Skift Take

Accor is staying busy with brand rollouts and expansion into newer sectors like all-inclusive resorts, but make no mistake: This is all about elbowing out the competition to win over luxury customers.

Series: Early Check-In

Early Check-In

Editor’s Note: Early Check-In, Making Sense of the Week in Hotel Deals & Development: First thing every Monday morning, hospitality reporter Cameron Sperance brings readers exclusive reporting and insights into hotel deals and development, and how those trends are making an impact across the travel industry. Start your week by being smarter.

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Accor’s second major growth push announced in less than a week is yet another reminder company leaders see a lot of its future coming from high-end customers.

The Paris-based hotel company plans to raise the stakes significantly on its all-inclusive resort portfolio, currently centered around the Rixos brand but on track to swell to five other brands, Skift has learned.

Rixos along with Fairmont and Sofitel will comprise Accor’s luxury all-inclusive resort collection while Pullman, Swissotel, and Mövenpick will be the premium offerings for all-inclusive resorts. The five newer brands to this space will still encompass traditional hotels along with their new all-inclusive function.

Accor is the latest major hotel company to put more chips into the all-inclusive sector. Hyatt, Marriott, Wyndham, and Hilton all ramped up their own all-inclusive offerings earlier this year. Hyatt’s recent $2.7 billion Apple Leisure Group acquisition gives the Chicago-based hotel company significantly more room in Accor’s backyard than it ever had before — and a significant chunk of that acceleration comes from all-inclusive resorts.

Most all-inclusive operators have some level of a high-end offering. But Accor’s all-inclusive strategy is the latest chapter in its ongoing concentration toward upscale brands, playing out recently with its lifestyle hotels and a new luxury soft-brand. This push into all-inclusive resorts isn’t meant to be a Sandals copycat.

“Our focus is very strongly in the premium and leisure segment,” Gaurav Bhushan, CEO of Accor’s lifestyle and entertainment division, told Skift. “Over the long term, the market will decide the successful and the leaders versus the also-rans.”

The decision to tie future all-inclusive resorts to six of Accor’s hard brands is different from Marriott, which is tethering its own all-inclusive expansion to the Autograph Collection — a soft brand that enables an operator to tap into a hotel company’s loyalty and distribution networks without the standardization of a brand like Sofitel. 

“A hard brand stands for something. It’s got a very clear concept,” Bhushan said. “These brands are quite strong in each of these markets, and they resonate well with the customers in these markets.”

Where It All Began: Accor’s planned ramp-up will build upon Rixos Hotels, the Turkish hotel brand it first partnered and invested with in 2017. Rixos — overseen by Fettah Tamince, the brand’s founder and chairman — is a leading all-inclusive brand in Turkey, the Middle East, and Central Asia. Accor’s all-inclusive hotel revenue tripled in the last five years thanks to Rixos, a company spokesperson told Skift. 

The company’s current all-inclusive resort portfolio encompasses 24 hotels with more than 10,000 rooms combined. An additional 26 hotels, with roughly a combined 14,000 rooms, are in the development pipeline. Bhushan estimated Accor can eventually swell to 100 all-inclusive resorts “over the next few years, no doubt.”

For perspective: Marriott’s all-inclusive push earlier this year puts it on track to eventually have 33 resorts, making it one of the ten largest operators in the sector. 

Accor’s geographic targets include Europe, the Middle East, Africa, Asia, Central America, and the Caribbean. Accor leaders expect the acceleration into its new all-inclusive brand offerings to be swift, with the first non-Rixos resorts expected to open next year. 

Company leaders weren’t ready to provide details on those properties, but they maintain this is not an entirely new venture for Accor. The work began five years ago with that initial Rixos link-up.

“It’s just a logical next step to build this and take this to a global platform, with global reach and go from one to six brands, taking the expertise that Fettah has over 20 years of developing all-inclusive resorts and partnering with him,” Bhushan said. “He brings to us all the product knowledge, all the sales relationships, all the know-how in operating all-inclusive resorts, and we provide a scalable platform to go out and do this on a worldwide basis. We started this journey five years ago. This is not new.”

