AccorHotels buys FRHI for US$2.9bn

Raffles Hotel in Singapore
Raffles Hotel in Singapore
Raffles Hotel in Singapore

ENDING months of speculation, AccorHotels is buying Fairmont Raffles Hotels International (FRHI) for US$2.9 billion, a move that will make the French chain, known as an upscale and mid-market operator, the largest luxury hotel player.

While the earlier Marriott/Starwood merger casts questions on brand overlaps, Accor has no luxury brand save for Sofitel, which is now back in its fold after an experiment a few years ago to have it run independently.

With the FRHI purchase, Accor adds three distinct brands – Fairmont, Raffles and Swissôtel – and 115 hotels and resorts with a total of 43,000 rooms to its current stable of nearly 500 properties. In addition, there are 40 FRHI hotels in development, comprising another 13,000 rooms.

“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 CEO of AccorHotels in a statement. “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.”

The agreement with Qatar Investment Authority (QIA), Saudi Prince Alwaleed’s Kingdom Holding and an Ontario (Canada) Municipal Employees Retirement System company includes a cash payment of US$840 million and the issuance of 46.7 million Accor shares worth about US$2.05 billion at Wednesday’s close, AccorHotels said in a statement. QIA will retain a 10.5 per cent stake in Accor and Kingdom a 5.8 per cent stake. It is subject to regulatory approvals of antitrust authorities.

“Since making our investment, FRHI has become a leading luxury hotel company with an expanded international presence,” said Sheikh Abdulla Bin Mohammed Bin Saud Al-Thani, CEO of QIA, in a statement. “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.”

The deal also seals Bazin’s reputation as a mover-and-shaker in the industry and at Accor since becoming its CEO in 2013 after a decade of watching from the sidelines as an owner-representative, during which he reportedly was Accor’s biggest critic in moving too slowly.

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