join us and bring fresh capital. We opened the equity to just two or three families.

We then hired our first COO to help structure the business. The brand gained momentum quickly. We attracted interest from significant players, which encouraged us to accelerate and to build a strong professional team. Linda was the first major hire, and she then set up her own management committee with highly experienced senior managers.

Today we have a very strong team. We have financial backing from Caisse des Dépôts and LVMH. We have legitimacy in France, and now in Italy as well, where things are going incredibly well. Our next step is to roll out further, accelerate our growth, and become a truly European group and, I hope sooner than expected, an American group too.

Do you mind sharing how much you spent to acquire the first hotel and how much you spent to renovate it?

Frederic: We do not usually talk much about money. Compared with major projects in Europe or the United States, at the time it was not such a large amount. Today, our projects are much bigger. For example, we are currently negotiating a new property in Italy that is significantly more expensive.

To give you a rough idea, Fontenille Luberon was a project that cost us around €20M.

The flagship Domaine de Fontenille in Luberon

And for the subsequent properties, how did you go about sourcing them?

Frederic: We are very pragmatic and use different approaches. As our visibility grows, people increasingly see us as strong operators. That means we now receive offers for management contracts, which is relatively new for us. It is a positive sign because it shows we have a good reputation as operators.

We have secured our first management contract in Aix-en-Provence, a beautiful 51-room hotel that will open at the end of next year. Now that people know us, they understand exactly the type of property we are looking for and often call us directly. This is especially true because we are willing to buy a house that is not yet a hotel and take the time to convert it, creating value through that transformation.

Beyond that, we all travel a lot, for both business and leisure. Last week, for example, Linda was in another country, saw a hotel she loved, came back with the name, and now we are approaching the owners directly.

Here in Brittany, it happened in a very simple way. I liked this hotel and called the owner. I told her, “If you want to retire, and if no one in your family wants to take over, call us.” Six months later, she called. We quickly found an agreement and took over.

This is the magic of our business model. There are thousands of beautiful, independently run, family-owned hotels in exceptional locations. These owners often do not want to sell to Accor or Marriott. They want their hotel to remain a family story. We are a family company. We run it together. Linda is a shareholder alongside us, so it is her company as much as it is ours.

Together, we can continue the family history of the previous owners. This is how we source many of our properties and ideas.

Fontenille Pieve Aldina

That’s the beauty of the European hotel market. It is very fragmented and this is how deals are done. You need to build relationships. It’s the same in Italy.

Frederic: Yes, that is true. In the United States, though, the market is very different. I now have investors in the US calling me. I did a lot of retail business there with my fashion brands, so I know the market. They tell me, “Frédéric, we like Fontenille. There is no comparable offer here. Why don’t you come? You find a location, I will buy it, and you run it under a management contract.”

So it will naturally be different, because the US market is less fragmented. There is a very large investment business around hotels, and a separate business around operating them. But I still believe there is a huge opportunity to explore and develop in the US.

Our uniqueness, which may have seemed like a weakness at the beginning of our story, has now become a strength.

What are three lessons you learned in fashion retail that have influenced how you operate your hospitality business?

Frederic: I would say the first lesson is that in fashion you must always protect creation and design over marketing. When you prepare a collection plan, the marketing team will tell you, “I need this dress at that time, in that color, at that price.” But when you are a designer, products come out of your head, and sometimes they do not fit the brief. They are not in the box, but they are special.

You need to protect those products. You should not cancel them just because they do not match the assortment plan. You have to take a risk and say, “My designer believes in this, it is unique, and we are going to produce it.” This is how you avoid standardization.

In hospitality, for me, it is the same approach. We want to stay creative and surprise the market. Sometimes we open a very bourgeois, classic hotel. Then we follow it with a more trendy, playful, or surprising property in a different destination. The idea is to remain creative whatever happens, not to simply obey industry rules or copy others.

The second lesson is people, people, people. That is true in retail and even more so in hospitality.

Linda: And I think it really makes all the difference. You can have the best product and the most beautiful hotel in the world, but if you do not have the right team to make the experience truly amazing, it does not work. In fashion and retail in general, and certainly in hospitality, people are at the heart of the business.

It is about how you recruit, how you retain them, how you develop and coach them. If you do that well, it completely changes the guest experience.

Frederic: The third lesson is about scalability and control. Retail gives you a very precise understanding of KPIs and indicators, and how to monitor activity in detail.

To give you an example: a traditional hotelier may want as many staff at reception as possible, just to be sure never to miss a guest. But on a Monday morning, check-out may be very quiet. A retailer, by contrast, would schedule one person on a quiet Tuesday morning and ten people on a busy Saturday afternoon. You adapt staffing to demand.

From retail, you learn how to use IT systems, CRM, and digital indicators to adjust your offer, services, staffing, and processes to the actual intensity of the business. When you apply this to hospitality, it is striking how much you can increase both service quality and cost control. We brought that retail methodology into hospitality.

At the same time, we invest in very traditional hoteliers in the best sense of the word. The “aubergistes” who love guests, love solving problems, and are present at breakfast, going from table to table, asking how the stay was. These people have hospitality in their blood. They genuinely love their guests.

