IHG to buy Fairmont, Raffles and Swissotel?

It was reported in The Sunday Times yesterday that InterContinental Hotels Group, owner of Holiday Inn, Crowne Plaza, InterContinental etc, was believed to be the winner of the auction for FRHI Hotels & Resorts.

The company is currently owned by a Qatari government fund and Saudi Prince al-Waleed bin Talal’s Kingdom Holding Company.

The FRHI group is relatively small but upscale, consisting of 116 hotels in 34 countries.

Fairmont

The key brands are:

Fairmont – predominantly a Canadian chain but with a growing presence elsewhere, including The Savoy in London

Raffles – predominantly an Asian chain, including the eponymous hotel in Singapore, but also present in Paris, Istanbul, Dubai and elsewhere

Swissotel – a eclectic mix of cities with the largest presence in China, Germany, Turkey and Switzerland (the London hotel was demolished a couple of years ago)

The rumoured price of $3bn is the same valuation suggested at the start of the sale process.  Without knowing the details of which hotels are freehold or long leasehold it is impossible to say if that is fair or not.

The key question is ‘what happens to the brands?’.

Having recently bought US chain Kimpton – with a promise to keep the brand in place – I doubt IHG is on the look out for any additional global brands.

Few people have ever stayed at Swissotel purely on the strength of the brand, and I would expect those to quickly be replaced by InterContinental and Crowne Plaza.  Similarly, apart from Raffles Singapore (which could easily be called ‘Raffles Singapore, an InterContinental hotel’) none of their hotels has a global reputation.

Fairmont is trickier because of its legacy position in Canada.  The properties are also eclectic, representing the origins of the company as a subsidiary of the railroad and its ownership of various gothic-style properties (see photo below).

Fairmont Banff Springs 350

It is possible that Fairmont could be kept as a regional brand.  Another option may be to strip out the modern properties which can be rebranded more easily and sell the historic Canadian hotels.  I’m sure IHG would love to have The Savoy as their second flagship London hotel.  I’d also be happy to have their Barbados resort as a redemption option!

From a loyalty point of view, I doubt many people would be concerned.  The schemes run by the three brands have little global traction and there would be little concern if they were merged into IHG Rewards Club.

I should stress that this is not a ‘done deal’ with IHG and other bids may yet emerge – we need to wait and see.

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Comments

  1. I have stayed at Fairmonts in both Singapore and Scottsdale and was impressed although there’s nothing particularly distinctive about either the brand or their properties. They have a loyalty programme which gives a few minor perks at lower levels but I’m nowhere near achieving high status.

    The Singapore location is literally across the road from Raffles and with IHG having the full set of their brands there already, if this all goes through it might be interesting to see what happens.

    • If you’ve stayed at one of the legacy properties in Alberta (formerly Canadian Pacific Hotels) you will find the properties to be very distinctive, most were built in the early 20th century as rail hotels, if you have the opportunity, I highly recommend a visit #fromaformerFairmontemployee

  2. Fairmont has been my most successful status match (despite them not officially doing it). Thus matched my Hilton Gold for their mid-tier (10 nights to acheive) status which gave me a series of vouchers which got us a free upgrade to a huge ‘Gold’ (club) suite at the Fairmont The Palm in Dubai (from a standard Gold room), a room upgrade for my parents and an upgrade to a huge suite at the Farmont San Fransisco for a week plus a free night and $50 credit in the bar. All in all the cash value was well in excess of £1000 which I would never have got even if I’d stayed the 10 nights in any other scheme.

    I’ve always found the service to be very good (the doorman at the Fairmont the Palm remembered my name and floor from a week’s stay a whole year earlier) albeit I agree the brand isn’t overly distinctive. They are also very accommodating if you email in advance for requests like early check in. When we had to wait for a room in Dubai they opened the Club bar just for us until it was ready. Would be sad to see them go as a separate enterprise but that looks inevitable.

    • Andrew (@andrewseftel) says:

      I had a match to HH Dia declined. Agree that the service was great (in Western Canada for me)

  3. Eshaq Choudhury says:

    Any chance of this deal happening before December and somehow joining IHG rewards by then? I know its a long shot but I’ve got a paid stay at Swissotel and would love to use IHG points and some free night vouchers I have for my stay in December.

  4. Although of course Fairmont properties (the ones I stayed at in Canada at least, around 20y ago) used to be called Canadian Pacific hotels – even more strongly linking them to their Canadian Pacific railroad heritage!

  5. Raffles is a well known, ultraluxurious hotel brand, with top properties in Paris, the Seychelles, Istanbul, Singapore (their flagship) and Combodia. Raffles hotels are far above the quality offered by InterContinental’s top hotels. Too bad you think they have no global reputation (they do).

    • Raffles Singapore is famous and it has a global reputation. I’ve not heard of any of the others.

    • Singapore – and I was there in May – is effectively a colonial-themed shopping centre with a hotel attached. None of the other properties – except Dubai, which does have a good reputation and the biggest standard rooms of any Dubai hotel I think – sprung to mind.

