There has been news of a number of mergers and acquisitions in the hotel industry lately and of course travelers, points enthusiasts and the media have been wondering what it will all mean to them. The mergers in the airline industry in the US have shown that reduced competition can have a negative impact on prices and competition – is that what we can expect in the hotel industry as well? Over the next few weeks, I’ll provide my insights and perspective on what it will mean to you as a traveler. In this week’s TravelNews I will start with the acquisition of the Fairmont hotel group by Accor Hotels!
Accor is one of the largest global hotel chains with close to 4,000 hotels. Their biggest brand is the budget ibis chain, making up close to 50% of their hotels. At the luxury end of the spectrum, they have the Sofitel luxury brand with 130 hotels worldwide. (get all the facts & figures here) Marriott, Starwood and even IHG all have a higher share of luxury hotels in their groups. The Fairmont group has over 100 luxury hotels in the Raffles, Fairmont and Swissotel brands, with more than 40 under development. That list includes iconic hotels like the Raffles Singapore, The Savoy in London or The Plaza in New York. That makes it a great addition to Accor, doubling their luxury properties and providing more choices to high-end travelers. Accor has shown with their Sofitel brand that they leave them well enough alone to provide a luxury experience, without the mass of budget ibis hotels interfering. I don’t think fans of Raffles or Fairmont have to worry about their favorite hotels losing their shine.
From a regional perspective, Accor has its focus on Europe, Africa and the Middle East with over 75% of their properties in the region. Accor is especially weak in North America with only a handful of properties there. The Fairmont group is well balanced, with almost an even split across the Americas, EMEA and Asia-Pacific. It will especially be a nice addition to North America with 44 additional high-end properties joining the group!
From a points perspective, fans of the Accor LeClub program will have more high-end properties to earn points at. It is more feasible now to earn Accor points on business travel in North America! While the revenue based redemption doesn’t offer great deals on aspirational properties, at least you could use those points to spend on vacations in Europe or Asia!
Overall, I think this acquisition is a net-positive for travelers, providing more choices within the Accor portfolio. Accor has done pretty well at managing the Sofitel brand in their portfolio and I’m not worried about a negative impact on the Raffles or Fairmont brands. I’d expect the new hotels to eventually be added to Accor’s LeClub rewards program as an additional positive for travelers. And I don’t expect a negative impact on price or service competition, given Accor’s small share of the global hotel market.
For more reading, here is the view from an investor perspective at Bloomberg.