So the lesson from retail is: keep the best of classic hospitality, and combine it with retail discipline and tools. If you can do both, you are in a very strong position.

Millennials and Gen Z are known to value experiential luxury over physical goods. We are seeing that play out right now. How are you integrating that into your strategy?

Frederic: They are also known to prefer experiences over ownership. They do not necessarily want to possess; they want to live and enjoy. I think our model is working because our clientele is perfectly balanced: roughly one third of our guests are under 35, one third are between 35 and 45, and one third are over 45.

Linda: It is a huge market for us. We recruit many of our clients through social media. I think we are one of the only hospitality brands that uses social media so extensively.

As we mentioned, we manage Fontenille as a brand. That means we invest heavily in strong digital assets and use them on Instagram and other platforms to tell the story of each hotel. Every property has its own identity, its own narrative, and often its own Instagram page.

It takes a lot of time for our team, but it is essential, because it is how we speak directly to our guests. It is the easiest and most natural way to tell them our story and to bring them into the brand. We tell the story through these digital assets, we recruit them online, and once they arrive at Fontenille, our teams continue that story in a very simple, human way. They smile, choose the right words, and make people feel at home. That is what makes the experience unique and special.

Domaine de Primard

Frederic: We also have strong values, both personally and as a company. In France there is a legal status called “Société à Mission,” or “Company with a Mission.” We are the first hotel group in France to adopt this status.

It means we have written commitments into our legal statutes regarding the environment, social responsibility, people, diversity, suppliers, customers, pricing, food, organic agriculture, sustainability, water, and energy. It is not a marketing argument. It is real.

We are now building hotels that comply with the highest environmental standards in Europe, which is very demanding. We also have clear commitments on salaries, days of rest, and internal promotion within the company. This helps us attract younger guests and younger staff. People understand that this is part of our reputation.

It does cost money, but we believe it is the right long-term strategy. It helps us retain guests, retain staff, and feel proud of the hotels we create, because they are genuinely eco-conscious.

Linda: And I think what is very strong at Fontenille is how community-driven we are. This is why we connect so well with millennials. Once you stay at a Fontenille property, you have a special feeling, and then you want to visit the others.

We have a very high repeat rate, especially among our younger guests. They really feel, “I am part of the Fontenille Collection, part of the Fontenille family.” When we opened in Italy, people were booking without even knowing exactly where we were in Italy. They simply thought, “Fontenille is opening in Italy, I am going.”

This strong sense of community and belonging to a brand is rare in hospitality. It exists in some beauty brands, where communities are very strong, but it is quite exceptional to achieve that in hotels.

How did the LVMH deal come about? You mentioned that you had worked with them in your fashion career, but how did this deal happen, and why do you think they are the right investor?

Frederic: The deal came about because they knew we were in discussions with someone else, a completely different investor.

What I find remarkable about LVMH is their constant curiosity, whatever the sector. They are always ahead of the market. They are often the first to invest in new and young designers. Look at what they have done with someone like Jonathan Anderson. They continuously nurture curiosity across all their businesses.

They are already very strong in hospitality. Belmond is an extraordinary company, and Cheval Blanc is perhaps the most beautiful hotel brand in the world. But they also know that other parts of the market are growing. In fashion, when they were, and still are, leaders in luxury, they decided to invest in a company like Sandro because it represented a new segment they wanted to understand.

I believe the same dynamic is at play now. They want to observe how we adapt a premium brand business model to hospitality. We share many of the same customers. I was speaking with the head of Cheval Blanc in Paris, who told us that many guests love staying at Cheval Blanc and other very high-end hotels, but sometimes they want something simpler. When they want that, they come to Fontenille. They know they will get a luxury experience at a more accessible price, in a casual, relaxed environment.

So on their side, it is partly about curiosity, and partly about investment and returns. They know we create significant value by acquiring and renovating properties, and by managing them as long-term assets. That is very much in line with how LVMH operates. We are profitable, and they want to participate in that story and enjoy a solid return on their investment.

Interestingly, we are managed by the financial division of LVMH, not by the hospitality division. So we do not have direct synergies with their other hotel brands, but we do benefit from the backing of the group.

For us, having LVMH as a shareholder is, first of all, a powerful recognition of the work we have done. It signals to the market that we are on the right track. When, in the same year, both the French national bank and LVMH invest in your company, it sends a strong message.

It immediately opens doors. Owners know that with LVMH behind us, we are financially secure for many years. If we make an offer to buy a property, they can be confident we will complete the transaction. LVMH brings us legitimacy, credibility, financial strength, and a sense of future.

The second aspect is more intangible. Hospitality has become a way of life. Fashion is a way of life. Beauty is a way of life. All of LVMH’s retail brands exist in that lifestyle space. Being part of a group that is so alive and at the center of global attention makes us stronger.

They are also highly professional, which pushes us to be more rigorous, more efficient, and clearer in how we analyze each project. It helps us become better, while giving us the safety net of a very powerful group behind us. For us, it truly is a win-win situation.

Definitely. And can you share at what valuation they invested?

Frederic: No (laughs). Let’s just say it is a valuation that reflects the high quality of each of our assets.

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