AccorHotels CEO: It's Foolish and Irresponsible to Fight Against the Sharing Economy

Paris-based AccorHotels, the biggest Europe-based hotel operator, with more than 500,000 rooms worldwide, has been on a buying spree of late.

In December 2015, the company agreed to buy the Fairmont, Raffles, and Swissotel brands for $2.9 billion in stock and cash. Currently, there's chatter suggesting it is eyeing Carlson Rezidor Hotel Group, too, although AccorHotels CEO Sébastien Bazin says the company has not put in a bid.

But three of its most recent acquisitions and investments — Oasis Collections, Squarebreak, and Onefinestay, announced yesterday — all play in the same space: the sharing economy. And that speaks to a larger trend in the hospitality industry best summarized as "if you can't beat 'em, join 'em."

With its $168 million acquisition of London-based Onefinestay, AccorHotels is making its largest commitment yet to entering the sharing economy. Onefinestay rents its members' upscale homes in London, Los Angeles, New York, Paris, and beginning in June, Rome.

"You don't know how strategic and key this acquisition [of Onefinestay] is for changing AccorHotels," Bazin told Skift. "It's all about providing guest satisfaction and Onefinestay is so unique and their team is so strong, it will bring enormous value to our company."

Embracing the Sharing Economy

Unlike many of his competitors and peers, Bazin thinks it's futile to try to find ways to compete against the sharing economy, and that's why, under his leadership, Accor has pursued investments in companies like Onefinestay.

"It would be absolutely foolish and irresponsible to fight against any new concept, offer, or services like this, let alone fighting against the sharing economy," Bazin said. "This is where the world is leading us. All of those new services are very powerful and very well implemented and executed. You need to embrace it."

Bazin said his approach to leading AccorHotels is driven by one thing  — his customers — and that's why, for the sake of his business and his employees, he's choosing to invest in sharing economy companies like Onefinestay, Oasis Collections, and Squarebreak.

"A hotel company can't just be a hotel company today," he said. "We will continue to do what we do with hotels but, at the same time, Accor is smart enough to know we should be embarking on new paradigms in which we should be participating, whether as a binary investor or a full investor controlling it."

That approach seems to be paying off. Last year, AccorHotels saw an increase of nearly 11 percent in its profits for a total of about $740 million in earnings before interest and taxes.

Making Onefinestay available to AccorHotels' guests is an example of the company anticipating and giving customers what they want and need, Bazin said. "You know guests will stay with you for a few nights on business at one of your hotels. But you also know that many of them, if they were to come back to that destination with a group of friends or family members and stay for five or more nights, they will stay in an Airbnb or Onefinestay."

He added, "To make sure the client remains with you, and has the same reassurance and guidelines of AccorHotels, it was critical to join hands and forces with Onefinestay. Your clients may stay at our hotel for one day and then at Onefinestay. It's the same leadership and reassurance. Otherwise you may lose them and you may not see them back."

Onefinestay co-Founder and CEO Greg Marsh said that companies like his fill a need in most hotel operators' portfolios in that they provide accommodations that are better-suited for longer-term stays or larger groups of guests. Whereas hotel companies have traditionally looked to extended stay properties to fill this niche, smart ones like AccorHotels are looking to home-sharing platforms that blend hotel amenities and service with the ease and flexibility of a vacation rental.

The quarterly lifestyle journal published by Onefinestay.

Details on the Onefinestay Acquisition

Onefinestay offers a more upscale and luxurious vacation rental model than an Airbnb or HomeAway but, unlike Airbnb, the company has kept its scale purposefully smaller since it launched in 2010, with approximately 2,600 properties globally. By comparison, Airbnb has more than 2 million listings worldwide in more than 34,000 cities. Onefinestay also has a rigorous acceptance process for the apartments and homes that belong to its network, and it takes a very hands-on approach in vetting the properties.

That scaling strategy will change under AccorHotels, and that's one of the primary reasons why Marsh and his team agreed to the acquisition. "The crucial feature of this deal with Accor is that it gives us the capital and strong strategic commitment from Accor to support our marketing and distribution," he said. "The key things for us are to make sure more people are aware of Onefinestay and that we continue to increase the profile of the business and increase the rate with which we attract new customers, especially luxury customers, which will be a huge game-changer for us."

AccorHotels acquired Onefinestay for $168 million but Marsh said AccorHotels will invest an additional $77 million in marketing and sales support, as well as expanding Onefinestay to 40 new cities over the next few years. Marsh will remain CEO of Onefinestay and will become a member of AccorHotels' board. Onefinestay will keep the same management team and employees as it operates autonomously within the AccorHotels group, Marsh said.

For the past nine months, Marsh and his team have been in discussions with "the CEOs of most of the major hotel companies" and other travel businesses about potential partnerships, but he said AccorHotels' strength in the luxury market and deep commitment to growing Onefinestay made it stand out from other suitors.

"With the addition of the Fairmont, Raffles and Swissotel brands, they are now one of, if not the, preeminent luxury hotel group globally, and we'll be speaking to their customers," he said. "There's a clear strategic commitment and conviction of the CEO of AccorHotels and his team. They are willing to put their money where their mouth is, and they really want to support the growth of Onefinestay's business as it continues on its journey."

Within three months or so, Bazin said customers will be able to book a Onefinestay accommodation via AccorHotels.com and that later this summer, the loyalty program will be added so that LeClub AccorHotels members can earn and redeem points through Onefinestay.

