AccorHotels FRHI deal boosts ME portfolio to 45,000 rooms

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AccorHotels Group has officially announced the acquisition of FRHI Hotels & Resorts (FRHI), which will take its Middle East inventory to more than 45,000 rooms.

The landmark merger will see the French hotel group significantly broaden its luxury hotel offering as the prestigious Fairmont, Raffles and Swissôtel brands become part of its portfolio.

AccorHotels says it will position the firm as a leader in the global luxury hotel market and boost its long-term growth potential and profitability.

“The acquisition of these three emblematic luxury hotel brands is a historical milestone for AccorHotels. It will open up amazing growth prospects, lift our international presence to unprecedented heights, and build value over the long term,” said Sébastien Bazin, chairman and CEO of AccorHotels.

“We remain committed to providing guests with unparalleled service, while also keeping the ambition to deliver exceptional return on investment for our shareholders and hotel owners.

“By leveraging the operational synergies between FRHI and AccorHotels, we are well-positioned to accelerate the growth of our luxury brands and offer guests even more exciting hotel choices and destinations to explore.”

Following the acquisition approval at the General Shareholders Meeting on 12 July, 2016, the transaction with Qatar Investment Authority (QIA) and Kingdom Holding Company (KHC) of Saudi Arabia provided $840 million (€768 million) cash payment and the issuance of 46.7 million AccorHotels shares in consideration for the contributed FRHI shares.

The transaction gives QIA and KHC respective stakes of 10.4% and 5.8% in Accor’s share capital. Ali Bouzarif and Aziz Aluthman Fakhroo from QIA and Sarmad Zok from KHC will now join AccorHotels’ Board of Directors.

AccorHotels plans to generate approximately €65 million 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 optimization of support costs.

Significant enhancements will also be made in terms of customer data, thanks to the integration of FRHI’s customer base that includes three million loyalty members, of which 75% are in North America.

The vast majority of Fairmont, Raffles and Swissôtel’s 154 hotels and resorts (of which 40 are under development) and 56,000 rooms spanning 34 countries and five continents are operated under long-term management contracts, with an average term of nearly 30 years; six hotels are leased and one hotel is owned. The Fairmont, Raffles and Swissôtel brands employ more than 45,000 colleagues worldwide.

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