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Hotel giant Accor to buy FRHI in US$2.9bn deal

by Jane Kitchen | 10 Dec 2015

Paris-based AccorHotels will buy FRHI – the owner of Raffles, Fairmont and Swissotel – for

approximately US$2.9bn (€2.6bn, £1.9bn) in cash and shares. Accor operates Sofitel, Pullman, Novotel and ibis brands, among others, and has around 3,800 properties – nearly 500 of which are luxury and upscale.

“This is an outstanding opportunity to add three prestigious brands – Fairmont, Raffles and Swissotel – to our portfolio, and a great step forward for AccorHotels,” said Sebastien Bazin, chair and CEO.

“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.”

As part of the deal, Qatar Investment Authority and Kingdom Holding Company of Saudi Arabia will become major shareholders, with 10.5 per cent and 5.8 per cent of the share capital respectively. The agreement with Qatar Investment Authority and Kingdom Holding Company of Saudi Arabia provides for the cash payment of US$840m (€768m, £553m) and the issuance of 46.7 million Accor shares.

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.”

FRHI has 155 hotels and resorts, of which 40 are under development. Its portfolio includes legendary properties such as Raffles Singapore, The Savoy in London, Shanghai’s Fairmont Peace Hotel and The Plaza Hotel in New York. Its hotels and resorts span 34 countries across five continents.

Accor said the acquisition will strategically enhance its brand portfolio and provide it with a better-balanced business profile, and the integration of FRHI’s three brands will also broaden Accor’s footprint in the luxury segment, and enable it to optimise its luxury and upscale brands.

Accor said it aims to generate around €65m (US$71m, £47m) 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.

This is the second major hotel consolidation deal of late; just last month, Marriott bought its rival Starwood in a US$12.2bn deal.

Paris-based AccorHotels will buy FRHI – the owner of Raffles, Fairmont and Swissotel – for approximately US$2.9bn (€2.6bn, £1.9bn) in cash and shares. Accor operates Sofitel, Pullman, Novotel and ibis brands, among others, and has around 3,800 properties – nearly 500 of which are luxury and upscale. “This is an outstanding opportunity to add three prestigious brands – Fairmont, Raffles and Swissotel – to our portfolio, and a great step
CLD,SAB,HHR,HOT,INV
FRHI has 155 hotels and resorts under the Fairmont, Raffles and Swissotel brands, including the recently opened Raffles Jakarta, shown here / FRHI
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