In July 2016, AccorHotels completed the acquisition of Fairmont, Raffles and Swissôtel (FRHI) bringing its regional portfolio in operation and under management to 150 hotels with more than 45,000 rooms across the luxury and economy segments. The company’s chairman and CEO Sébastien Bazin was in Dubai in November 2016 and he tells Hotelier Middle East that the merging process has been going well.
“The integration has been smooth and easy because it is extraordinarily complementary to our existing networks. It is additive, not redundant. It adds network capacity, it adds to the owner relationship, it adds talent. We are adding distribution capabilities, we are adding loyalty programmes, we are adding presence and market leadership — it’s a win-win scenario between everybody,” Bazin says.
He adds that the important element to the merger is listening and respect between everyone involved, which is why he has been spending a lot of time with the teams especially in the regional headquarters to ensure this happens. The merging is on schedule and budget, reports Bazin, and there has been an increased interest from owners as well.
Bazin says, of the experience with owners post-acquisition: “First they were a bit surprised. Second, they were questioning Accor’s true strength being economy and mid-scale. The more we have been spending time with them introducing ourselves, the more they realise that it may be a different business segment but we end up being the largest hotel operator in the world.”
This is also the reason behind Bazin’s packed travelling schedule, which involves meeting the owners, and the reasoning behind AccorHotels creating a luxury business unit with the company. “It is a different segment, so you have to have dedicated expertise, dedicated HR, dedicated marketing, dedicated sales, so that as a guest you expect the purity and the discipline needed for the luxury segment.”
Another part of any acquisition raises questions about loyalty programmes, which is always an interesting topic of discussion. Prior to the acquisition, FRHI ran ‘guest recognition programmes’ under the headlines of Fairmont President’s Club, Raffles Ambassadors, and Swissôtel Circle, while AccorHotels has the Le Club AccorHotels programme. Will these merge or stay the same? Bazin responds quickly that these will not stay the same, rather, they will be merged to help guests across all brands benefit from shared advantages. “But it’s going to be done about 18 months into transition because they have a different programme. That means we have to link all the IT systems — which is doable but it takes a bit of time. If anything, our loyalty programme is today 33 million clients and they have 3.5 million. They bring to me a lot of US-based loyalty programme holders where we have very minimum so they bring me sizeable portion of the United States. But there again it’s win-win,” he explains.
Certainly, Bazin is all about the big picture. While the FRHI acquisition has certainly made a lot of noise, especially in the Middle East market, the company has made other purchases over the last year or so which reflect Bazin’s focus on a deeper understanding of the current client profile. Jumping into the sharing economy and services beyond hotels, AccorHotels acquired brands including Onefinestay, Oasis Collections, Squarebreak and John Paul — all in 2016.
Through Squarebreak, AccorHotels will offer private upscale properties in resort locations, primarily in France, Spain and Morocco, with a 49% stake in the French start-up. The operator also acquired a 30% stake in Oasis Collections, a curated marketplace for private rentals which has 1,500 properties in 18 destinations, in Latin America, the US and Europe. And then with its US $157m (€148m) acquisition of Onefinestay, the operator has dipped its toes in the luxury serviced home rental space. And in November, AccorHotels finalised the acquisition of John Paul, a big player in the concierge market which offers premium customer and employee loyalty services.
This doesn’t even include the acquisition of FastBooking in 2015, which is a digital services provider for the hotel industry, and app creator Wipolo — showing the group’s focus on technology.
Bazin says: “Everything is tied up, absolutely everything. Nothing has been done, at least since I’ve been here, by accident. It’s just the question of understanding the market you live in. The market today is in the hands of the digital players, who are probably 25% the size of the market.”
Stating that these players did not exist 20 years ago, Bazin highlights that their success came from being client-minded, not product- and brand-minded. “We decided, as Accor, to participate in the game and not be a spectator,” he adds.
Of course, this seems to be a reaction to the success of what many term a ‘disruptor’, Airbnb, which Bazin gives due credit. “Airbnb is a true success in terms of expansion with its model. But today Airbnb is short of one segment, which is the upscale luxury segment.” Bazin notes that Airbnb is a price-sensitive model, and one which is labour-light, which is why it does not currently play in the upscale luxury space as successfully.