Like the other big hotel companies, Accor thinks it has gaps in its portfolio it needs to fill. Let's see if guests feel the same way.
Hot on the heels of Accor’s announcement of a new midscale brand, Tribe, comes another addition to the French hospitality company’s portfolio.
Through its 50 percent stake in SBE Entertainment Group, Accor is launching a luxury lifestyle brand called The House of Originals, the company announced Tuesday.
Both of these launches are not quite as they seem. Tribe is technically an acquisition of an Australian modular hotel company (Accor declined to give a price) and The House of Originals is a tweaked name of the Originals, which SBE picked up when it bought Morgans Hotel Group.
The new soft brand will start out with just four properties — the Sanderson and St. Martins Lane in London, 10 Karakoy in Istanbul, and the Shore Club in Miami Beach — but Accor has five more in the pipeline.
“The lifestyle market continues to grow rapidly and has one of fastest growth rates in the industry. Accor has had very strong acceleration in the lifestyle sector and now offers the widest portfolio, with 10 brands to be developed internationally from economy to luxury,” said Gaurav Bhushan, chief development officer at Accor.
New Loyalty Program
Accor obviously thought it needed a couple more hotel brands to fill in the gaps in its portfolio, especially with its new loyalty program, Accor Live Limitless (or ALL) on the way.
“It was time to put all the pieces of the puzzle together,” said CEO Sébastien Bazin at the International Hotel Investment Forum in Berlin on Tuesday.
Bazin’s masterplan is to have members use their points not just at hotels but in restaurants, health clubs, and co-working spaces, keeping them tied in to the Accor ecosystem for a much longer time than is usual for a travel or hospitality company.
Bazin said Accor only generates around $6.8 million (€6 million) from partnerships, a much smaller figure than the other big hotel companies and the new scheme would help to redress that balance.
“[If] you want to have partnership revs with credit cards with airlines, with food retailers, with [the] telecoms industry you need to have a program on the ground which is visible, notorious that people use, so that relaunch is to increase partnerships increase stickiness, increase usage of it, increase simplicity and its going to fly,” he said.
Under Bazin, Accor has completely redefined itself moving from a company mostly focused on midscale hotels to a diversified travel and hospitality business. It has bought or invested in tech companies, events specialists, alternative accommodations providers and a concierge service.
This strategy, however, is yet to convince everyone. The company’s share price has been up and down under Bazin and is in the midst of a year-long slump with the financial community seemingly not quite on board with the plans.
“[My] investors still don’t understand it and they believe it is [a] distraction and my peers — InterContinental, Marriott, Hilton — have done very, very few of them and they stick to core competencies and free cash flow and so far they are better off. I’m doing it because I believe it is part of the future,” Bazin said.
Given, Accor’s history and given the grand plans for its loyalty program we should expect more deals, and more investor befuddlement, in the future.
Photo credit: The Sanderson in London. The hotel is one of Accor's new House of Originals properties. SBE