When I first saw this in my e-mail, I had that sinking feeling in my stomach. You may recall, I revisited the Southampton Princess in Bermuda recently, and it wasn’t my first time there. I probably mentioned in other posts, how Bermuda and the Southampton Princess in particular hold a special place in my heart (and not just having celebrated my honeymoon there). So seeing another company coming in and whisking away the Fairmont name, and upsetting the apple cart, well, I’m concerned.
Let us take a moment and look at the deal:
- An unrivalled collection of iconic hotel assets with 155 hotels and resorts, of which 40 are under development
- Acquisition to provide AccorHotels with robust and global leadership in luxury hotels, a key segment in terms of geographic reach, growth potential and profitability, for long-term value creation
- FRHI’s unrivalled hotel portfolio, expertise in marketing luxury hotels and sizeable footprint in North America, provide a stronger platform to continue aggressive worldwide expansion.
- AccorHotels will pay for the acquisition by issuing 46.7 million new Accor shares and a cash payment of $840 million (€768 million) – Qatar Investment Authority and Kingdom Holding Company of Saudi Arabia are to become major shareholders, with 10.5% and 5.8% of the share capital* respectively
- Transaction will be accretive to earnings per share from the second year with €65 million in revenue and cost synergies identified in the medium term
Something else interesting from the announcement is this:
AccorHotels today announces the signing of an agreement with the Qatar Investment Authority (QIA), Kingdom Holding Company (KHC) of Saudi Arabia and Oxford Properties, an Ontario Municipal Employees Retirement System (OMERS) company for the acquisition of FRHI Holdings Ltd (FRHI), parent of Fairmont, Raffles, and Swissôtel.
For me, that says that there are a whole lot more players than just Accor, Fairmont, Raffles and Swissotel. Perhaps it shouldn’t be big to me, considering I hadn’t realized that Qatar Investment Authority had been involved beforehand, see below:
His Excellency Sheikh Abdulla Bin Mohammed Bin Saud Al-Thani, CEO of Qatar Investment Authority, said: “Since making our investment, Fairmont Raffles Hotels International has become a leading luxury hotel company with an expanded international presence. 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.
So what does this mean?
Unfortunately my crystal ball is in the shop. I for one absolutely love Fairmont Hotels’ loyalty program. I dare say that many love it, as it seems to me, to be quite generous. Perhaps more generous than any other program that I have participated in. Just take a look at this FlyerTalk thread, and you’ll see that many share the dread that I have. Fairmont flew under the radar for many, especially among the major blogs, I know I only started researching it recently. Despite my personal feeling that I wasted my time, I think there are many others who are much more frustrated.
Well, I’ll be watching this merger rather intently. I owe my wife a trip back to Bermuda, and I’m sure my parents would love to return. Candidly, I had, at one point considered bringing many friends, and as much of my family as wanted to attend, back for my wife and my ten year anniversary (we’re just under 2 years out, for those of you keeping track). I suspect this merger will happen before that, which is quite sad. But I still believe there is opportunity. Just like many of the mergers we’ve seen over the past five or so years, they take time. Those of you who have the Chase Fairmont Card, leverage it. Meet your spend for the sign on bonus, meet your spend for the bonus night, leverage those free breakfasts, and dining certificates. Perhaps most of all though, however fruitless it may be, let Fairmont know what you think. They are a small enough brand, that just maybe, enough of us sharing on our feelings, may change the course.
What do you think about AccorHotels acquiring Fairmont, Raffles, and Swissôtel?