Prestige in the Product: What is new is just how cutthroat the world of all-inclusive resorts has become in just a few short months. 

“What [has been happening] in the U.S. or Mexico or Caribbean, I will not exaggerate, is what we did 15 years ago,” Tamince said of his competitors.

Most of the major hotel conglomerates had some degree of an all-inclusive presence before this year, but it was typically limited to just a few resorts. This was generally a sandbox left to players like Sandals, Club Med, and the pre-Hyatt-owned Apple Leisure Group’s AMResorts.

Suddenly, Marriott, Wyndham, Hyatt, and Accor are duking it out for all-inclusive resort customers just as they do in their traditional hotels. IHG’s new soft brand also has the possibility to include all-inclusive resorts.

The significant expansion seen in recent months is indicative of greater leisure travel trends seen during the pandemic as well as upside potential recognized before the crisis. It also provides some reputational upgrades analysts view as a long time coming for all-inclusive resorts. These properties aren’t just for honeymooners or Spring Break crowds, the thinking goes.

“If you look at past, all-inclusive resorts came in with a cheap product or budgeted hotels,” Tamince said. “We have created a lifestyle atmosphere where the hotel was totally opposite.”

Keep in mind: Major hotel companies aren’t entering the all-inclusive resort sector just because they want to improve its reputation. There is massive upside potential in providing customers with this kind of offering. 

Nearly 1,500 all-inclusive resorts in the first half of 2019 racked up nearly $8 billion in sales — 20 percent growth in five years, according to STR data used in a Skift deep dive earlier this year.

One area the Accor-Rixos partnership aims to differentiate from competitors is the extensive programming resorts offer to children, from educational offerings in tech to more of what one might expect like water sports or painting and cooking.

Obviously, there’s a business slant to this, too. 

“We want [our customer’s] kids to be with us at least for the next 10 to 15 years,” Tamince said. “Actually, our target is to have their kids become our customer. When we are doing our kids programming, it is all about how to engage them in the coming years.”

A New Hotel-Branded Residence

Standard International’s desired push into branded-residential developments is becoming a reality.

The hotel company plans to debut its first condo project in Miami, the Real Deal reported. The planned 228-unit project is likely to be the first of several residential offerings for Standard.

The company has previously hinted residential projects, both standalone and attached to a hotel, were under consideration.

“People have more free time, and they have more time to be home because they’re not commuting,” Standard International CEO Amber Asher told Skift earlier this year. “So, we are thinking about it through that lens of what that will be for the next generation of young people and people that are moving to cities and the shift of all that.”

Hotel-branded condos have typically been attached to luxury brands like St. Regis and Ritz-Carlton and generally attracted older buyers. But analysts and executives in recent years have seen potential in courting younger buyers with hipper brands.

“Brands like us bring something new to the table to the younger, second, or third generation developers who may not want to go with a legacy brand,” SH Hotels & Resorts CEO Raul Leal told Skift earlier this year.

Omicron Watch

We’ll obviously be watching this week how the hotel sector responds to the surge of cases tied to the new Omicron coronavirus variant first detected by scientists in southern Africa. Countries around the world enacted travel restrictions on international arrivals from eight countries, including South Africa. Travel stocks tumbled, with Marriott and Hilton each down more than 6 percent.

While Omicron is of notable concern, these are still early days.

The Delta variant is likely to be the industry’s go-to comparison in coming weeks, and it should be pointed out all the major hotel companies on recent third quarter earnings reported minimal, if any, lasting impact in bookings from that variant. August bookings softened before stabilizing in September and then returning to growth mode last month.

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Tags: accor, all-inclusive resorts, coronavirus, coronavirus recovery, Early Check-In, hyatt, marriott, Skift Pro Columns

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