One-third of AccorHotels’ revenues in the future will not be from traditional room and F&B sales, said its Chairman and CEO Sebastien Bazin, who is continuing to transform the Paris-based company.
In an interview with HOTELS, Bazin said his string of acquisitions, the latest being John Paul, and the launch of the new brand Jo&Joe, were not “by accident” but part of his strategic plan to change traditional hotelkeeping, which he said is “under attack” by the digital revolution.
Giving an example, he said the hotel industry for the last 50 years had defined its guests as largely those from out of town. Bazin said for Accor, guests would now include those living in the neighborhood and new services would be launched “to ease their quality of life” – an observation he made of start-ups, whose success lies on the premise of removing pain points for clients.
“The traditional hotel thinking is your guests are people coming from another city or country. Why?” Bazin said. “Why could not your client be the one living next door to your hotel? He may not need a room but there are many services we can render to him, whether it is laundry, key service, package delivery, because we are open 24/7 and we have 240,000 experts. You will see many services Accor will get into and probably one-third of my revenue tomorrow will be from these services.”
This is partly why he is buying 80% of John Paul, whose concierge expertise and system are “probably the two best tools for the liaison with the neighborhood”.
“The local guy could be my cardmember, even though he is not staying with me,” Bazin continued. “He could call the digital concierge for services. Some (of the services) I will be online, some will be done physically at my hotel property. I can ease the quality of life for local inhabitants by performing services that I already perform for out-of-town visitors.”
Bazin added that this made sense for hotel owners as well. “Accor has 4,100 hotels. The real estate investment made by all my owners is probably over US$100 billion,” he said. “I need to offer them additional revenues for what they have spent, which is why I’m enlarging my scope of activities to those people who actually need to use my facilities.”
Another key reason for the John Paul acquisition relates to Bazin’s conviction that for legacy companies to be around in the next 10 years, they must think client first. The hotel industry, however, has put brand and product first, he charged, alluding to a ‘we build, they come’ mentality. But clients’ needs are changing faster and they demand more surprises from the hospitality industry all the time, he pointed out.
“(Our) business model was inside to outside thinking. For example, you produce something with a new pattern and you manage to sell your product… For the last 10 years, it’s exactly the reverse,” Bazin opined. “All the new business models are outside thinking to inside producing. First, you think of what your clients want and you invent what they want. And to understand what they want, you need data access, which is why Facebook, Google, Amazon, eBay, etc., without you knowing collect your data – so they can invent the business model of tomorrow.”
Bazin said he was going “more and more into data analytics” when asked what his next move would be. “I don’t know (if we’ll buy a data-mining company) but we are spending more and more time with software companies, which is what companies like Visa and Mastercard are doing.
“Accor has 200 million clients in 95 countries. My data is very different from IHG, Marriott, Hyatt, etc. Theirs is 80% U.S.-centric. My data is 99% non-U.S.,” Bazin continued. “Why is that significant? Because with my data, I have people with different cultures and needs. Those in Thailand are different from Greece, different from Brazil, etc. So how do I use data on clients to invent new businesses?
“The other thing is to link data with social networks.”
The launch of Jo&Joe is a testbed of outside to inside thinking Bazin is driving at Accor, as well as an experiment on incorporating townsters (locals) with tripsters (foreign guests). A townster who is having such a good evening at a Jo&Joe, for example, could decide to stay the night as he could get a bed for 20-25 euros.
“Did I believe three years ago we would launch Jo&Joe? No,” Bazin said. “I’d even be more honest. All that we have done in the last 12 months, all the acquisitions – Fairmont/Raffles, OneFineStay, etc. – not more than half of these were in my mind. Which shows how fast you need to adapt.
“Do we have what we need today? Yes. Five years from now? I don’t know,” Bazin added. “I may invent another segment in three years because the market would have evolved. The world is moving so fast. Accor is not moving fast enough, but we are moving much faster than my competition, that’s for sure.”
Bazin said large legacy companies, too, can disrupt the market if their organizations are flatter, if they change their cultures to think differently and dare to take risks, and if they give autonomy to millennials.
He declined to give details of a new organizational structure, which would be launched in October. However, when asked what the main considerations were, he mentioned two keywords, “agility” and “horizontal.”