Fairmont - FRHI Hotels & Resorts - looking for a buyer?

 
Old Aug 2, 15, 11:54 am
  #1  
Original Poster
 
Join Date: Sep 2010
Location: San Francisco Bay Area
Programs: RC Plat
Posts: 5,814
Fairmont - FRHI Hotels & Resorts - looking for a buyer?

Leff, the self-proclaimed thought leader in travel, has spoken: "Will Intercontinental Hotels Buy Fairmont, and What Happens to Lifetime Fairmont Status?"

Will Intercontinental Hotels Buy Fairmont?




Arabian Business article: http://www.arabianbusiness.com/ihg-e...rt-601173.html

"ArabianBusiness.com is the Middle East’s premier business news portal."

"It was reported in June that owners of FRHI Hotels & Resorts, which include a Qatari government fund (Katara Hospitality) and Saudi Prince Alwaleed bin Talal’s Kingdom Holding Company, are looking to sell the luxury operator.

Deutsche Bank and Morgan Stanley were hired to market the Toronto-based company, whose brands comprise Fairmont, Raffles and Swissôtel."

The Sunday Times: http://www.thesundaytimes.co.uk/sto/...cle1588226.ece

"Hotel giant plots deal spree after US raid flops
InterContinental eyes luxury chain Fairmont and Switzerland’s Mövenpick following failure of Starwood talks" (subscription required to see entire article)
LarkSFO is offline  
Old Aug 2, 15, 12:24 pm
  #2  
Suspended
 
Join Date: Jun 2009
Location: YYZ
Programs: AC E50K (*G) WS Gold | SPG/Fairmont Plat Hilton/Hyatt Diamond Marriott Silver | National Exec Elite
Posts: 19,285
I had no idea Fairmont was tied to the Qatari government and the Saudis! Thanks for sharing
superangrypenguin is offline  
Old Aug 2, 15, 1:27 pm
  #3  
Moderator: Le Club Accorhotels
 
Join Date: May 2009
Location: FRA / YEG
Programs: AC Super Elite, Radisson Platinum, Accor Platinum
Posts: 11,483
Originally Posted by LarkSFO View Post
Leff, the self-proclaimed thought leader in travel, has spoken: "Will Intercontinental Hotels Buy Fairmont, and What Happens to Lifetime Fairmont Status?"

Will Intercontinental Hotels Buy Fairmont?
I'd agree with Gary's two main points:

1) If IHG bought Fairmont, there wouldn't be any immediate changes.
2) An integration of Fairmont properties into the IHG portfolio and its loyalty program (which is almost inevitable in the mid-run) would be a really, really bad thing.

I'd even go a step further and say IHG is among the worst major hotel companies to purchase Fairmont from a consumer perspective. The goals and structure of the IHG rewards program is fundamentally different from FPC.

If this deal happened, I actually wouldn't be surprised if certain Fairmont properties (such as those owned by pension funds etc.) terminated the management agreement with Fairmont (where possible).
Jasper2009 is offline  
Old Aug 2, 15, 2:21 pm
  #4  
Moderator: Le Club Accorhotels
 
Join Date: May 2009
Location: FRA / YEG
Programs: AC Super Elite, Radisson Platinum, Accor Platinum
Posts: 11,483
Originally Posted by superangrypenguin View Post
I had no idea Fairmont was tied to the Qatari government and the Saudis! Thanks for sharing
THe ownership structure is rather complex, there's some good discussion here:

http://www.flyertalk.com/forum/fairm...roperties.html

It gets somewhat complex when you consider that various Fairmont properties are owned by many different owners incl. individual owners, wealth funds, pension funds, reits etc.
Jasper2009 is offline  
Old Aug 2, 15, 2:39 pm
  #5  
 
Join Date: Jan 2011
Location: YYZ
Programs: TK*G, AC Aeroplan, Fairmont Platinum, Starwood Gold, Nexus/GE, Hertz #1 Gold
Posts: 1,648
Originally Posted by Jasper2009 View Post

If this deal happened, I actually wouldn't be surprised if certain Fairmont properties (such as those owned by pension funds etc.) terminated the management agreement with Fairmont (where possible).
Wouldn't that be most of their properties? I didn't think that Fairmont owned very many of the properties at all they manage today, unlike in the days before CP Hotels bought Fairmont. And if the current owners of the individual properties are free to change management companies (and I assume they are, subject to some exit clause in their contract), I don't imagine very many of them wanting their high profile properties associated with IHG.

