The chairman and CEO of the European giant held court in New York City,
discussing everything from luxury growth to lessons learned over past ‘dirty’
eight years.
NEW YORK CITY – “Whatever transformation we have done is
behind us,” declared Accor Group CEO Sébastien Bazin during a press briefing
last week in New York City. “The next few years we’ll kind of enjoy the ride.
We have the market share, the brands… We now have to connect culture and
people.”
Bazin said Accor has been through eight years of “dirty work,”
refocusing 47 brands and selling off assets to become truly asset light. “Probably
50% of the outside world was at best perplexed, and the other 50% was
absolutely negative, as in, ‘what are those guys doing? They’re never going to
be credible in lifestyle. They won’t get there with luxury. So, finally, now
they’ve done something like that.’ Well, we might have actually something good.”
Today, about 15% of the company’s rooms are in the luxury
and lifestyle spaces, while CFO Martine Gerow said about 25% of Accor’s
pipeline is in luxury and lifestyle. Currently, Accor has some 800,000 luxury rooms
in its system.
Bazin’s statements come on the heels of 2024 year-end
earnings that saw Accor grow RevPAR 5.7% to €75 (5.8% for Q4), beating analyst
expectations. RevPAR normalization is expected, with growth converging towards
the mid-term target of 3% to 4% annually.
Management reiterated the mid-term goal of 3% to 5% annual
net unit growth, with an expected acceleration in 2025.
High growth regions such as the Middle East and Southeast
Asia remain focal points for expansion. Those regions today represent 60% of
Accor’s pipeline.
Here are a few of the highlights from the hour-long meeting
with the media on February 27.
Five years ago, we were invited maybe one time out of 10 for requests for proposals because we either didn’t have the brand or the talent. Today, if you look at the same 10 RFPs, we are invited 10 times, and I think we win a half of those.
Sébastien Bazin
Luxury footprint in North America. CEO of Raffles and
Fairmont Omer Acar said the Raffles brand has momentum in North and Central America
after a successful opening in Boston. He said the brand is in advanced
discussions in California, Florida and Mexico.
Many properties in the Fairmont brand are going through
renovations and new projects are being developed in Nashville and New Orleans.
Acar said Miami is in the works and ski resorts are a focus with a deal developing
in Colorado and other U.S. ski destinations.
Bazin said Raffles growth in the U.S. shouldn’t grow beyond
a dozen cities to help maintain what he calls the brand’s ultra-luxury status.
More broadly in the luxury and lifestyle space, Bazin said today
Accor always has a seat at the development table. “Five years ago, we were invited
maybe one time out of 10 for requests for proposals because we either didn’t
have the brand or the talent,” he said. “Today, if you look at the same 10
RFPs, we are invited 10 times, and I think we win a half of those. So, in terms
of depth of portfolio, the luxury lifestyle portfolio of Accor, which is 24
brands, is by far the most diverse and probably the strongest in terms of
uniqueness.”
Growing Premium, Midscale and Economy in the U.S. The
short answer is “no,” Bazin said. He called it too much of a risk because the
U.S.-based brands are too dominant.
Geopolitical concerns. As a European and French
citizen, Bazin said he is concerned because he doesn’t see anything good coming
out of the current climate. As a hotel CEO, however, he is not concerned – at all
– and expects travel to Europe and America to remain robust.
“Accor is a service company. We don’t buy goods. We don’t
sell goods. We don’t have any supply chains. So, economically, we are not
impacted by what could be decided in terms of tariffs,” he added.
The return of business travel. Bazin called the trend
of less corporate travel structural. He blames Zoom and Teams. “The CEOs have
been telling their guys you first saw them on Zoom, and if you really believe
you have a prospect, then you go and travel. So, what we see is lesser number
of flight and a greater length of stay.”
As strong as we are, it’s pretty humbling. Accor has always been late. We’ve been late going asset life. We’ve been late on technology. We’ve been late on the systems. So, all the benefit you see today, we have played catch-up with the best expertise of the American fellows. It’s humbling, but that’s what it is.
Sébastien Bazin
Third-party management expansion into Europe. Bazin
feels good about and likes the idea but has a bit of trepidation.
Because Accor is growing as a franchisor, he sees
third-party managers, especially those coming from the U.S., filling the
management role of behalf of independent owners. “We are very happy to team up
with Ambridge, for example, and we talk with them about boosting the expansion
of Accor in Europe,” he said.
However, Bazin added, while it is easy for third-party
groups to expand in the U.S. where there is just one currency, one language and
one legislature, the complexities of Europe won’t make it as easy. “If you want
to deploy third-party business in Poland, Italy, Spain, U.K., France – be my
guest,” he said with a tone of sarcasm.
3.5% net unit growth, which trails Accor’s major
competitors. Bazin clarified that there has been a lot of churn in the
system the past three years, adding that it is reassessing 400 hotels in the
Premium, Midscale, Economy segments. Even some 20% of the upscale Sofitels and
Fairmonts have not met brand standards. So, with 2% system churn means about
5.5% overall unit growth.
By 2027, Bazin said Accor will be at the upper end of 5%.
He added that while not as competitive at the lower end of
the market in the U.S., Accor is “ultra-dominant” in Europe. “It doesn’t mean
they’re not entering, and we have to be very careful, but we still have the
biggest market share of openings in Europe. Yes, in the Middle East and Asia,
we box, and it’s super healthy, putting all of us on our guard.”
Lessons learned. Bazin admitted to being a laggard
among Accor’s peer set but feels they have caught up. “As strong as we are, it’s
pretty humbling. Accor has always been late. We’ve been late going asset life.
We’ve been late on technology. We’ve been late on the systems. So, all the
benefit you see today, we have played catch-up with the best expertise of the
American fellows. It’s humbling, but that’s what it is.”