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AccorHotels To Acquire 3 Iconic Hotel Brands, Enhancing Company's Footprint In Luxury Segment

Dec 11, 2015 10:11 AM EST | By Jean-Claude Arnobit
AccordHotels, FRHI Holdings Ltd., Fairmont Hotel, Raffles Hotel, Swissotel, acquisition
AccorHotels to Acquire Three Iconic Hotel Brands, Enhance The Company's Footprint in the Luxury Segment
(Photo : Clive Mason | Getty Images News)

AccorHotels has announced in a press release that it will be acquiring FRHI Holdings Ltd., the parent of Fairmont, Raffles, and Swissotel hotel brands.

The acquisition will strategically enhance AccorHotels' brand portfolio and broaden its geographic footprint in the luxury segment.

AccorHotels said that FRHI has 155 hotels and resorts, 40 of which are under development, and more than 56,000 rooms, with approximately 13,000 under development.

FRHI's hotels and resorts span 34 countries across five continents, with 42 properties in North America, 2 in South America, 26 in Europe, 17 in Africa / Middle East, and 28 in Asia-Pacific.

Fairmont, Raffles, and Swissotel, three of the most prestigious global luxury hotel brands, also allows AccorHotels to optimize its luxury and upscale brands and adapt its offering the expectations of its demanding clientele.

FRHI's teams will help bolster AccorHotels' expertise in the luxury segment.

Sébastien Bazin, the chairman and CEO of AccorHotels, said in the press release that the acquisition is a great opportunity for the company to add "three prestigious brands" to its portfolio.

"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," he said.

AccorHotels' acquisition of FRHI comes less than a month after Marriot International Inc. acquired Starwood Hotels & Resorts Worldwide for $12.2 billion, according to The Wall Street Journal.

Marriot's deal creates the world's largest hotel company with more than 1 million rooms and 30 brands.

Analysts are saying that major hotel operators are feeling the pressure to get bigger to allow them to compete globally.

More deals are expected to come as the hotel growth cycle levels off.

Hotel operators are also facing competition from the fast-growing home-rental companies such as Airbnb.

These companies are forcing traditional hotels to expand or risk losing market share.

Under the terms of the agreement, AccorHotels will be paying $840 million in cash to Qatar Investment Authority (QIA) and Kingdom Holding Company of Saudi Arabia (KHC), FRHI's owners, according to the press release.

The company would also be issuing 46.7 million AccorHotels shares to FRHI's owners, which will be issued via a reserved capital increase.

The transaction will give QIA a 10.5 percent stake in AccorHotels share capital and KHC a 5.8 percent stake.

Two representatives from QIA and one representative from KHC will be appointed to AccorHotels board of directors.

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