I'm trying to picture the "Holiday Inn Chateau Frontenac", or the "Crown Plaza Banff Springs", or "The Savoy, an IHG managed hotel"--really? I can't imagine any of the property owners degrading their iconic properties like that. And if it's likely many of the properties would pull out after such a merger, there's really not much value in it.

I only see a merger working if it's with a chain of a similar perceived quality. I could see IHG buying the chain and continuing to operate it as is, possibly finding some head office synergies, and with no changes to the branding or mixing of the customer facing aspects, but a merger of the brands would be a real value killer--for the owners of the chain, the owners of the properties, and for their guests. I just don't see them as the most synergistic buyer out there, and if I was the current owners of Fairmont looking to sell, I'd be waiting until someone with a more upscale chain was interested, as they should theoretically be able to offer a higher price, since they would be able to integrate the chain to gain synergies without killing the brand equity.

I really hope there's no truth to this. If it does happen, they need to keep them separate. Volkswagen owns Rolls Royce, but you're not going to see them flogging a Jetta on the showroom floor next to a Bentley--I don't think they even want the customer to know they're remotely connected. I hope IHG doesn't try to combine them.

Last edited by CanadaDH; Aug 2, 15 at 2:55 pm
CanadaDH is offline  
Old Aug 2, 15, 3:14 pm
  #6  
Moderator: Le Club Accorhotels
 
Join Date: May 2009
Location: FRA / YEG
Programs: AC Super Elite, Radisson Platinum, Accor Platinum
Posts: 11,483
Originally Posted by CanadaDH View Post
Wouldn't that be most of their properties? I didn't think that Fairmont owned very many of the properties at all they manage today, unlike in the days before CP Hotels bought Fairmont. And if the current owners of the individual properties are free to change management companies (and I assume they are, subject to some exit clause in their contract), I don't imagine very many of them wanting their high profile properties associated with IHG.
Indeed, almost all Fairmont properties are owned by pension funds, investment funds, wealth funds or individuals. I know that some properties have long-term management agreements with Fairmont (50+ years in some cases), and while there probably is an exit clause in their contracts, I'm not sure how easy it would be for some properties to terminate the contract.

Originally Posted by CanadaDH View Post
I'm trying to picture the "Holiday Inn Chateau Frontenac", or the "Crown Plaza Banff Springs", or "The Savoy, an IHG managed hotel"--really? I can't imagine any of the property owners degrading their iconic properties like that.
I'll blame you if I get nightmares tonight.

Originally Posted by CanadaDH View Post
I only see a merger working if it's with a chain of a similar perceived quality. I could see IHG buying the chain and continuing to operate it as is, possibly finding some head office synergies, and with no changes to the branding or mixing of the customer facing aspects, but a merger of the brands would be a real value killer--for the owners of the chain, the owners of the properties, and for their guests. I just don't see them as the most synergistic buyer out there, and if I was the current owners of Fairmont looking to sell, I'd be waiting until someone with a more upscale chain was interested, as they should theoretically be able to offer a higher price, since they would be able to integrate the chain to gain synergies without killing the brand equity.

I really hope there's nho truth to this. If it does happen, they need to keep them separate.
I fully agree. A few of the city center properties (such as the Fairmont Chicago, Dallas or Pittsburgh) would fit well into the IC portfolio IMO, but the vast majority of Fairmont properties are landmark / historical buildings. I could see some of the properties joining the SPG Luxury Collection or becoming a Park Hyatt (at least from a service / branding perspective), but IHG seems like a terrible option.

