Fairmont Hotels formally becomes part of the AccorHotels group

As of today, Fairmont and its sister brands Raffles and Swissotel have formally joined the AccorHotels group. As per the press release:

“Following the approval of shareholders at the General Shareholders Meeting on July 12, 2016, the transaction with Qatar Investment Authority (QIA) and Kingdom Holding Company (KHC) of Saudi Arabia provided $840 million (€768 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% and 5.8% 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 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.”

Conclusion:

Overall the deal is a great value add for the Accor group as it helps them capitalize on the luxury appeal of the Fairmont branding and enter the space on a very strong footing. I have always loved the way the Fairmont hotels operated providing a personalized level of service to its customers although their so called loyalty program left a lot to be desired. Although that is unlikely to change much with the AccorHotels loyalty not being a path breaker in the loyalty space but it would still given them a strong leverage in terms of expanding their reach and accelerating their growth plans with the strong financial and marketing muscle. Lets see how things pan out but I will sure keep a lookout in terms of any new changes that come up from them. What are your thoughts on the merger. Let me know in the comments section below.