AccorHotels buys iconic FRHI brands

PARIS — AccorHotels announced on Dec. 9 that it will acquire Fairmont, Raffles and Swissôtel hotel brands, which it called “a strategic deal to create a worldwide leader in the luxury segment.”

Guestroom, Fairmont Queen Elizabeth.

Guestroom, Fairmont Queen Elizabeth.

PARIS — AccorHotels announced on Dec. 9 that it will acquire Fairmont, Raffles and Swissôtel hotel brands, which it called “a strategic deal to create a worldwide leader in the luxury segment.”

AccorHotels signed an agreement with the Qatar Investment Authority (QIA), Kingdom Holding Company (KHC) of Saudi Arabia and Oxford Properties, an Ontario Municipal Employees Retirement System (OMERS) company, for the acquisition of FRHI Holdings Ltd (FRHI).

FRHI is the parent company of three of the most prestigious global luxury hotel brands: Raffles, Fairmont and Swissôtel. It has 155 hotels and resorts (of which 40 are under development), and more than 56,000 rooms (of which approximately 13,000 are under development). 

Here in Canada, Fairmont is far bigger than AccorHotels. Accor has eight properties with 1,881 rooms, including seven Novotels and a lone Sofitel in Montreal. Fairmont has 19 hotels, including both historic icons and luxury newer-builds, with a total of 9,984 rooms.

This means that Canadian properties account for 23 per cent of FRHI’s portfolio by rooms.

AccorHotels will pay for the acquisition by issuing 46.7 million new Accor shares and a cash payment of $840 million (€768 million) – Qatar Investment Authority and Kingdom Holding Company of Saudi Arabia are to become major shareholders, with 10.5 per cent and 5.8 per cent of the share capital respectively.

The transaction will be accretive to earnings per share from the second year with €65 million in revenue and cost synergies identified in the medium term.

“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 chief executive officer of AccorHotels in a release. 

“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.”