I'd agree, the least bad option would be to keep the Fairmont branding (along with its separate loyalty program, management and customer service), but I doubt that would happen in the long-run.
Jasper2009 is offline  
Old Aug 3, 15, 8:36 pm
  #7  
 
Join Date: Jan 2011
Location: YYZ
Programs: TK*G, AC Aeroplan, Fairmont Platinum, Starwood Gold, Nexus/GE, Hertz #1 Gold
Posts: 1,648
Originally Posted by Jasper2009 View Post
I'll blame you if I get nightmares tonight.
Sorry about that.

Actually, the sight of a bright green Holiday Inn "H" overlooking the Bow River on the roof of the Banff Springs should be enough to make Cornelius Van Horne roll over in his grave with nightmares.

If I had the talent, it sounds like a good Photoshop exercise plastering the various IHG brand logos across the most iconic properties around the world, to illustrate how horribly bad an idea such a merger would be.

Originally Posted by Jasper2009 View Post
I'd agree, the least bad option would be to keep the Fairmont branding (along with its separate loyalty program, management and customer service), but I doubt that would happen in the long-run.
Even today, FRHI doesn't mix the Fairmont loyalty program with Raffles or Swissotel. The branding is kept distinct, and while there are linkages (like earning stay credits across chains), that's about it. However, you can see when making a booking that they share systems. The booking engines work the same way, and I recall making back to back reservations at the Swissotel Geneva and Fairmont Montreux, the confirmation numbers seem to be using the same sequence.

So even the current owners recognize the need for a distinction, and that's with brands that arguably have a lot more in common for mixing than Fairmont would have with IHG properties.

Last edited by CanadaDH; Aug 3, 15 at 8:45 pm
CanadaDH is offline  
Old Aug 4, 15, 6:56 am
  #8  
A FlyerTalk Posting Legend and Moderator: Air Canada Aeroplan & Manufactured Spending
 
Join Date: May 2002
Location: YEG
Posts: 48,715
IHG has as many flavors as Baskin Robbins but few at the luxury end of the market so can see the upside of adding those heritage properties to their portfolio. Swissotel seems the most redundant brand as the ones I've stayed at are to me akin to good Crowne Plaza's. While it looks good from IHG's view however I can't see this as being good for Fairmont/Raffles long-term and hope they continue to grow on their own into a bigger luxury focused chain with their own acquisitions or mergers with like-minded chains such as Steigenberger.
tcook052 is offline  
Old Aug 4, 15, 10:39 am
  #9  
 
Join Date: Aug 2007
Location: PARIS (France)
Programs: AF/KLM LTP| Emirates Gold |InterContinental Spire RA |A Club Gold |AMEX Plat| Visa Plat |Hertz P
Posts: 8,623
Originally Posted by Jasper2009 View Post
I'd even go a step further and say IHG is among the worst major hotel companies to purchase Fairmont from a consumer perspective. The goals and structure of the IHG rewards program is fundamentally different from FPC.
Fairmont could perfectly fit into the Ambassador program.

But it is true that it is slighty more difficult to be Royal Ambassador rather than Platinum with President's club.

I am not quite sure that Fairmont values are that far from InterContinental ones.
With the exception of the Savoy and The Plaza (more luxurious than most ICs) and some Canadian properties (not at the standard of ICs), hotel range is quite the same.
nicolas75 is offline  
Old Aug 4, 15, 10:44 am
  #10  
 
Join Date: Aug 2007
Location: PARIS (France)
Programs: AF/KLM LTP| Emirates Gold |InterContinental Spire RA |A Club Gold |AMEX Plat| Visa Plat |Hertz P
Posts: 8,623
Originally Posted by tcook052 View Post
IHG has as many flavors as Baskin Robbins but few at the luxury end of the market so can see the upside of adding those heritage properties to their portfolio. Swissotel seems the most redundant brand as the ones I've stayed at are to me akin to good Crowne Plaza's. While it looks good from IHG's view however I can't see this as being good for Fairmont/Raffles long-term and hope they continue to grow on their own into a bigger luxury focused chain with their own acquisitions or mergers with like-minded chains such as Steigenberger.
We can perfectly imagine that the most luxurious properties would get the Raffles brand when the other will get the InterContinental ones.

