Accor Just Restructured the Company in the Middle of a Pandemic: Why Now?

A corporate reorganization at Accor pushes some power away from corporate headquarters and leaves the Paris-based hotel company without four of its top executives, according to an internal memo sent this week by the company’s CEO Sebastien Bazin.

The restructuring calls for eight geographic hubs around the world while maintaining a central office led by Bazin.

The corporate overhaul at Accor, owner of brands like Sofitel and Fairmont, comes as the global hospitality industry grapples with how to adapt business models during the worst year for travel due to the coronavirus pandemic.

“A key principle has guided our organizational choices: always focus on the Group, its long-term future, its development, its strengths and its ambition,” Bazin wrote in his memo to Accor employees. “This principle was essential to finding fair and honest answers to simple questions: what are our weaknesses and how can we remedy them?”

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Bazin did not indicate in the memo if the restructuring was tied to a previously announced $235 million cost savings plan. That initiative entails eliminating 1,000 jobs and a potential sale of Accor’s $430 million Paris headquarters.

Accor’s priorities going forward are “focus, simplify, and expand,” Bazin wrote.

The focus element calls for close proximity to owners and clients and is tethered to a new office model where eight geographic hubs around the world will replace the current five-region structure.

The European region will be split into Southern European and Northern European hubs. The Asian-Pacific region will be spread across new hubs for Southeast Asia, Greater China, and the Pacific, which includes Australia and New Zealand.

The restructuring, effective Oct. 1, also calls for the departures of Accor Europe CEO Franck Gervais, Asia-Pacific CEO Michael Issenberg, Food & Beverage and Lifestyle CEO Amir Nahaï, and CEO of New Business Thibault Viort.

Food and beverage operations will be managed by each individual hub, therefore eliminating Nahaï’s role.

Gervais, Issenberg, and Nahaï are expected to remain in their roles until the transition to the new corporate structure is completed.

Bazin hinted at the need for closer ties to individual owners earlier this year during a New York University webinar, especially as hoteliers rely heavily on localized marketing strategies during the travel industry’s recovery from the pandemic.

“You’re going to de-nucleize much further to your local management teams in countries because they know the market better, they know the owners better, and they know the clients better,” he said in June. “It’s a time to be bottom-up rather than top-down as an organization.”

The simplify element of the reorganization greenlights more operational responsibility at the local level while the expand component focuses on future growth. Accor is also creating independent divisions for the ultra-luxury and lifestyle segments, areas Bazin noted as “high potential segments.”

The company has moved forward with global expansions of its Raffles and Delano luxury brands, even during the pandemic downturn in travel. The luxury sector in one of Accor’s key markets, China, has even outperformed lower-tier market segments in terms of occupancy in recent weeks, according to STR.

Accor’s corporate shake-up comes after months of turmoil for the world’s largest hotel companies.

Marriott plans to lay off 17 percent of its corporate headquarters staff, according to a labor notice filed in Maryland. Hyatt laid off 1,300 employees in May. Hilton eliminated 2,100 roles, or about 22 percent of its corporate workforce, in June.

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