Business model of FRHI Hotels & Resorts

Customer Segments

FRHI serves a broad spectrum of consumers and corporate customers around the world, primarily targeting more affluent customers and those seeking high-end services. 

The Company’s core customers can be organised broadly into one of the following categories:

• Leisure Guests, comprising general consumers – including individual travellers, groups, and families – requiring short-stay lodging and amenities;
• Business Travellers, comprising individual and group business travellers that require lodging and amenities, as well as other specific business needs such as meeting rooms, internet and computer services, and other facilities; 
• Enterprises and Organisations, comprising a range of companies and organisations that utilise the company’s hotel facilities – including conference halls and meeting rooms – to organise conventions, celebrations, and other events; and
• Other Consumers, comprising other consumers that rent the company’s hotel spaces for events such as parties, weddings, and other celebrations.

FRHI serves an international customer base via its global network of hotels.  This includes customers native to or visiting markets across the Americas, Asia Pacific, Europe, the Middle East, and Africa.

Value Propositions

FRHI provides value to its customers in the following ways:

• Brand Portfolio and Reputation – FRHI operates hotels across a number of prestigious, well-regarded, and popular brands – including Fairmont, Raffles, and Swissotel – and can trace its roots as far back as the nineteenth century;
• Luxury Experience – FRHI seeks to provide a luxury experience to its guests that sets its offerings apart from competitors, including high end restaurants, modern and well-furnished rooms, and luxury facilities and services;
• International Reach and Accessibility – FRHI operates an extensive network of hotels across the Americas, Asia Pacific, Europe, the Middle East, and Africa, ensuring that its services can be access in numerous markets around the world, particularly in and around major cities;
• Corporate Solutions – FRHI has established its brands as popular choices for corporate travellers, providing a wide range of services that are tailored specifically to suit the needs of traveling professionals, including meeting rooms and computer facilities. 
• Affordable Options – While FRHI offers high end services, the Company also offer cheaper rooms and discounts so that its services can be experienced by a broader spectrum of the consumer population.

Channels

FRHI serves its customers directly through its international network of hotels and resorts under the Swissotel, Raffles, and Fairmont brands. 

The Company operates a network of more than 100 hotels the Americas, Asia Pacific, Europe, Africa, and the Middle East.

This includes around 17 hotels under the Raffles brand, more than 70 under the Fairmont brand, and more than 30 under the Swissotel brand. 

At these hotels, the Company serves its customers directly via an in-house staff of customer service, facilities, and reception personnel.

FRHI takes bookings from customers and businesses over the phone, at its hotels and online.  The Company operates websites for its Raffles, Fairmont, and Swissotel brands, as well as for a large number of its individual hotels, through which customers are able to make room reservations on a self-service basis.

Customer Relationships

FRHI seeks to establish longstanding relationships with its customers, aiming to secure repeat business through its reliable offerings and high-quality customer service. 

The Company serves its customers primarily through its in-house personnel, who are on hand to manage customers check in and check out times, handle queries and complaints, and offer advice on the surrounding area.

Under its Swissotel, Fairmont, and Raffles brands, FRHI operates membership and rewards programs to encourage customers to return.  Through these schemes the Company offers regular customers a range of discounts, deals, and benefits that can be availed across the Company’s various hotels. 

FRHI is additionally able to communicate directly with its customers through its various social media accounts under its Raffles, Fairmont, and Swissotel brand names, including with  LinkedIn, Facebook, Twitter, YouTube, Pinterest, Instagram, and Google+.

Key Activities

FRHI is a prominent hotel and resort operator.  The Company owns, operates, and manages a large network of hotels and resorts under several well-known brand names, notably Fairmont, Raffles, and Swissotel. 

The Company’s hotels offer a wide range of facilities and services – including airport transfers, corporate and business suites, swimming pools and gym facilities, and high end restaurants – and cater to a broad customer base. 

FRHI additionally manages a number of estates and luxury private residence club properties under the prestigious Fairmont and Raffles brands. 

Since 2016, FRHI has operated as a subsidiary of Accor Hotels, which operates an extensive network of hotels around the world, including under the Sofitel, Rixos, and Banyan Tree brands.

Key Partners

FRHI works closely with a broad network of partner companies and organisations that support its core hotel operations. 

The Company’s partners can be organised broadly into the following categories:

• Supplier and vendor Partners, comprising suppliers of equipment, produce, and beverages that are used or sold across the Company’s network of hotels, as well as third party providers of services that support the Company’s corporate activities ore broadly;
• Rewards and Affiliate Partners, comprising a range of commercial enterprises and brands with which the Company collaborates on the delivery and operation of its rewards and benefits scheme, notably brands that provide discounted products or services in return for using FRHI services;
• Travel Partners, comprising a range of commercial airlines, travel agencies, and vehicle rental companies that maintain close relationship with the Company, promoting one another’s products and services;
• Franchise Partners, comprising various commercial entities and hotel operators that operate hotels and resorts under one or more of the Company’s brands under franchise or licensing agreements; and
• Strategic and Alliance Partners, comprising a range of commercial enterprises with which the company collaborates on other strategic brand development, marketing, and business projects.

FRHI has a number of strategic partnerships in place.  The Company’s parent, Accor Hotels, has notably launched partnerships with airlines such as Emirates and TAP.

Key Resources

FRHI’s business model depends on its ability to offer high quality, reliable, and efficient hotel services to customers around the world. 

As such, the Company’s key resources are its brand portfolio – including its Raffles, Swissotel, and Fairmont brands, its network of owned and franchised hotels and resorts, its inventory and supply chain, its network of partners, and its personnel. 

FRHI notably operates more than 100 hotels around the world, without the Company’s business does not function.  Much of the Company’s success is also tied to the prestige attached to its hotel brands.

Cost Structure

FRHI incurs costs in relation to the operation of its hotels – including occupancy and utility costs, the procurement of food and beverages, the acquisition of equipment and hotel supplies, the procurement of third party services, the implementation of marketing and advertising campaigns, the management of its partnerships, the development and maintenance of its IT and communications infrastructure, and the payment of salaries and benefits to its personnel. 

In 2018, FRHI’s parent company recorded total operating expenses for the year of USD 2.90 billion. 

This included cost of goods sold totalling USD 97 million, personnel expenses totalling USD 1.82 billion, rental costs totalling USD 148 million, and energy and maintenance costs of USD 69 million.

Revenue Streams

FRHI generates revenue through the operation of an international network of hotels and resorts. 

The Company derives revenue in the form of booking and room fees, room charges, event bookings, and other hospitality services performed at its hotels.  The company also collects franchising and licensing fees from its operating partners.

FRHI operates as a subsidiary of Accor Hotels and does not publish its own financial results publicly.  In 2018, Accor Hotels recorded total annual revenue of USD 3.61 billion, up on the USD 2.77 billion recorded by the Company in 2017.