Swissotel has a very poor brand value (and poor consistency) and would certainly disappear in case of merger with IHG.
nicolas75 is offline  
Old Aug 4, 15, 11:19 am
  #11  
Moderator: Le Club Accorhotels
 
Join Date: May 2009
Location: FRA / YEG
Programs: AC Super Elite, Radisson Platinum, Accor Platinum
Posts: 11,483
Originally Posted by nicolas75 View Post
Fairmont could perfectly fit into the Ambassador program.

But it is true that it is slighty more difficult to be Royal Ambassador rather than Platinum with President's club.

I am not quite sure that Fairmont values are that far from InterContinental ones.
With the exception of the Savoy and The Plaza (more luxurious than most ICs) and some Canadian properties (not at the standard of ICs), hotel range is quite the same.
I'd tend to disagree that Fairmont could perfectly fit into the IHG portfolio / the Amb. program. As mentioned above, some of the more generic city center Fairmont hotels (Chicago, Dallas, Pittsburgh etc.) would fit perfectly into the portfolio, but it's hard to imagine the landmark Fairmont hotels becoming ICs.

Overall, there are very few true 5* ICs IMO (I'd classify most ICs as solid 4*-4.5* hotels with a focus on business travellers). While some Fairmonts also fit that description, there are dozens of historic landmark hotels and resorts which don't really fit into the IHG portfolio IMO.

Originally Posted by nicolas75 View Post
Swissotel has a very poor brand value (and poor consistency) and would certainly disappear in case of merger with IHG.
That I agree with. Low brand awareness combined with rather generic hotels in the 3.5*-4* rangewould make for a perfect integration into the IHG portfolio (most properties would probably become Crowne Plazas and the better onces would become ICs).
Jasper2009 is offline  
Old Aug 4, 15, 2:27 pm
  #12  
 
Join Date: Nov 2008
Location: YYC
Programs: Hilton Diamond, Fairmont Plat, IHG Spire, SPG Gold, WS Gold, Hertz PC, National E Elite,
Posts: 2,714
IHG bought Kimpton, and they are maintaining very separate loyalty programs.
CanuckFlyHigh is offline  
Old Aug 4, 15, 3:01 pm
  #13  
 
Join Date: Aug 2007
Location: PARIS (France)
Programs: AF/KLM LTP| Emirates Gold |InterContinental Spire RA |A Club Gold |AMEX Plat| Visa Plat |Hertz P
Posts: 8,623
Originally Posted by CanuckFlyHigh View Post
IHG bought Kimpton, and they are maintaining very separate loyalty programs.
For the moment, mainly for IT reasons (PMI takes time, and you need to secure first financial, legal and HR issues, while you can maintain double commercial and marketing plans and structure during the transition period).
nicolas75 is offline  
Old Aug 4, 15, 4:37 pm
  #14  
 
Join Date: Nov 2008
Location: YYC
Programs: Hilton Diamond, Fairmont Plat, IHG Spire, SPG Gold, WS Gold, Hertz PC, National E Elite,
Posts: 2,714
Originally Posted by nicolas75 View Post
For the moment, mainly for IT reasons (PMI takes time, and you need to secure first financial, legal and HR issues, while you can maintain double commercial and marketing plans and structure during the transition period).
Ha, true. I am just in denial. Leave us alone IHG!
CanuckFlyHigh is offline  
Old Aug 4, 15, 5:49 pm
  #15  
Moderator: Le Club Accorhotels
 
Join Date: May 2009
Location: FRA / YEG
Programs: AC Super Elite, Radisson Platinum, Accor Platinum
Posts: 11,483
Originally Posted by CanuckFlyHigh View Post
Ha, true. I am just in denial. Leave us alone IHG!
That statement I support 100%.
Jasper2009 is offline  

Thread Tools
Search this Thread