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AccorHotels ups Mideast presence
August 2016 3098

AccorHotels's acquisition of Fairmont Hotels & Resorts (FRHI) was completed mid last month, doubling its Middle East portfolio to 150 properties and remarkably increasing its footprint in North America. The addition of three established luxury brands – Raffles, Fairmont and Swissotel – also results in a distinct shift of Accorhotels’ brand proposition towards the luxury segment, with its predominantly mid-market and budget hotels.


Following the approval of shareholders at the general shareholders meeting held on July 12, the transaction with Qatar Investment Authority (QIA) and Kingdom Holding Company (KHC) of Saudi Arabia provided $840 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 per cent and 5.8 per cent 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, the world’s sixth largest hotel group post the acquisition, plans to generate approximately €65 million ($72 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 per cent are in North America.

As a result of the merger, AccorHotels ranks as the sixth in the world in terms of number of bedrooms, and first in the world for the number of properties its operates itself, said Accorhotels CEO HotelServices Mediterranean, Middle East and Africa Jean-Jacques Dessors. 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.


AccorHotels’ portfolio in the Middle East includes 75 operational hotels with 18,000 rooms in 10 countries - Bahrain, Egypt, Jordan, Iran, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia and the UAE – and 55 under development bringing the total to 130.

Under the deal, AccorHotels will acquire all FRHI’s 20-odd Fairmont, Raffles or Swissôtel-branded hotels across the region.

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. This newly created role sees Cahill become a member of AccorHotels’ executive committee and 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.

The move towards luxury is not in line with the current climate in Dubai, which has seen several hoteliers focus on increasing their mid-market and economy options ahead of Expo 2020. In response to this, AccorHotels Middle East managing director and chief operating officer Olivier Granet, said that the emirate would continue to attract guests to the luxury sector. Granet also mentioned that AccorHotels is collaborating with Emirates Airline, DTCM and Dubai Parks and Resorts to continue protecting source markets for both luxury and mid-scale properties.


FRHI properties are now live on Accor’s booking platforms, available to book online via AccorHotels. The deadline, he added, for bringing together other aspects of the organisation, including the loyalty club members, is October, but the entire process could take up to one year, Dessors said.

AccorHotels has been pushing direct booking from its website for years now, and has invested millions of dollars online to that effect. However, agents, operators and OTA’s remain an important part of the booking mix.

What will change for the booking agent? 'This offers a common system for agents to book – this is good news for them,' said Granet. 'A case in point is Makkah, where we have a good representation of all segments from Ibis to Raffles. This is great for the trade because when you have a huge amount of pilgrims coming in, you are looking for a huge capacity and we can provide a wide spectrum of options now, with this take -over.'

'Negotiations might to change a little bit because as a hotel operator we are becoming stronger with this acquisition,' concludes Granet.

By Rashi Sen


Group sheds Europe weight

EARLIER last month, Accorhotels finalised the disposal of a portfolio of 85 hotels in Europe to a new franchised operator called Grape Hospitality.

As part of the transformation of the HotelInvest asset base, AccorHotels announced the sale of a portfolio of 85 hotels in Europe in the economy and midscale segments, for a total consideration of €504 million ($554 million), in accordance with the terms announced on January 27, 2016.

These hotels will now be brought together in Grape Hospitality, a dedicated hotel platform owned 70 per cent by Eurazeo and 30 per cent by AccorHotels.

This newly created structure will be led by Frédéric Josenhans, formerly managing director of the Mercure and Novotel brands, assisted by a team of hotel and real-estate professionals.

The portfolio transferred to Grape Hospitality consists of one Pullman, 19 Novotel, 13 Mercure, and 35 ibis, three ibis Styles and 14 ibis budget hotels. Most of these establishments are located in France, but also in Spain, Italy, Portugal, Germany, Austria, Belgium and the Netherlands. All these hotels will retain their affiliation with the AccorHotels brands through franchise contracts, and will benefit from an ambitious renovation programme over the next few months.

John Ozinga, CEO of HotelInvest, said: 'This operation substantially accelerates the repositioning of HotelInvest assets and appreciably boosts their profitability. We are very happy to contribute to the emergence of a sizeable new hotel investor in the European market, which will be a strategic partner for the group's future.'


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