With its 5,200 hotels, Accor group aims to capture a major share of the flexible office market

Spotted in @lecho

Last month, Sébastien Bazin, CEO of the Accor group was invited by the Brussels B19 Business club. Accor is the N°4 hotel group worldwide and N°1 in Europe. Sébastien Bazin spoke about the impact of the COVID-19 pandemic that has heavily weighed down on the group’s financial results for 2020. Their turnover collapsed from 4 billion Euros to 1.6 billion. The group has been able to resist this unprecedented huge financial impact because, at the end of 2019, they decided to sell all the buildings they owned in which they operate a hotel. And this succeeded. They cashed in 6 billion Euros.

Sébastien Bazin comments on this real estate strategy: “We cannot invest in plumbing, electricity, roofing or maintenance and, at the same time, invest in management, customer relations and loyalty programs. It is too much to invest. Real estate is a business of capital allocation, risk taking and yield. Hotel service is a hospitality business of brand building, turnover, margins. It was therefore necessary to simplify.”

Sébastien Bazin shared with the audience his vision for the transformation of the group, which operates almost 5,200 hotels around the world, located in more than 110 countries. New initiatives will be needed to counteract the decline in business travel, which represented 60% of the Group’s incomes. Bazin underlines: “40% of travel for domestic business and 20% for international business.The first will come back, because it's near home and cheap. Where international business is concerned, we are doubtless set to lose a third”.

Nomadic workplace experience

One target of the group development strategy is the increasing flex office market. The Accor group intends to ride the wave of the nomadic office. Sébastien Bazin: “We undertook a study with 40,000 people in 30 European countries. Only 10% want to come back to the office five days out of five. 70% do not want to come back to the office, but also do not want to work from home. With our 5,200 hotels, we have the infrastructure to accomodate them. Along with hospitals and police stations, hotels are the only facilities open seven days a week and 24 hours a day”. Today, companies are striving to achieve a qualitative ‘workplace experience’. Hospitality has always been the core business of the Accor group, which is why the group expects to succeed in capturing a share of the flexible office market (co-working centres and business centres), and in particular those more aimed at occasional nomadic workers and the geographically more itinerant.

Developing ‘boutique hotels’

A second major development axis is the ‘charm’ niche of the hotel industry, known in the jargon as ‘boutique hotels’, ie less standardized, more welcoming and more original infrastructures. Fourteen brands meeting this profile are now under the umbrella of the Accor group (Mama Shelter, Gleneagles, Delano, Mondrian, Museum Hotels, etc.). They were recently merged into an autonomous entity, Ennismore, based in London. To date, it has only around 100 establishments, and accounts for less than 5% of the group’s turnover, but within three years, this number will have tripled.

Read more in L’Echo report [“Avec nos 5.200 hôtels, nous pouvonsaccueillir les travailleursnomades"] >>>