Publicly traded AccorHotels has entered the hostel world with Jo&Joe, a brand that seeks to offer choice, socialization, flexibility and autonomy to millennials, its main target guest demographic.
PARIS—Following two noticeable buys by AccorHotels in 2016, the French hotel company has created Jo&Joe, a new brand which seeks to capture millennial demand for social hostel-hotel experiences, said two executives at the heart of its launch.
Designed to blend hotel, hostel and rental provision, the brand was announced on 27 September and follows in the wake of a busy year for the company. In April, AccorHotels announced a €148-million ($164.8 million) purchase of luxury sharing-economy provider Onefinestay and in July completed its $2.9-billion buy of FRHI Holdings Limited, which contains the Fairmont, Raffles and Swissôtel brands.
As AccorHotels’ 20th brand, Jo&Joe is at the other end of the hotel segment spectrum, but it further broadens the company’s overall proposition and bolsters its loyalty push in an age group that might not have many or any loyalty membership cards now, AccorHotels executives said.
The brand, which the company calls a “vibrant living space,” also is the first product from AccorHotels’ research and development-minded Marketing Innovation Lab, which was formed in January, said Frédéric Fontaine, SVP of global marketing at Marketing Innovation Lab.
Fontaine said the lab’s goal is to “sniff out market opportunities, trends and new behaviour and spend time assessing if an idea has some value to the group.”
The brand’s goal of 50 properties by 2020 is “quite realistic and ambitious,” Fontaine said.
Fontaine said research showed Jo&Joe’s target guest is interested in location and price, but their main drivers are to feel they are occupying a property’s space while being autonomous.
“It’s a point on which we have spent much time. Socialization, sharing, encountering other people, blending with other cultures are more important in the hotel world today,” Fontaine said, who added security, safety and comfort never could be neglected.
The goal, Fontaine said, is to turn the property into a hive of activity.
“What is important will be our playground, our ground floor, with a bar-restaurant concept, very volume-driven, with lunch and dinner from €10 ($11.14), and event programs. Something always will be happening, hosting talent, inviting locals, a real cool place,” Fontaine said, who added gyms and yoga will also feature.
Fontaine and Pascal Locatelli, SVP of innovation and marketing projects at AccorHotels, said there will be a private area for residents only called the Happy House, which will be very branded.
“You lose that in an Airbnb,” Fontaine said.
“We are merely car-boot sellers,” Locatelli said. “We’ll offer everything for our guests to make their own social choices.”
“We will position this brand as a mix of all of this, while trying to avoid falling into a trap of having a ‘me, too’ product,” Fontaine added. “Design will be quite disruptive, too.”
Fontaine and Locatelli said it would not be wrong to say AccorHotels had looked at similar offerings from European hotel firms such as 25Hours Hotels, Generator Hostels and Ennismore’s The Hoxton.
“We have looked at all these options and spent time sleeping in these hotels,” Locatelli said. “The main difference is we have redone the digital element and added design twists. We looked at the way guests envisage shared rooms, not to have dorms with prison lighting but a whole range of choices.
“What we are planning is very flexible accommodations. One-third will be private, for two to three people; one-third will be small dorms, for four to six, and this will be the most flexible, where guests can rent a bed or the whole space, and with a private bath; and there will be ‘together’ dorms, (which are) larger, but different, some with classic bunk beds, others a reinvention of Japanese pod-style rooms but more comfortable and spacious.”
He said the brand won’t rely on run-of-the-mill hotel design.
“Iconic furniture will feature, for example, yellow, round sofas, where guests can crash, sleep, hang out, and there will be what we are calling ‘Out of the Ordinary’ rooms, depending on the location and space, perhaps a shack on the beach,” Locatelli said.
Such thinking and offerings are the future in this segment, said Harry Douglass, associate director of hospitality at hotel consultancy HVS.
AccorHotels is “tapping into millennials,” Douglass said. “They must however also enter the space where others have already enjoyed much success, such as CitizenM, and Hoxton to a degree, as these are perceived by many as responding to today’s requirements for this and other age groups.”
He said this sort of thinking is becoming a necessity in hospitality.
“Operators need to keep it fresh, because brands quickly become stale unless they continue to innovate and reinvent,” Douglass said.
Fontaine said the new brand’s target market, which he said will be worth $336 billion in spending power by 2020, wants constant change, and Jo&Joe was set up to be able to respond to that need and scale up quickly.
“We need to surprise them every day. … Add to that Accor’s 150 development guys around the world, and the brand will come out quickly and disruptively,” Fontaine said.
Fontaine said hotels needed to think differently “to break the code and adapt to different usage.” He and Locatelli mentioned distinct types of traveler in this age group.
“There are ‘social solos,’ ‘tribes’ and ‘love birds’ who want to be on their own but not all the time,” Fontaine said.
The first Jo&Joe will open in Paris, Locatelli said.
“Work will start at the end of year, maybe in early 2017, and we will go to our Facebook guests and social community to ask them what their view is in terms of what our design should be,” he said. “Colors, textures, for example, and we will take this input to apply design related to location and community.”
He said that hotel—which will be close to Paris’ main university—would be a new build, but the brand could fit into existing buildings not suitable for footprints of traditional hotels.
“What we really like is we can open a Jo&Joe that’s not finished,” Locatelli said. “It is not just a two- or three-person band making that decision.”
Locatelli said all cities that are hubs of the millennial generation will be targeted.
“The strongest point is Europe, but also Latin America and Asia, and later on, North America,” he said. “Some cities where our social network told us they wanted to travel to surprised us, such as Reykjavik.”
The other announced Jo&Joe will be in Bordeaux, France.
The brand’s distribution will be via a combination of AccorHotels’ own platform, a dedicated app and website and specialized hostel platforms.
The brand announcement coincided with the Hotel Investment in Europe conference in London, and panelists discussing budget hotels considered AccorHotels’ new player.
Peter Gowers, CEO of Travelodge U.K., said hoteliers, who are often not millennials, need to “unlearn what you know about your friends and analyze the market.”
Sharan Pasricha, CEO of Ennismore, said he thought it was an “interesting move.”
“Accor is innovative,” Pasricha said. “The question will be can a big brand do this and have it work.”