Ultimately, Bazin said he wants to "make Onefinestay the unbeatable world-class operator in this space, luxury service home rentals in the top 40 to 50 cities in the world." With the addition of more than 320 million unique visitors from the AccorHotels.com site, as well as AccorHotels' scale, speed, complementary businesses, distribution, and loyalty program, he thinks it's a win-win for both entities.

On the other hand, AccorHotels will have to be cautious about whether or not Onefinestay bookings will dilute or be accretive to the company's earnings.

"It's evident Onefinestay has the capacity, with speed and skill, to be the dominant player when it comes to luxury home markets in those 40 major cities," he said. "It's just a matter of power, dimension, and discipline, and since Accor is already global and present in those top 40 cities, it's much easier and there's less risk of execution for us to expand together."

This Is Just the Beginning

AccorHotels' deepening entry into the sharing economy is "an idea whose time has come," said Marsh, and we can expect more strategic acquisitions of alternative accommodations providers from AccorHotels and its competitors going forward.

Onefinestay is just one piece of AccorHotels' strategy for infiltrating the sharing economy. On February 18, Accor acquired a 30-percent stake in Miami-based Oasis Collections, which has approximately 1,500 listings in 18 cities throughout Latin America, the U.S., and Europe, including New York, Miami, Barcelona, and Paris. Its accommodation-sharing model is unique in that it offers the amenities of a traditional hotel such as a 24/7 concierge who welcomes guests in each of Oasis Collections' destinations and caters primarily to corporate travelers.

On the same day AccorHotels announced its investment in Oasis Collections, it also disclosed that it had purchased a 49 percent stake in Squarebreak, a French startup launched in 2013. Squarebreak co-founders Hugues van Heesewijk and Maxime Lesaulnier, both of whom have a background in the hospitality, e-tourism, and real estate businesses, debuted Squarebreak as a platform for high-end vacation rentals in Europe.

Bazin says all three investments are complementary and to AccorHotels' global portfolio. Whereas Onefinestay appeals primarily to leisure travelers staying an average of seven nights in an urban destination, 70 percent of Oasis Collections' business is for corporate travelers staying an average of 22 days. Squarebreak, he said, offers secondary villas found on the shores of Greece, Italy, Spain, and France where guests will stay for a month or more.

"That same guest will be booking a vacation home on Squarebreak, may stay in a business hotel for work, and may spend eight days in New York with Onefinestay. And for their corporate needs, they may think about Oasis Collections," he said. "Whether our customers are traveling for business, leisure, or for a certain average length of stay, we will find a home for them."

Bazin said he eventually plans to bring the teams of each of the companies together to meet to talk increased synergies and strategies. "I'm going to be introducing the Onefinestay team to the Oasis Collections and Squarebreak teams because even though they work in different business models and they need to keep it that way, I'm sure there is a lot of learning we can be able to build together."

He also hinted at the possibility that Oasis Collections and Squarebreak may eventually be added to AccorHotels' distribution channel, but he said, "We have to sit down with the other shareholders of the other companies and assess, together, what is the right timing and whether it's the right idea. It will be made available, but probably at a later stage."

"I think Accor is ahead the curve," Marsh said. "They're being bold and showing a strong, strategic conviction in taking this step with us. Other hotel companies and travel businesses will have to react. We will see other significant innovations and changes in this sector of travel. Much more will follow in the footsteps of this announcement."

What About Hyatt and the Other Hotel Companies?

Other hotel companies are keeping close watch on alternative accommodations and sharing economy platforms, too, although none have made as deep a commitment to them as Accor has.

In February, Choice Hotels International CEO Steve Joyce told Hotel News Now that the company is planning to allow third-party vacation rental management companies to rent directly to consumers on its own platform. Last year, it was also rumored that Marriott may have been considering a partnership with Airbnb that would create some sort of redemption program for its Marriott Rewards members.

This also isn't the first time Onefinestay has partnered with an established hotel company. Last spring, Onefinestay revealed that Hyatt Hotels & Resorts had become an investor during a recent $40-million funding round, although it did not disclose how much Hyatt invested.

Following that investment, Hyatt and Onefinestay piloted a program together in London whereby Onefinestay guests could store their bags or temporarily use the guestrooms the the Hyatt Regency London – The Churchill while they wait for their Onefinestay vacation rental to be available for check-in. In July 2015, Marsh described the Hyatt pilot program to Skift, saying "The game here is about exploring. The opportunity here is recognizing this is a new type of activity and trying to understand it and meeting guests' needs as best we can."

Following news of AccorHotels' acquisition of Onefinestay, Hyatt CEO Mark Hoplamazian issued the following statement:

"We wish our friends at Onefinestay continued success. We have learned a lot about their business and this segment in our work together. As the hospitality industry continues to change and evolve, so does Hyatt. Our 'test and learn' approach, including our investment with Onefinestay and our exploration of other alternative accommodation platforms, underscores our focus on understanding our guests and providing them with distinctive, powerful experiences. Hyatt remains committed to a thoughtful growth model that benefits guests, owners and shareholders."

Hyatt will be selling its shares of Onefinestay to AccorHotels. A spokeswoman for the company said, "The great thing about Hyatt's business model is that we have flexibility to be nimble, to learn by experimenting and collaborating, to make decisions, and to explore different accommodation models, among other things."