The existing AccorHotels luxury portfolio of Sofitel, MGallery and Pullman will grow to include FRHI’s three brands: Fairmont, Raffles and Swissôtel. The unification of these two hotel companies establishes AccorHotels as a leader in the global luxury hotel market. The two chains combined form a network of over 4,000 hotels and resorts globally across 20 brands. In the Middle East, AccorHotels has now added 28 Fairmont, Raffles and Swissôtel properties in operation and in the pipeline, representing over 14,000 rooms in the luxury and upscale segments. Granet believes that the integration of the FRHI brands is the perfect addition to Accor’s existing portfolio, particularly in the Middle East, as over 70 percent of the chain’s key partners within the region are interested in the further development of the multi-segment market.
Transaction’s financial returns
Through the transaction, AccorHotels announced an objective to generate approximately USD 71 million (€65 million) in revenue and cost synergies in the medium-term due to the combination of brands, maximization of hotel earnings, increased efficiency of marketing, sales and distribution channel initiatives, and the optimization of support costs. This will also be supported by the combination of operational expertise and talent within the combined entity.
The integration will enable AccorHotels to bring in additional talent, expertise and resources around management and development of luxury and upscale properties. The deal will allow Accor to re-focus on the importance of innovation and provide positive dynamism to the hospitality market. All brands within both FRHI and AccorHotels’ networks will maintain their positioning and brand promise while being part of a more globally established organization. “On a global level, the deal will provide us with a sizeable footprint in the North American market, enabling us to enter into the growing branded residential business,” explained Granet. For the Fairmont, Raffles and Swissôtel brands, this deal allows them to enjoy the scale and growth made possible by AccorHotels’ global platform. FRHI will also be able to yield new development opportunities, increased sales and marketing presence alongside greater cost and revenue synergies.
As of July 12, 2016, employees from both groups have access to job opportunities and career development prospects throughout the combined network. On another level, AccorHotels is known for its community outreach programs that are specially designed for this region. “We are the only international hotel group in the region with a permanent and dedicated
training academy: Tamheed,” explained Granet. AccorHotels is also the first and only international hotel group in KSA to develop the Saudi Management Training Program, a special management program, which is certified by the Saudi Commission for Tourism and National Heritage. It encourages nationals to engage with the hospitality industry and nurture their skills. These programs will benefit FRHI’s properties in the Kingdom too. “Following the acquisition, we are keen to further develop and increase the scale of our regional training programs.”
Eye on the future
With this merger, two investment groups are now part of AccorHotels’ board: Kingdom Holdings and the Qatar Investment Authority. “With their presence, our focus on the Middle East as a key growth market is now stronger than ever,” he explained. AccorHotels’ long-term development strategy for the region continues to remain aligned with regional initiatives such as Dubai’s vision for 2020 and Saudi Arabia’s plan to welcome a larger number of visitors, especially in the holy cities. These factors increase the region’s demand for quality accommodation across each market segment. “AccorHotels is now the second largest hotel operator in the region with the most significant presence across all segments, allowing us to be ideally positioned to meet this need for diversified accommodation. We are planning to open over 100 hotels within five years in order to double our network and reach 50,000 rooms in operation by 2020,” he concluded.
About the Author: