THE ownership of Raffles Hotel is changing hands once again, this time to AccorHotels, which is marking its maiden acquisitions in Singapore in a big way. The acquisition of Fairmont Raffles Hotels International Holdings means the French hospitality group is now the owner of the iconic Singapore hotel, as well as Fairmont Singapore and Swissôtel The Stamford next door.
The US$2.9 billion acquisition, which was announced on Wednesday, covers 155 hotels and resorts including Manhattan's Plaza and London's Savoy. It is set to make AccorHotels a world leader in luxury hotels, said the French hotel group.
AccorHotels, which operates the Ibis and Sofitel chains, also operates Novotel Singapore Clarke Quay and Grand Mercure Singapore Roxy in Singapore. The three hotels it is acquiring in Singapore through the deal will be the first hotels in Singapore that it owns.
"At the moment we are focused on finalising all the details of the deal, so it is too early to speak about the future plans for the hotels. However, we are very excited to have such prestigious hotels join our network, especially Raffles Hotel Singapore which has set the benchmark for luxury hospitality since 1887," said Gaynor Reid, vice-president of communications, Asia Pacific, for AccorHotels.
"This adds over 2,100 rooms to our networks and means we will have over 5,700 rooms in Singapore when the deal is finalised which will make us the largest operator in the city," she added.
The acquisition is the largest in the hotel group's history after the US$1.3 billion purchase of Motel6 more than two decades ago.
Chesterton Singapore's managing director Donald Han noted that the shift in strategy, from an operator model to an owner model, marks a milestone for AccorHotels.
"(In the past) they manage rather than buy, unless it's in an absolute jewel of a location ... This foray into buying is a milestone for them because now they're going to be up there, not only in terms of expanding their reach as hotel operators, but also being owners of one of the largest brands in the world."
Julien Naouri, associate director of hotels, Asia-Pacific, at Savills (Singapore), said the deal will give AccorHotels a strong foothold on the global stage and afford them great growth potential in the luxury market.
"The brand Sofitel has always been one step behind the luxury players like Four Seasons and Marriott. This acquisition will put them in a very strong position."
AccorHotels said it will pay for the acquisition by issuing 46.7 million new Accor shares and a cash payment of US$840 million. Qatar Investment Authority (QIA) and Kingdom Holding Company (KHC) of Saudi Arabia will remain major shareholders, with 10.5 per cent and 5.8 per cent of the share capital respectively.
Raffles Hotel was built in 1887 on the site of a 10-room bungalow, and was part of Singapore-listed Raffles Holdings' portfolio until 2005, when the now-delisted company sold all of its hotel assets to US-based Colony Capital for S$1.7 billion.
In 2006, Colony Capital teamed up with Saudi billionaire Prince Alwaleed Talal to buy Fairmont Hotels and Resorts in a US$3.9 billion deal that injected Raffles Hotel into Fairmont Raffles's portfolio.
In 2010, Qatari Diar acquired a 40 per cent stake in Fairmont Raffles, making it the largest stakeholder. It also bought Raffles Hotel from the group for US$275 million.
Looking ahead, Mr Naouri said he expects more mergers and acquisitions (M&As) within the hotel space.
"The hotel industry is quite fragmented and I think they need more consolidation especially to overcome the power of the online travel agencies ... these M&As are a clear response to the threat from, also, Airbnb and those alternative accommodation supply."
Just last month, Marriott International mounted a US$12 billion takeover of Starwood Hotels & Resorts Worldwide.
"It's just the beginning. We've seen this trend for the last two years and I think there will be more and more," said Mr Naouri.
UPDATE: Katara Hospitality has confirmed that Raffles Singapore remains 100% owned by Katara Hospitality. "Raffles Singapore is 100% owned by Katara Hospitality, the global hotel developer, owner and operator based in Qatar," they said in a statement.