AccorHotels has signed an agreement with Qatar Investment Authority (QIA), Kingdom Holding Company (KHC), and Oxford Properties (an Ontario Municipal Employees Retirement System company) to acquire FRHI Holdings (FRHI), the parent of the Fairmont, Raffles, and Swissôtel brands.
“[The agreement] 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,” says Sébastien Bazin, chairman and CEO of AccorHotels, which currently includes 3,800 properties across 92 countries. “This major acquisition…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.”
Per the agreement, QIA and KHC will receive a cash payment of $840 million, 46.7 million new Accor shares, and stakes in Accor’s share capital of 10.5 percent and 5.8 percent respectively. Two QIA representatives and one KHC representative will be appointed to Accor’s board of directors.
The acquisition of Fairmont, Raffles, and Swissôtel will significantly build upon AccorHotels’ global footprint in the luxury segment. FRHI encompasses 155 hotels and resorts, of which 40 are under development, with an estimated 56,000 rooms, of which approximately 13,000 are under development. The properties are located throughout 34 countries.
Based on the combination of brands, maximization of hotel earnings, increased marketing efficiency, sales and distribution channel initiatives, and the optimization of support costs, AccorHotels expects to see approximately $72 million in revenue and cost synergies in the medium term.
AccorHotels’ announcement follows in the wake of Marriott International’s recent $12.2 billion acquisition of Starwood Hotels and Resorts Worldwide, which is expected to close in mid-2016.
