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Europe’s largest hotel group, Accor earlier this week said it has agreed to buy FRHI Holdings—owner of hotel brands Raffles, Swissotel and Fairmont—in a US$2.9 billion (S$4.1 billion) deal.
For the deal, France-based Accor will pay US$840 million in cash and issue 46.7 million Accor shares via a reserved capital increase, subject to the approval of shareholders at an extraordinary shareholders’ meeting. In a press statement on Wednesday (9 December), the transaction is also subject to regulatory approval by antitrust authorities.
QIA and Kingdom Holding—two of the three joint owners of FRHI—will each retain minority stakes and have representatives on Accor’s board of directors.
FRHI owns three global luxury hotel brands: Raffles, Fairmont and Swissôtel. It has 155 hotels and resorts—of which 40 are under development—and more than 56,000 rooms, with about 13,000 under development, spread across 34 countries. Its portfolio includes The Savoy in London, Shanghai’s Fairmont Peace Hotel, The Plaza Hotel in New York, Le Royal Monceau – Raffles Paris, Fairmont San Francisco, Fairmont Le Château Frontenac in Quebec, Swissôtel The Stamford Singapore and Raffles Singapore (pictured).
“This is an outstanding opportunity to add three prestigious brands – Fairmont, Raffles and Swissôtel – to our portfolio, and a great step forward for 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,” said Sébastien Bazin, Chairman and Chief Executive Officer of AccorHotels. “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.
Accor said it aims to generate around €65 million (S$100 million) in revenue and cost synergies thanks to the combination of brands, the maximization of hotel earnings, the increased efficiency of marketing, sales and distribution channel initiatives, and the optimization of support costs. It also said that “significant improvements” will also be made in terms of customer data with the integration of a customer base including 3 million loyalty members, of which 75 percent are North Americans.
Following the deal, Accor will have 500 luxury and high-end hotels. Accor’s luxury hotel brands include Sofitel, Pullman, MGallery by Sofitel, Grand Mercure, The Sebel.
This is the second high-profile hotel consolidation deal in as many months. after Marriott International’s acquisition of Starwood Hotels & Resorts Worldwide to create the world’s largest hotel operator for US$12.2 billion (S$17.37 billion).
According to media reports, FRHI was put up for sale by its owners earlier this year. It was reported in September that international hotel operator InterContinental Hotels Group was considering making a bid, but did not materialise.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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