AccorHotels CEO Sébastien Bazin discusses the company’s future plans, including the launch of its Accor Local strategy to marry local businesses with hotel services.
Editor's note: Click here for the full transcript of Hotel News Now’s interview with AccorHotels CEO Sébastien Bazin, and click here for part one of the story, in which Bazin shares his thoughts on industry disruptors, the changing customer and why risk is important to growth.
BUENOS AIRES, Argentina—AccorHotels CEO Sébastien Bazin is a proponent of big-picture change in the global hotel industry, and he’s starting with his own company.
In an interview with Hotel News Now at the South America Hotel Investment Conference, Bazin said the Paris-based AccorHotels has “never been stronger than today, never in the past 50 years.” As reasons behind this success, he cited the company’s “great people, great balance sheet, great brands and great market share.”
His commitment to change begins in his own organization. Bazin shared his thoughts on new expansion initiatives for AccorHotels, how today’s global hospitality companies can keep up with more-nimble startups, and what’s next for the company’s real estate platform.
How culture is changing
With companies of great size come great challenges, Bazin said. One of those is culture—not the culture of dealing with customers, but rather the culture of training and retaining thousands of employees.
“I have 260,000 employees,” he said. “We hire every year another 80,000 people. We lose 50,000 people. Most of them are people we have trained in Asia/Pacific, in the Middle East, in Africa. After three or four years, they gain what they want from Accor and then go (work) for somebody locally or they go for another industry.”
Much of that is due to the fact that big organizations with traditional, hierarchal cultures are at a natural disadvantage compared to newer companies.
Bazin elaborated on some of the ways he’s changing the corporate structure of AccorHotels to be more nimble and encourage corporate employees to embrace some tenets of “new economy” companies.
“If I want Accor to be able to move and act, I need to shift the entire vertical organization to a horizontal organization,” he said.
A big move like that comes down to culture, he said.
“Buying another operator, launching (a brand), it’s an easy task because it takes money and guts and a little brains,” he said. “Channeling a culture is going to take five to seven years at a minimum.”
Resources lead to new initiatives
Bazin expanded on the differences between global hotel companies like AccorHotels and newer, leaner start-ups.
There are two things “old economy” companies have that “new economy” companies don’t really want, he said. “One is capital intensity. Accor manages 4,300 hotels on the planet. Behind those 4,300 hotels there is $120 billion being spent, and we open two new hotels every three days.
“The second thing we have that they don’t have is labor,” he continued. “We have 260,000 people. … It is a weakness; it appears to be a weakness, which is why they have so much value in the stock market, because they have better agility, less volatility and better free cash flow.”
He expanded on how his company is looking to “transform a weakness into a force” through a pilot program called Accor Local.
More on those owned assets
While the Accor Local plan is designed to capitalize on the resources and people the company already has, Bazin also shared additional insights into the company’s moves earlier this year to create a new platform, called AccorInvest, for some of the company’s owned assets and also to attract outside investors.
The company previously held its more than 1,000 owned hotel assets in a portfolio called HotelInvest. The difference with AccorInvest, Bazin said, is that the company will use it to attract those outside investors, and also to divest 430 of its owned assets with the goal of raising approximately $4.2 billion in asset sale revenue.
He called the Luxembourg-based AccorInvest platform “the largest portfolio in Europe by far.”
“My stock price does not compare well to Hilton, to Marriott, to InterContinental, and it upsets me,” he said. “If I don’t (sell), somebody’s going to be buying Accor and selling the real estate at my expense.”
Future growth plans
All of the company’s moves, whether around owned assets or corporate culture, are part of Bazin’s plan to continue to accelerate AccorHotels’ growth, diversity and market share.
Bazin identified three particular regions where the company is growing fast.
The company is moving quickly in “Asia/Pacific, including China, which is half of the Accor network,” he said. “Two is India/Sub-Saharan Africa because of the enormous capacity and lack of infrastructure. And three is Latin America. We have 320 hotels today already (in Latin America), and we signed another 170.”
Even that pace might not be fast enough for Bazin, but he recognizes that growth must also be controlled.
“Anybody who is driven (only) by size makes a mistake because that means you’re driven by your ego, and that makes no sense,” he said. “I am driven by local market share. … What means the most is, do you have market leadership in Brazil? Do you have it in Paris? Do you have it in Bangkok? Because if you do, then you change your relationship with the OTAs. … If you go too broadly, too thinly in too many countries, then you depend on (OTAs) because you don’t control your market share. So yes, size matters, but it matters locally, not globally.”