AccorHotels creates new role for digital growth and greedy OTAs
A raft of acquisitions and digital developments is helping the French chain to become a key player in industry consolidation and a serial entrepreneur has been appointed to help, writes Sally White
With classic French élan AccorHotels is making it absolutely clear that it is on song with leisure industry trends. The latest senior appointment at Europe’s largest hotels group (3,900 hotels) is that of serial digital entrepreneur Tribault Viort (43) as chief disruption (sic) and growth officer.
Viort’s CV includes creation of Facebook’s first online games (lsCool Entertainment), digital data factory Ysance, French travel app Wipolo (now owned by AccorHotels) and transformation of Cityvox, a French online review site specialising in restaurant and nightlife. For 20 years he has also been teaching at the prestigious French college, Ecole Polytechnique.
AccorHotels says the appointment is to help it “increase its agility in new businesses”. So his main missions will be to “track down new opportunities for growth”, to oversee the group’s new ventures and to “reinforce interactions with start-ups that reinvent the sector”. Sounds as though he is going to be busy!
For the last few years AccorHotels has been a business in a hurry to expand, with moves in all sectors of leisure accommodation. These have been designed to keep it ahead of both its conventional and disruptive competitors. Investment in digital has also been a major priority.
Just last month AccorHotels spent €148 million buying Onefinestay, the UK-based international high-end serviced home rental group. AccorHotels CEO Sebastien Bazin says a further €64 million will be spent helping it growth worldwide. The acquisition is part of its plan for countering competition from Airbnb.
Its buying spree has also included a variety of vacation rental companies, such as Squarebreak and Oasis Collections. But its major acquisition in recent months was last December’s deal to buy the 115 hotels, plus 40 under development, in FRHI group. These are the luxury Fairmont, Raffles and Swiss hotel brands for which AccorHotels agreed to pay about $2.9 billion in shares and cash. The deal has just been given clearance.
A key player in industry consolidation
The deal “offers us robust and global leadership in luxury hotels, a key segment in terms of geographic reach, growth potential and profitability,” AccorHotels’ CEO Sebastien Bazin said in the statement. “We are positioning ourselves as a key player in the current industry consolidation process.”
An indication of what was driving AccorHotels comes from the global deal figure. It rocketed 50% to $85 billion in 2015 according to international property services and management group JLL. JLL expects no end yet to the consolidation, forecasting $70bn worth of transactions in 2016.
Despite the damage to tourism in France (still AccorHotels’ largest single market) from last November’s terrorist attacks in Paris, it reported a 9.4% jump in net profit last year. However, while full-year sales rose 2.3% to €5.58 billion, this slightly missed analysts’ expectations of €5.65 billion.
In Q1 there was an overall sales rise of 1.9% on a like-for-like basis, but a fall of 5.2% in headline figures. French sales fell by 3.2% and AsiaPacific dropped by 0.7% (a weak performance in Australia). But the rest of northern Europe, Central and Eastern gained 1.6%, and southern Europe and the Middle East rose by 6.1%, thanks to the group’s exposure to fast-growing Portugal and Spain. Revenue in the Americas was stable, rising 0.7%.
AccorHotels’ strategy statement shows it is still very much in deal mode, though its focus is on building its luxury presence. It wants luxury service fees to rise from 19% to 35% of revenues. It also wants to “strengthen our position in the US market with flagship properties in key cities”.
Part of AccorHotels financial success has been its cost-cutting, selective disposals and increases in internal efficiency. It has also been making moves to counter the strength of the OTAs, for example by opening up its booking platform to independent hoteliers. (Apart from cutting the OTA’s business, AccorHotels saw this as a way of increasing inventory and revenues and improving margins.)
OTAs have taken a large slice of the pie. They eat too much, but they also provide me with customers. I want to enter their game more efficiently
Sebastien Bazin CEO AccorHotels
Developing a strong online presence has been an integral part of its strategy for some years - the group makes a third of its sales online. In 2014 it announced a five-year programme to spend €225 million to beef up its online business.
Sebastien Bazin has made no secret of his views of OTA’s- “OTAs have taken a large slice of the pie. They eat too much, but they also provide me with customers. I want to enter their game more efficiently,” he said then at the group’s Digital Day. (At which he appeared in Silicon Valley uniform - a black tee-shirt!)
AccorHotels puts its digital progress right up at the beginning of its annual business review. Last year, it highlighted, investment in digital technology encompassed more than just booking (signs of Tribault Viort’s influence seem already present). AccorHotels invested €73 million and initiated “some one hundred projects within the company”. There is even an app to network its staff, Digital Development Days to help them understand the internal programme, HotelLabs to test the digital tools in the field and hackathons at Paris’s Web School Factory to brainstorm ideas with its students!