10 December, 2015

Accor acquires Fairmont Raffles Hotels

French hotel group AccorHotels says it has agreed to buy Canada’s FRHI, owners of the Fairmont, Raffles and Swissotel luxury hotel groups, from its current Qatari and Saudi owners.

The $US2.9 billion ($A4.02 billion) acquisition, which covers 155 hotels and resorts, will make AccorHotels a world leader in luxury hotels, it said.

AccorHotels added that it would pay the Qatar Investment Authority and Kingdom Holding Company of Saudi Arabia a total of $US840 million in cash and by issuing 46.7 million new Accor shares.

Managing director of AccorHotels Sebastien Bazin told reporters that the deal constituted “the largest acquisition in the hotel group’s history” after the $US1.3 billion purchase of Motel6 more than two decades ago.

Bazin said the accord was “a strategic operation which gives birth to an uncontested world leader in the luxury segment” of the industry, fighting to stay ahead of upstart rivals such as Airbnb.

The company added that Qatar Investment Authority and Kingdom Holding Company of Saudi Arabia would “become shareholders with respectively 10.5 and 5.8-per-cent capital stakes in AccorHotels”.

Bazin described Fairmont, Raffles and Swissotel as three “legendary brands” that would “strategically complete our portfolio and our geographic reach, in particular in the United States, the primary issuing market for international tourism.”

The deal will bolster the company’s strength in the luxury sector outside Europe, according to Euromonitor International travel analyst lodging Dr Wouter Geerts.

Raffles is strong in Asia and the Middle East, Fairmont in North America while Swissotel has a significant Chinese pipeline in addition to its strong European network.

“Accor’s revenue is heavily reliant on sales from Europe, but since the economic crisis this has been an underperforming region,” he said. “Accor’s main competitors are strong in the US and have benefited from a strong performance of the North American hotel market.”

However, Geerts claimed the US$2.9 billion pricetag was “rather high” for a portfolio of 155 hotels. Marriott snapped up Starwood’s 1270 properties for US$12.2 billion.

Nonetheless, he branded it a “positive development” for the hotel chain, strengthening its position to withstand challenges such as growing pressure from online retailers and consolidation within the sector.

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accor Fairmont frhi Hotels Raffles Swissotel