Q&A: Accor’s Vivek Badrinath on distribution
17 JUNE 2015 7:59 AM
Vivek Badrinath, deputy CEO of AccorHotels, is the man charged with revolutionizing his company’s distribution strategy, which he says is a win for all partners.
PARIS—Vivek Badrinath, deputy CEO of newly rebranded AccorHotels, is taking the company on a leap of faith into the digital landscape.
The former telecommunications executive (former deputy CEO of innovation, marketing and technologies at telecommunications company Orange) was charged on his arrival to the French hotel giant 18 months ago to revolutionize its distribution landscape.
He and his team are making headway, with the 3 June announcement the company was opening up its booking platform to independent hotels.
In a telephone conversation with Hotel News Now, Badrinath spoke widely of his company’s strategy of supplying more choice, value and incentive for customers to come direct.
Hotel News Now: Does the 3 June announcement push AccorHotels into the realm of online travel agencies?
Badrinath: “If you have a single-branded clothing store, it attracts people on the High Street, but what you get are a flow of people that are kind of in the mood to buy your product. But if you have a retail corner in Harrods, you get more people, as they have not anything specifically in mind to buy and also see they get more choice. …
“The planet does not need yet another copy of Booking.com or Expedia, but if (AccorHotels) offers an absolute catalog covering the planet with hotels that are all well done, then there is room for a customer to come and say, ‘Here is a good list of reasonable-quality hotels by someone who knows the business, and if I do not find (what I am looking for here), then I can go elsewhere.’
“There is space in the middle for the leap of faith we have (on 9 June) instigated. Studies have proven that the more products in your store, the more gets sold than if you only have one product. We see it as a win, win, win, win, for customers, for franchisees, for the independents who chose to join us and for AccorHotels itself.”
HNN: Is this a play to combat the threat of Google and other giants that could upend the traditional booking model?
Badrinath: “This was the reason we acquired Fastbooking, which candidly is a competitor of BookingSuite. In this industry, we are in a competition model with many, but we have good partnerships with the Booking.coms and Expedias. We can partner and compete with them, and there is nothing wrong or aggressive in that, nothing contentious, and the independent hotels that roll on with us will no doubt still be also on Booking.com and Expedia.”
HNN: Should existing AccorHotels’ franchisees be worried that you’re opening your distribution platform up to independents, which might hurt them or negate the necessity for them to have that leg up on your system?
Badrinath: “Branded owners realize the proposition they have as a branded hotel is still a valuable and meaningful asset. … With the independents joining us, we will be selective on criteria, quality, attractiveness and TripAdvisor ratings, et cetera, as we are lending our name to them. But many franchisees have said that this fits well into distribution. Some independents will also use affiliation as a segue into later becoming branded. Maybe initially (their owners) are not in the mood for capital expenditure but can join the system with the view of doing so later.”
HNN: Presumably, AccorHotels would need to integrate independent hotels’ availability and pricing into their central reservation system and to enforce rate parity and loyalty?
Badrinath: “Plugging will be done through the extranet and channel managers, but we will not be imposing rate parity. With all that is going on in Europe, the market is gradually moving away from that. The pressure from regulators means that idea is going out of the door. It will get further regulated.
“I came (to AccorHotels) from a very regulated sector, and I can see the writing on the wall. Logically, you will start seeing a slight spread of prices that correlate to a certain extent with pricing levels, which will drive lower commission rates.
“Currently, the commission levels charged online are excessive. Yes, (Booking.com, etc.) have the market pricing power and efficient tools, and they drive traffic, but it has gone very high for independent hotels. … As for loyalty, we’re still working on this. It will be optional, not tied in, but we need to study this more.”
HNN: What is the target rollout of your new initiative?
Badrinath: “The plan is to have up to 10,000 properties listed in the next two to three years. We have approximately 3,700 AccorHotels-branded properties. With the independents, we are taking a city approach that started with our data as to where our customers are looking. We have listed 320 (or so) cities that we need to cover. The process is not just to get footprint but to look for where we are underproviding for our outbound visitors to have access in these markets. Above all, it is a customer-facing strategy, a customer value proposition.”
HNN: Would you consider making this independent initiative into a soft brand or hotel collection?
Badrinath: “No, this is not the path we are taking. We are being very clear that this is not a branded process.”
HNN: What is it about OTAs that you find useful for the hotel industry? And vice-versa?
Badrinath: “OTAs do a lot very well, certainly around extranet, and that they can quickly capitalize on the smallest whiff of demand. We do need to learn from them. What they have learned from (the hotel industry) is about how to get deeper into the guest experience, although they do interact there already after the (OTA) booking.”
HNN: Apart from distribution, what is the greatest threat facing AccorHotels today?
Badrinath: “I would say it is if we are not able to adapt fast enough in the de-standardization of brands, we will lose. We need to embrace diversity and hyper-localization. Airbnb is showing that this is what is needed, and there is no reason why we cannot do this. After all, we are local hotels under a consistent global umbrella. We have to embrace this, to provide both convenience and localization.”
HNN: Is there any mergers and acquisition activity likely for AccorHotels, regarding both buying new brands or selling them, or selling some part of your structure?
Badrinath: “There is nothing of that nature on the agenda. Currently, we have belief in (the 3 June announcement), which is useful for independents, branded hotels and customers. It shows that hotel groups do not need to be passive.”