Accor CEO on why he doesn’t miss big M&A

SINGAPORE — Accor has radically transformed in the past 10 years from 13 to 48 brands, but the company’s M&A has slowed down dramatically over the past few years. So, does CEO Sébastien Bazin miss the thrill of buying one company after another?

Not really.

“We haven’t done anything serious over the last three years and no, I don’t miss it,” Accor’s chairman and CEO said during an interview at the Hotel Investment Conference Asia Pacific (HICAP) in Singapore last week. “At the time, it was indispensable and necessary for Accor to be transformed,” said Bazin, who was interviewed by business journalist and Hotel Investment Today reporter Raini Hamdi. “Accor was too European, too midscale- and economy-dependent and I wanted to go outside Europe. We wanted to go to the premium affordable luxury, then luxury, then ultra-luxury, then lifestyle, then all-inclusive.”

So, is Accor done with M&A? Not completely, Bazin said.

“As of today, I seriously believe Accor has been transformed. There’s nothing that we need further,” he said. “That doesn’t mean we won’t do anything. It just means it’s time to bear the fruits. After seven years of transformation, [we should] just enjoy the ride.”

Speaking of the industry as a whole, Bazin doesn’t see many big mergers coming anytime soon, either.

“I’ve been saying there’s no need for any big M&A… I don’t believe you will see further consolidation in the industry,” he said. “America belongs to five exceptional hotel operators. Maybe something is going to be happening in America, but you’ve seen Wyndham and Choice failing. I don’t see any cross-Atlantic merger. It’s super difficult to execute.” 

‘The job is almost done’

Bazin, who also leads the company’s luxury and lifestyle divisions, thinks the ride includes delivering 9% to 12% growth in the coming years. He thinks that can happen if the company stops transforming, so “the job is almost done.”

[The founders who create brands] have something special… So when you find those people, give them the light because they deserve it. If you find those brands to be the big brother, help them to scale, but don’t scale too much.

Sébastien Bazin

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It’s not that he doesn’t like the investment side; Bazin said he personally loves it, but it creates a great deal of complications. He was listening to an investment panel before he spoke and said now it sounds exhausting.

“I am so happy that we moved away from the investment side,” he said. “Listening to the five people ahead of me talk when you have to assess: What is the inflation rate? What is the GDP? What is the interest rate? Can you get access to financing? What’s the GDP of this country?

“It just occurs to me that as a hotel operator, you cannot do everything… So, focus on what you know best,” he said.

When asked about Accor’s luxury and lifestyle segment growing twice as fast as its premium, midscale and economy segment (which still makes up 90% of the company’s portfolio), Bazin said both areas are critical for the company.

“[Premium, economy and midscale] is predictable, scalable and cash flow. This is a great segment,” he said. “If you go to luxury and lifestyle, it is less predictable, less cash flow, greater brand value… and greater growth but higher risk…. We have different ambitions and different designs, and it’s actually different customers.”

Accor has been on a hiring spree over the past few years to keep up with its growth and various segments. Bazin said he’s comfortable with the scale of the executive growth as well. He’s also comfortable knowing what the company can’t do.

“We are very good, I think, in managing people. We have good instincts on where and how to play. We know how to distribute ourselves. We know how to actually scale a loyalty program,” he said. “Do we really know how to create a new brand? Not really because we’re too big and because we have too many chefs in the kitchen. We don’t have the entrepreneurship, we don’t have the identity and we don’t have the daring aspect.”

That’s why founder-led brands are so powerful for Accor.

“[The founders who create brands] have something special… So, when you find those people, give them the light because they deserve it,” he said.  “If you find those brands to be the big brother, help them to scale, but don’t scale too much.”