Sebstien Bazin, Accor Chairman & CEO

Sebstien Bazin, Accor Chairman

Accor’s new Chairman and CEO, Sébastien Bazin, has split  the huge French accommodation company into two divisions – HotelServices and HotelInvest. “With this new strategy, our aim is to unlock Accor’s full potential through its two core activities and maximize value creation for shareholders,” he said.

Unfortunately shareholders were underwhelmed and Accor shares fell 7.5% after Mr Bazin’s announcement, his first after taking control of the company in August. According to the Financial Times, they were looking for Accor to sell the hotels it owns and return cash to shareholders.

In summary Mr Bazin defined the new divisions as:

  • HotelServices: a hotel operator and brand franchisor that will be fee-oriented and P&L driven.
  • HotelInvest: a hotel owner and investor that will be yield-oriented and balance sheet driven.

“All 1,400 hotels of HotelInvest will be operated by HotelServices through management contracts,” Accor said in a press release.

“Each business unit will have its own reporting, with separate P&L, Cash-Flow statement and balance sheet. They will report to single Executive Committee. The Group will retain key central functions including Finance, HR, Legal and Communication.

“HotelServices is pure fee-oriented hotel operator & brand franchisor, that boasts strong brands, a winning path in distribution, and robust development. It will comprise the Management & Franchise, Sales & Marketing, distribution and IT departments.

“It will operate nearly 3,600 hotels and 460,000 rooms worldwide under 14 brands worldwide across all segments. Its room portfolio will consist of 46% in the economy segment (ibis, ibis Styles, ibis budget, Adagio Access, hotelF1), 40% in the midscale segment (Novotel, Mercure, Adagio), and 14% on the Luxury/upscale segment (Sofitel, Pullman, MGallery, Grand Mercure, The Sebel).

“This high margin and cash generative business will be driven by three business priorities:

  • “Maximize fee generation, by adjusting our service offer to better meet partners expectations, focusing on fee generation rather than contract wins, and managing costs to optimize results for both our partners and Accor.
  • “Accelerate in CRM, Loyalty and digital services. Resources will be allocated in priority to program & system development, to increase Le Club Accorhotels loyalty members’ contribution to hotel revenues and to foster Revenue Management agility, in order to maximize the top-line, with a better use of OTAs as additional revenue growth partners.”

He said Accor “will move from the current hybrid set-up to a geography-based organization with consistent accountability in all the regions. This organization structure will enable decision-making that is closer to the frontline at lower running costs. The brands will be clustered in three segments, “Luxury/Upscale”, “Midscale” and “Economy/Budget” with synergies in support functions across the brands.”

As part of the restructure, he said the Sofitel brand will be included in the “Luxury/Upscale” segment and its marketing functions relocated to Asia.

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