  6. Interesting.

    Could we see Intercontinental making a return to Scotland at last?

    There is a Fairmont property in St Andrews.

  7. Redemption options for IHG members at Fairmont properties would be great. I was Fairmont Platinum for some time whilst regularly working in Vancouver. Stayed in all their properties in Vancouver as well as Whistler and VI. Used redemptions in Miami, The Plaza (NY) and Savoy.

    I would say they are a step up from IC. So perhaps 80k per night?

  8. I’d been hoping that Accor would win this. Losing Swissôtel into the IHG monster would be sad — it’s a brand I’ll actively choose (and which has a nice, if somewhat quirky, loyalty scheme).

  9. I stayed recently at the Fairmont Lake Louise as part of the Rocky Mountaineer / The Canadian tour package. Got a shock when I saw the rack rate for a room! Glad it was “hidden” in my total tour package. We had the option to stay in other Fairmont hotels in Banff and Jasper, but they seemed out of town a bit compared to other ones.

    I have to say, while the lobby and public spaces are nice, and the lake view at Lake Louise is superb, the room itself was a let down. Small, efficient luxury would be a way to describe it. But the worse thing was the bed was lumpiest of all the hotels we stayed in while on tour. Didn’t get a good night’s sleep there which was disappointing.

    I joined Fairmont’s loyalty scheme as it gave you access to free wifi. I wonder if the points I got will be merged with IHG. By the time they are in a position to do so, my points would have expired!

    • The Fairmont loyalty program doesn’t use points, therefore you don’t have any points to either expire or be merged with any successor program.

    • Does anyone actually know someone who has paid the rack rate for a room. Ever?

      • Technical terms here.

        If by rack rate you mean the rate posted on the wardroom door or behind reception, then very few people except late running business people.

        If you mean ‘best available rate’, ie the cancellable rate offered online, then I book them all the time because I usually need flexibility – and, as Avios flights are flexible, it would be stupid to wrap inflexible hotels around a reward flight. Get a couple of snotty kids, or an unpredictable hours job, and you learn why.

  10. Hello from a Lifetime Platinum Fairmont Presidents Club member.

    The rumors of a Fairmont sale have been going around for years. For a time they were supposed to be bought by Four Seasons which excited me. I do think the sale will eventually happen and I SO hope it is NOT IHG!

    The properties at Banff Springs and Lake Louise, because of their location, are amazing. Vacationed there a few years ago and spent all 11 nights in hotels for FREE :-)

    http://travelbloggerbuzz.com/travel-reports/canadian-rockies-banff-jasper-national-parks-2013/

    • I do like the Banff hotel – never stayed there but have had a mooch around, seems like something out of Harry Potter! It is out in the woods though. I think we were in the Cariboo Lodge downtown!

      • Out in the woods? I don’t think so!
        You should try Fairmont Chateau Montebello http://www.fairmont.com/montebello/ which is an enormous log cabin in the forest. It also includes twelve square miles of forest where you can shoot a moose (terms and conditions apply). As soon as I saw a model when we stayed at the Chateau Frontenac I had to go and we have returned (our only return to a hotel).
        Your children will love Parc Omega http://www.parcomega.ca/en/ where you will be held to ransom by an elk or smaller deer standing across the road until you give him a carrot.
        These Canadian Pacific hotels seem a strange match for Fairmont and even stranger for IHG.
        We leave for Canada on Friday but are missing CP this time as I am now retired and have used Hilton, IHG and Avios points to pay for the hotels. Maybe next time.

  11. The reason that so many of the old CP railway hotels are currently Fairmont hotels, is because Fairmont and CP are essentially the same. It was actually CP Hotels that bought the Fairmont hotel chain many years ago, and decided to continue operating under the Fairmont name vs. the CP name.

    I don’t quite understand the suggestion that Fairmont could “sell” many of those properties that don’t fit the new brand. Most were sold off years ago. Fairmont today is mainly in the business of managing their hotels, not owing them. The iconic Banff Springs is currently owned by the Ontario Municipal Employees pension fund (OMERS); Fairmont manages it. The famous Chateau Frontenac is owned by a Quebec pension fund. Fairmont might still own some of their branded properties, but I don’t think very many.

    I have no idea what the terms of the management contracts are, but presumably if the ownership of an individual hotel objected to the plans of the new owners of FRHI, they would have some sort of recourse. I can’t imagine the management contracts grant FRHI and it’s successors management rights in perpetuity.

    • I was being simplistic in what I wrote, apologies. The management contracts have an NPV value, eg if the fee is £1m per year and the contract has 10 years left then the contract is probably worth £4m.

      There are probably change of control clauses though – look at what happened to IHG and Kimpton in SanFran.

  12. Andrew (SJC) says:

    What rumors? Who is speculating beyond some silly drabble about IHG bidding 1.9 GBP for Fairmont, if that was factual it would say for FRHI the parent company of Fairmont. Without actual references this article and others are pure click bait.

    I am taking a I’ll believe it when I see it stance.

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