France’s Accor buys Raffles Hotel owner for S$4.1b

SINGAPORE — The storied Raffles Hotel is set to change hands for the fourth time in 10 years, since it was first bought over by a foreign investor in 2005, when it triggered a public outcry over the loss of a Singapore icon.

Paris-based Accor, Europe’s biggest hotel operator, said early today (Dec 10) that it had agreed to buy FRHI Holdings in a deal worth about US$2.9 billion (S$4.1 billion) in shares and cash. FRHI,  the owner of the luxury Raffles, Fairmont and Swissotel brands, is jointly owned by the Qatar Investment Authority (QIA), Kingdom Holding Company of Saudi Arabia and Oxford Properties, the real estate division of the Ontario Municipal Employees Retirement System.

Mr Robert McIntosh, executive director for CBRE Hotels Asia-Pacific, described the deal as a “good match” that will enable Accor to raise its profile in the luxury segment.

“Accor has been trying to develop its luxury products, but didn’t have enough. With the inclusion of Raffles, this will position them well in the five-star market,” he told Channel NewsAsia. 

On the other hand, Fairmont does not have a big global footprint, he added. “Being part of Accor will give them additional access to other developments and opportunities,” he said.

Accor will pay US$840 million in cash and issue 46.7 million new Accor shares, subject to the approval of shareholders at an extraordinary shareholders’ meeting, the company said. The transaction is also subject to regulatory approval by antitrust authorities, it added. If the deal is successfully concluded, QIA and Kingdom Holding will become Accor shareholders, with stakes of 10.5 per cent and 5.8 per cent, respectively.

Besides Raffles Hotel, FRHI has more than 150 hotels and resorts, of which 40 are under development, and over 56,000 rooms, about 13,000 of which are under development. Its portfolio also includes Swissotel The Stamford in Singapore, The Savoy in London, Shanghai’s Fairmont Peace Hotel and The Plaza Hotel in New York. Accor, which operates the Ibis and Sofitel chains, has 3,800 hotels worldwide. 

“The deal offers us robust and global leadership in luxury hotels, a key segment in terms of geographic reach, growth potential and profitability. We are positioning ourselves as a key player in the current industry consolidation process,” said Accor chief executive Sebastien Bazin.

Accor said it aims to generate around €65 million (S$100 million) in revenue and cost synergies from the combination of brands, the maximisation of hotel earnings, the increased efficiency of marketing, sales and distribution channel initiatives, and the optimisation of support costs. 

Significant improvements will also be made in terms of customer data, with the integration of a customer base including three million loyalty members, it added.

“This deal generates the scale needed to drive the next phase of growth in our real estate and hospitality investments,” QIA’s CEO Abdullah Mohammed Saud Naseer Thani said.

Hotel acquisitions are rising worldwide as owners and operators attempt to bulk up and defend themselves against competitors such as accommodation portal Airbnb. 

Investors spent US$60 billion on hotels in the first nine months of the year, 37 per cent more than last year, according to data compiled by property consultancy JLL. Just last month, Marriott International inked the biggest deal in the industry since 2007 by agreeing to buy Starwood Hotels & Resorts Worldwide in a US$12.2 billion transaction. AGENCIES