Following the approval of shareholders at the General Shareholders Meeting on July 12, 2016, AccorHotels Group has officially acquired FRHI Hotels and Resorts (FRHI) and its three prestigious luxury hotel brands Fairmont, Raffles and Swissôtel for $2.7 billion.
AccorHotels says the addition of “three remarkable brands instantly positions AccorHotels as a leading player in the global luxury hotel market, increases long term growth potential and profitability, and significantly expands the company’s footprint in North America, the world’s largest and most influential consumer market”.
“Today is a great day for our Group,” said Sébastien Bazin, Chairman and Chief Executive Officer of AccorHotels. “The acquisition of these three emblematic luxury hotel brands is a historical milestone for AccorHotels.
“It will open up amazing growth prospects, lift our international presence to unprecedented heights, and build value over the long term,” he said.
Joining AccorHotels’ global network is a portfolio of globally admired brands, which includes management of many of the world’s most iconic and historic hotels located in key strategic cities around the world, including: The Savoy in London, Raffles Singapore, Fairmont San Francisco, New York’s The Plaza, Fairmont Le Château Frontenac in Quebec City, and Le Royal Monceau Raffles Paris.
Combining FRHI’s proven track record and deep expertise in operating and marketing luxury hotels, with AccorHotels robust global operating platform, extensive loyalty base and industry leading digital capabilities, means the Group is “uniquely positioned to deliver the most profitable returns and best growth potential across all market segments” AccorHotels says.
“We remain committed to providing guests with unparalleled service, while also keeping the ambition to deliver exceptional return on investment for our shareholders and hotel owners,” Bazin said.
“By leveraging the operational synergies between FRHI and AccorHotels, we are well-positioned to accelerate the growth of our luxury brands and offer guests even more exciting hotel choices and destinations to explore.”
In support of the acquisition, and as part of AccorHotels’ larger strategy to strengthen its luxury and upscale business, the company has appointed Chris Cahill as the Group’s Chief Executive Officer, Luxury Brands. See that separate story here.
Following the approval of shareholders at the General Shareholders Meeting on July 12, 2016, the transaction with Qatar Investment Authority (QIA) and Kingdom Holding Company (KHC) of Saudi Arabia provided $840 million (€768 million) cash payment and the issuance of 46.7 million AccorHotels shares in consideration for the contributed FRHI shares.
The transaction gives QIA and KHC respective stakes of 10.4% and 5.8% in Accor’s share capital. Ali Bouzarif and Aziz Aluthman Fakhroo from QIA and Sarmad Zok from KHC will now join AccorHotels’ Board of Directors.
AccorHotels plans to generate approximately €65 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.
Significant enhancements will also be made in terms of customer data, thanks to the integration of FRHI’s customer base that includes three million loyalty members, of which 75 percent are in North America.
The vast majority of Fairmont, Raffles and Swissôtel’s 154 hotels and resorts (of which 40 are under development) and 56,000 rooms spanning 34 countries and five continents are operated under long-term management contracts, with an average term of nearly 30 years; six hotels are leased and one hotel is owned.
The Fairmont, Raffles and Swissôtel brands employ more than 45,000 colleagues worldwide.