Raffles Hotel is to be managed by AccorHotels after the Paris-based chain signed a US$2.9 billion (S$4.1 billion) deal yesterday to buy out FRHI Holdings, which operates a string of hotels around the world under the Raffles, Fairmont and Swissotel brands.
While the deal allows AccorHotels to add 2,100 rooms to its portfolio here, making it Singapore's biggest operator, it is the capture of Raffles that is the real coup.
The ornate, all-white colonial landmark in Beach Road boasts only 103 rooms, but its old-world elegance and understated luxury have long resonated with travellers.
Hotelier and restaurateur Loh Lik Peng said Raffles Hotel will be a "trophy asset" for Accor.
Mr Julien Naouri, associate director of hotels, Asia-Pacific, at Savills (Singapore), noted that the deal gives Accor a presence in the posh end of the industry.
He said with its Ibis and Mercure brands, Accor had been very successful in the mid-scale segment, but lagged behind the Four Seasons and Marriott/Starwood groups in the luxury segment till now.
Analysts said yesterday's buyout is unlikely to have a major impact on the hotel industry.
"But it may encourage more people to visit Singapore through the Accor network," said Mr Robert McIntosh, executive director for CBRE Hotels Asia-Pacific.
Mr McIntosh said it could also be an opportune time to refurbish Raffles Hotel, which has lost some of its lustre over the years.
Raffles is not the only jewel falling to Accor, which is Europe's largest hotel operator.
FRHI's portfolio also includes The Savoy in London and The Plaza in New York. There are the local gems too - Fairmont in Bras Basah Road and Swissotel in Stamford Road.
The buyout will add 155 hotels and resorts, 40 of which are still under development, to Accor's already burgeoning portfolio of nearly 3,800 properties worldwide.
It will have about 4,200 rooms here after the deal. There are a further 1,472 rooms in the pipeline.
This is the second high-profile deal in the sector in as many months, after Marriott Internatio- nal's US$12 billion deal to buy Starwood Hotels & Resorts Worldwide.
Consolidation is increasingly the name of the game, say analysts, as scale allows players to deal with online travel agents, such as Expedia, which restrain hoteliers' ability to raise rates. Home rental firms like Airbnb are seen as another threat.
The bulked-up Accor is seen as having more bargaining power with suppliers to keep costs down when it makes bulk purchases, although lower room rates are not expected.
Mr McIntosh said Accor's larger footprint could reap savings from redirecting its distribution channels. "For some chains, using the likes of Agoda or Expedia can cost between 10 per cent and 20 per cent of their room revenue. If you can redirect people to your own websites, the costs are significantly lower at 2 per cent to 3 per cent."
Clarification: An earlier version of this story said Raffles Hotel will be owned by AccorHotels which had signed a deal to buy out FRHI Holdings. AccorHotels has clarified that it will manage Raffles Hotel, but not own it.