Accor Still Keen to Find Investors for Its Software Business Despite Pandemic Fallout

AccorHotels years ago rolled up tech vendors to create a technology services company for independent hoteliers called D-Edge. But Accor Chairman and CEO Sébastien Bazin told investors on February 20 that he wanted to find external partners to co-own the software provider.

Then along came the pandemic and all those plans screeched to a halt. Now D-Edge finds itself struggling along with the rest of the travel industry. And Accor’s coveted tech play may stay within the hotel giant’s fold for now until the hotel market shakes out from the damage delivered by coronavirus.

It’s certainly a complete turnaround from when Bazin was touting D-Edge earlier this year. “We’re going to give a bowl of fresh air to D-Edge, where you’re going to have third-party coming in, likely private equity or industrial operating companies providing funds and acquiring either 40 percent, 35 percent, 60 percent,” Bazin said.

“I want Accor to remain as the big industrial strategic partner,” Bazin said. “But I don’t want to be the one putting back more capital into D-Edge because we’re not the best partner for them to grow faster.”

But of course the onset of the pandemic in Europe has delayed Accor’s sale of a stake in Paris-based D-Edge. The subsidiary provides central reservation management software, customer relationship management software, and other services. More than 11,500 hotels covering more than one million rooms use its tech.

“D-Edge is a remarkable technology platform, rendering a lot of services on behalf of independent hotels, helping them to assess the best channel for distribution, [create] the best website, [use the best property management system, [find] the best way of acquiring search words from Google and others,” Bazin said.

D-Edge grew out of Accor’s acquisition of tech firm Fastbooking in 2015 and Availpro in 2017.

D-Edge expanded its revenue at about 15 percent a year over four years to about $55 million (about €50 million) last year, said Pierre-Charles Grob CEO of D-Edge. It generated earnings of about $5 million a year, he said.

Left, CEO of D-Edge Pierre-Charles Grob at a Singapore event. Source: D-Edge.

The pandemic will throw off this year’s revenues and earnings projections. But Grob is optimistic about gaining share in the medium-term.

“We’ve excelled with smaller independents, but we are moving up the scale chain to address the sweet spot, which is hotel groups with about 100 to 150 properties,” Grob said.

He believes that while hotel groups may be slow to bring back full-time employees during the crisis and will want to outsource some of their tech to streamline some of their processes with automation to cope.

One of D-Edge’s strengths, Grob said, is its connectivity with other systems that hoteliers use, such as more than 150 property management systems.

“You don’t build connectivity overnight,” Grob said.

Intriguingly, Grob said D-Edge would likely add a service or two to its portfolio of services to fill in gaps and become more appealing to hotel customers. But he declined to provide details.

Looking for Investors

Finding outside investors isn’t always easy. Choice Hotels tried for years to find an outside partner for its hotel tech services unit SkyTouch, to no avail.

Parent company Accor announced in January it had signed a deal to be the first customer of a unified central reservation system and property management system that Sabre is building. That raised the idea in some minds that Sabre might become a partner in the separate D-Edge effort, too. But the crisis has delayed Accor’s participation in Sabre’s project, and Sabre seems focused on its own services in the near-term.

Sabre already competes, in a sense, with D-Edge in that it also offers a booking engine, a customer relationship management service, and some channel management services.

Amadeus’s TravelClick also offers those above services plus, like D-Edge, automated marketing, and some pricing intelligence.

Other competitors with some overlapping services with D-Edge include Shiji Group and Pegasus.

Companies whose services are more complementary include SiteMinder, Oracle Hospitality, and Infor.

Booking Holdings and Expedia Group have both dabbled in offering some enterprise software services for hoteliers. But their offerings haven’t been blockbuster successes, with Booking Holdings shutting down its revenue management service last month.

The online giants have struggled in hotel tech partly because some hoteliers are skeptical about the intentions of the online travel agency groups, experts said. Half of the reservation revenue for European hotels in 2018 came from Booking.com and a fifth from its competitor Expedia, D-Edge said.

Given the crisis, the online agencies might take even more share this year despite no apparent cuts in commissions unless they embrace metasearch channels more effectively, D-Edge said in a report last week.

No word yet on when Accor might sell a stake in D-Edge to an outside investor. The pandemic has overturned the hotel tech market. So a surprising new cast of potential investors might come forward to join the usual suspects.

For more context, subscribers to Skift Research can read the report The Hotel Property Management Systems Landscape 2020. While D-Edge doesn’t provide a property management system, and Grob claimed it has no interest in doing so, that system forms the core of a hotel’s tech stack and is critical to understanding how other services fit in.