AccorHotels has announced that it will acquire FRHI Holdings Ltd (FRHI), the parent company of Fairmont, Raffles, and Swissôtel, for US$2.9 billion
This purchase will add 155 properties to its portfolio and includes Raffles Singapore, The Savoy in London, Shanghai’s Fairmont Peace Hotel, The Plaza Hotel in New York, Le Royal Monceau – Raffles Paris and Fairmont San Francisco.
The deal was announced this morning (Dec 10), with AccorHotels signing an agreement with the Qatar Investment Authority (QIA), Kingdom Holding Company (KHC) of Saudi Arabia and Oxford Properties, an Ontario Municipal Employees Retirement System (OMERS) company for the acquisition of FRHI Holdings Ltd (FRHI).
AccorHotels will pay for the acquisition by issuing 46.7 million new Accor shares and a cash payment of $840 million (€768 million) – Qatar Investment Authority and Kingdom Holding Company of Saudi Arabia are to become major shareholders, with 10.5% and 5.8% of the share capital respectively.
“This is an outstanding opportunity to add three prestigious brands – Fairmont, Raffles and Swissôtel – to our portfolio, and a great step forward for AccorHotels,” said Sébastien Bazin, chairman and chief executive officer of AccorHotels.
“It offers us robust and global leadership in luxury hotels, a key segment in terms of geographic reach, growth potential and profitability, for long term value creation.
“In addition, the deal allows us to strengthen our human capital with FRHI’s widely respected and talented global workforce which has a proven track record in operating and marketing luxury hotels.
“The transaction will also enable the group to consolidate its shareholder base, with the arrival of two high-profile investors that both have extensive expertise in the hospitality industry.
“This major acquisition demonstrates the group’s agility in a fast-changing industry and will allow us to more effectively support our guests, clients and hotel owners.
“Through it, we are positioning ourselves as a key player in the current industry consolidation process while maintaining substantial leeway to implement our transformation plan,” Bazin said.
His Excellency Sheikh Abdulla Bin Mohammed Bin Saud Al-Thani, CEO of Qatar Investment Authority, said, “Since making our investment, Fairmont Raffles Hotels International has become a leading luxury hotel company with an expanded international presence.
“This deal generates the scale needed to drive the next phase of growth in our real estate and hospitality investments. QIA has confidence in AccorHotels and looks forward to becoming a significant shareholder.”
FRHI has 155 hotels and resorts (of which 40 are under development), and more than 56,000 rooms (of which approximately 13,000 are under development).
FRHI’s hotels and resorts span 34 countries across five continents, with 42 properties in North America, 2 in South America, 26 in Europe, 17 in Africa/Middle East and 28 in Asia-Pacific.
The acquisition of these three global brands will strategically enhance AccorHotels’ brand portfolio, and will provide AccorHotels with a better-balanced business profile.
AccorHotels aims to generate around €65 million in revenue and cost synergies thanks to the combination of brands, the maximisation of hotel earnings, the increased efficiency of marketing, sales and distribution channel initiatives, and the optimisation of support costs.
Significant improvements will also be made in terms of customer data, thanks to the integration of a customer base including 3 million loyalty members, of which 75% are North Americans.