FOLLOWING THE approval of shareholders at the General Shareholders Meeting on July 12, 2016, AccorHotels Group officially announces the acquisition of FRHI Hotels & Resorts (FRHI) and its three prestigious luxury hotel brands: Fairmont, Raffles and Swissôtel. This addition of three remarkable brands instantly positions AccorHotels as a leading player in the global luxury hotel market, increases long term growth potential and profitability, and significantly expands the company’s footprint in North America, the world’s largest and most influential consumer market.
“Today is a great day for our Group. 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,” says Sébastien Bazin, Chairman and Chief Executive Officer of AccorHotels.
Joining AccorHotels’ global network is a portfolio of globally admired brands, which includes management of many of the world’s most iconic and historic hotels located in key strategic cities around the world, including: The Savoy in London, Raffles Singapore, Fairmont San Francisco, New York’s The Plaza, Fairmont Le Château Frontenac in Quebec City, and Le Royal Monceau Raffles Paris.
Combining FRHI’s proven track record and deep expertise in operating and marketing luxury hotels, with AccorHotels robust global operating platform, extensive loyalty base and industry leading digital capabilities, means the Group is uniquely positioned to deliver the most profitable returns and best growth potential across all market segments.
“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,” added Bazin. “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.”
In support of the acquisition, and as part of AccorHotels’ larger strategy to strengthen its luxury and upscale business, the company has appointed Chris Cahill as the Group’s Chief Executive Officer, Luxury Brands. In this newly created role, Chris, who will also become a member of AccorHotels’ Executive Committee, will lead the FRHI integration process and be responsible for the strategy and global operations of AccorHotels Luxury Brands. This new structure will include Raffles, Fairmont, Sofitel Legend, So Sofitel, Sofitel, MGallery by Sofitel, Pullman and Swissôtel.
Chris is an experienced hotelier who has led several successful integrations, is familiar with multi-brand management and brings an extensive background in luxury operations, sales and marketing. With more than 30 years of hospitality industry experience, including 19 years working with FRHI and its predecessor companies, Chris is ideally positioned to lead the integration of the Fairmont, Raffles and Swissôtel brands into the AccorHotels portfolio, and will ensure AccorHotels’ luxury brands grow and prosper. He most recently served as Executive Vice President Global Operations at Las Vegas Sands Corp.
AccorHotels plans to generate approximately €65 million in revenue and cost synergies thanks to the combination of brands, the maximization 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 percent 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.
The shareholders of the Group approved the resolution finalizing the acquisition of FRHI Holdings Limited (FRHI) and the corresponding share capital increase reserved for the Qatar Investment Authority (QIA) and Kingdom Holding Company (KHC), as well as their representation on the Board of Directors.
The shareholders also approved the appointment of six new directors: Aziz Aluthman Fakhroo and Ali Bouzarif, proposed by Qatar Investment Authority, Sarmad Zok, proposed by Kingdom Holding Company, and Jiang Qiong Er, Isabelle Simon and Natacha Valla as independent directors.
The Board of Directors now has 16 members, including one employee representative director. Seven directors are women and 9 are independent. A new employee representative director will be appointed by the Group’s European Work Council within the next few weeks, in accordance with the company’s bylaws.
Bazin, commented: “The 6 new Board members who have been appointed by our shareholders today are bringing tremendous diversity and experience to AccorHotels’ Board. I am convinced that their complementary backgrounds and views will be of great support to continue developing our growth and innovation strategy in the future. ”
The changes in the Group’s shareholder structure and in the composition of its Board of Directors are governed by individual shareholder agreements between Accor and each of QIA and KHC setting out the principles and objectives of their individual shareholdings.
QIA announced: “Qatar Investment Authority (QIA) puts its trust in AccorHotels and is pleased to become a significant shareholder of this company. We are convinced of the relevance of this transaction for QIA and fully support the strategy defined by the Board of Directors of AccorHotels and implemented by the Group’s management team. The acquisition of FRHI positions AccorHotels as a key player in the luxury hospitality industry and strengthens its positioning as the world's leading hotel operator.”
Sarmad Zok, Chairman and CEO of Kingdom Hotel Investments and Member of Kingdom Holding Company’s Board of Directors, said: “The combination of FRHI with AccorHotels is a milestone transaction in the hospitality sector at a time when the industry is undergoing major structural changes characterized by consolidation, consumer empowerment, disruptive technology, and distribution channels. We are confident in the capacity of the Group and its executives to implement growth and value-creation opportunities within this context. As a significant shareholder in AccorHotels with a seat on the Board of Directors, Kingdom fully supports the current management strategy and looks forward to contributing to Accor’s future success.”
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