AccorHotels will buy FRHI Holdings, the parent company to
the Fairmont, Raffles and Swissôtel brands, for $840 million cash and 46.7
million new Accor shares.
“[This deal] 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,” said AccorHotels chairman and CEO Sébastien
Bazin.
The FRHI name has popped up frequently in conversations
about possible industry consolidation. In late October, TheWall Street Journal reported
the company’s probable
sale to Accor. The announcement also comes on the heels of Marriott
International’s unprecedented purchase
of Starwood Hotels & Resorts.
Bjorn Hanson, a clinical professor at the New York
University School of Professional Studies Tisch Center for Hospitality and
Tourism, said the deal would allow FRHI's owners—Qatar Investment Authority and Kingdom Holding Company of Saudi Arabia—to
“realize some of the value that’s been achieved through the recovery since the
recession.”
“[Fairmont] is a stronger brand,” he said. “It has a higher
unaided recall than brands with many more hotels, so to give it an
international platform and a new level of energy for growth makes sense.”
The FRHI portfolio
comprises 155 hotels, 40 of which are under development, across 34 countries on
five continents. The deal would give Accor a more significant global footprint both
in the luxury space and in North America, where FRHI has 42 properties. As the Starwood-Marriot merger will do for Marriott, this transaction will provide
Accor with a strong customer base via FRHI’s loyalty program, which features 3
million members, 75 percent of which are based in North America.
“Through [this deal],
we are positioning ourselves as a key player in the current industry
consolidation process while maintaining substantial leeway to implement our
transformation plan," Bazin said.