Accor targets luxury growth in ME following FRHI takeover

The operator which introduced budget hotels to Dubai 13 years ago now has its sights fixed on top-end growth following Accor’s takeover of FRHI Hotels & Resorts yesterday.

It’s an interesting turn-around. Back then we all asked if there was room for budget – and now everyone wonders if luxury can withstand the pressures in today’s variable economic climate.

With Raffles and Fairmont now part of the Accor stable, it’s no surprise that the French chain is rubbing its hands at the prospect of new luxury business.

What perhaps is a surprise is the lengths at which it plans to go to target this sector. A new independent luxury structure, headed by a separate CEO – Chris Cahill, formerly at FRHI for 19 years – indicates the new-found focus and desire to differentiate itself from Accor’s mid-market and budget brands. Sebastien Bazin, CEO of AccorHotels, said it would have “autonomy and financial means”.

He added that the two luxury brands, containing many of the world’s most iconic hotels, complement Accor’s network “in a sublime fashion” while FRHI benefits from Accor’s bigger capacity and greater network.

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What is clear is that the ‘top shelf’ now looks busy with Raffles, Fairmont, three Sofitels (Hotels & Resorts, So Sofitel and Sofitel Legend) and recently acquired onefinestay; there was no room for MGallery and Pullman, which had to move onto the second level but to all intents and purposes, Accor’s five-star portfolio now encompasses eight brands.

It should be stressed Accor isn’t turning its back on the mid-market or budget, both of which will continue to drive much of its future pipeline, but it is telling that a third of Accor’s 150 hotels regionally are now in the upscale and luxury tiers.

Jean-Jacques Dessors, CEO HotelServices for the Mediterranean, Middle East and Africa, acknowledged it will have to “exaggerate” the qualities of each brand in the five-star and luxury segments (now over 450 hotels), and each market will have to look at how they are positioned. “Maybe some of the Sofitel Legends will move over to Fairmont or Raffles,” he said.

Irrespective of the new union, Olivier Granet, managing director and chief operating officer for AccorHotels Middle East, believes the UAE has room for more of ‘old Accor’s top-end brands. “Dubai has a great opportunity for a Sofitel So and an MGallery,” he said.

While distribution systems have gone live today, the organisational integration is unlikely to be completed before mid-October. Dessors said it would look to pair the loyalty recognition strengths of FRHI with the more distribution-led, earn-and-burn nature of Le Club.

Accor shareholders gave the deal the thumbs up with 73 per cent voting and 98 per cent of them supporting the move. Three Middle East investor heavyweights will now play a key part in driving the company forward with Aziz Aluthman Fakhroo and Ali Bouzarif from QIA and Sarmad Zok from Kingdom Holding Company now sitting on the Accor board.

With Dubai Parks and Resorts opening later this year, and Rove hotels being rolled out across the city, the mid-market charge is in full flow.

But today served as a reminder that the newly expanded Accor, with hotels like Raffles Singapore and The Savoy in London now under its wing, still sees plenty of mileage in the five-star market regionally and internationally.