French hotel chain Accor buys Fairmont, Raffles and Swissotel for $2.9B US
French chain is one of world's largest with 3,800 hotels worldwide
French hotel chain Accor is buying the company that owns luxury hotel lines Raffles, Swissotel and Canada's Fairmont in a deal worth about $2.9 billion US in cash and shares.
Accor is buying the company known as FRHI from joint owners Qatar Investment Authority; King Holding Co., which is the private investment arm of Saudi Prince Alwaleed Bin Talal; and Oxford Properties Group, the real estate division of OMERS, Ontario's municipal workers pension plan.
QIA and King Holding will each retain minority stakes in the new company, while Oxford will not.
"Fairmont Raffles Hotels International has become a leading luxury hotel company with an expanded international presence," QIA CEO Sheikh Abdulla Bin Mohammed Bin Saud Al-Thani said in a release. "This deal generates the scale needed to drive the next phase of growth in our real estate and hospitality investments. QIA has confidence in AccorHotels and looks forward to becoming a significant shareholder."
Accor currently owns 3,800 hotels across 92 countries worldwide under the brand names Ibis, Sofitel, Novotel and others.
The three acquired companies own 155 hotels and resorts (of which 40 are under development), and more than 56,000 rooms worldwide, Accor said in a release. That includes iconic Canadian hotels such as:
- Fairmont Banff Springs.
- Chateau Lake Louise.
- Fairmont Le Château Frontenac in Quebec City.
- Chateau Laurier in Ottawa.
- Royal York hotel in Toronto.
- Montreal's Queen Elizabeth.
Other well-known properties covered by the deal are Raffles Singapore, the Savoy in London, Shanghai's Fairmont Peace Hotel and the Plaza Hotel in New York.
The deal is the second major hotel merger in as many months, coming on the heels of a pact between Starwood and Marriott that would create the world's largest hotel chain with more than a million rooms worldwide.
Both moves come amid a wind of change in the industry as it tries to deal with new companies and technologies such as Silicon Valley-based AirBNB eating into their customer base by offering short-term stays in residential properties.
Accorhotels says it will make a cash payment of $840 million US and issue 46.7 million new Accor shares with Qatar and Saudi companies to become major Accor shareholders, with 10.5 and 5.8 per cent of the share capital, respectively