Skift Take

Accor is focused on setting itself apart by offering more than just a place to stay. Jean-Jacques Morin, a top Accor executive, discussed that and more at the Skift Future of Lodging Forum.

Jean-Jacques Morin, a top executive at Accor, said the company is committed to growing its “augmented hospitality’ offerings and incorporating sustainability into its business strategy.

That means moving beyond just providing hotel rooms to offering unique experiences plus richer food and beverage options.

Morin spoke with Skift Senior Hospitality Editor Sean O’Neill at the Skift Future of Lodging Forum in London on March 29.

Morin is Accor’s group deputy CEO, group chief financial officer, and CEO for the premium, midscale, and economy division.

Morin discussed the strong demand in the hotel industry, highlighting growth in the Middle East and Africa, as well as China. He attributed the demand to a shift in consumer spending towards experiences and noted the experiential transformation of the hospitality industry.

In summary, Jean-Jacques Morin believes Accor’s success is due to staying ahead of industry trends, focusing on customer value, and offering unique experiences.

O’Neill: Jean-Jacques, thank you for joining us here at the Future of Lodging event in London. We’re grateful to have you.

Morin: Thank you. Delighted to be here.

O’Neill: So last year you were named the best chief financial officer in all of France, across all industries. So congratulations for that.

Morin: Thank you.

O’Neill: I think if people here had one question that they could ask the chief financial officer of a major hotel group right at this moment, it would be is demand staying strong? So it’s been about a month since you reported. Is demand staying strong?

Morin: Yes. I mean, first off, you may wonder why I’m not staying in finance and you’ve got the answer. I cannot do much better so I have to try something else.

But candidly, I’m delighted to be able to move in the battle because that’s really the way I look at moving in operations, which is getting to the case.

And in Accor, it’s extremely true that we’ve got gold in our hands and we just need to be able to transform it. So that’s what I’m going to try to do.

The demand again, I’ve got two hats. One is the CFO, and the other one is the business guy. As a CFO, I do not believe it. As a business guy, I’m a delighted man.

I mean the demand is incredibly strong again in January and February. I’m not telling you anything you don’t know. I mean there are enough statistics in the industry to be aware of that, but what is amazing is that it’s strong across the board.

I.E., in our case last year we had an amazing year in the Middle East and Africa. Middle East and Africa we had [RevPAR, revenue per available room, a key industry metric] which was north of 50% last year.

But there were some good explanations for it. There were two big events. One was the Qatar football cap and the other was the Dubai International Convention.

Despite that, I am better this year than I was at the same point last year. So I think the only rational explanation that we’ve been going through is that that pent-up demand is still being fueled by money that people have been putting aside.

Just came back from China, which is one of the places that I’m so glad that I can visit again. And so as soon as it opened. And Gary, our CEO from China is here, Gary Rosen. And when I went there, I was amazed because, from all the forecasts we could do, we are way off. I am way off where I think China can do and when China does it, then the rest of Asia will do it.

There was a number quoted by the management team then, which was that there is a statistic that says that the GDP of the UK is the equivalent of the money saved by the Chinese during the last two or three years.

So there is quite a lot of money to be spent, and I think you’re going to find out the same phenomenon as what we’ve seen first for the U.S. but then for Europe.

So again, if I look at what I have in my hands, it just portrays what I said. If I look at what’s going on around in the world, I’m quite glad to be in London today and not to be in Paris.

O’Neill: We understand. So you mentioned you have your two hats. From the one hat, it’s hard to believe it and the other, it’s not.

And what I’m hearing from you is as China comes back with international outbound tourism, that will give another pent-up savings demand that will continue to give you momentum.

Morin: Yeah.

O’Neill: Do you believe though, that in the past five years that Accor has gotten better at pricing power,and it’s gotten better at being able to extract demand from the market, or that consumer behavior has sort of changed or is moving away from material goods experiences in some way so that you’re at a new higher level for long term?

Morin: I would love to be able to tell you that it is because of my action that you see it, but I think it would be unfair. I think as a company we’ve got much better at revenue management, we’ve gotten more advanced.

I was just hearing about AI-driven pricing tools, so that helps in fact certainly being better at decision-making. But the reality of it is the fact that this experiential transformation of the business that has been talked of for many, many years has now become real.

And I think COVID, from all the bad things that it brought, has just accelerated that dimension and you see it every day. We’ve got a [joint venture] part of a business, which some of you may know, which is called Ennismore into which you got brands like SLS, Hoxton, 25Hours, 21c, all kind of brands throughout the world.

And this business has been doing amazingly well because people are looking not for a bed, and not everyone, but some people are not looking anymore just for a bed. They’re also looking for some kind of social habit really, which is mixing up with the local people, getting some good food, getting some entertainment around it.

We just opened the Delano Hotel in Paris last week, if you want to get there. See it’s an amazing place and that is what you call experiential hoteliere. And this is where people are less buying things and much more getting experiences.

I think that’s one thing that is occurring. And candidly and more generally, you see pressure on prices in other parts of the world. So for example, if you are distributing goods like retailer Carrefour, you can really sense the fact that some people are hit by inflation and so look differently at how and where they spend money.

But I think in our world, there are some analyses that show that the share of wallet of what people are ready to spend is much more geared towards experiences and much more geared towards spending time in hotels.

So how deep is it and is it going to stay past COVID is the question everybody is asking themselves. But I think this share wallet thing has shifted and will not come back to where it was before. People value other things post-COVID in the way they want to basically get through life.

O’Neill: Okay. I think it’s very interesting about the share of wallet having shifted away for the kinds of people who are coming to some of the kinds of properties that Accor has.

Yeah, I think it’s a good cue for us to call a video which sort of captures Accor’s sense, because you talked about experiences and emotions. These are things that, part of your “augmented hospitality” concept, which echoes a little bit what my colleague Varsha Arora [of Skift Research] was talking about a moment ago … She refers to it as hybrid hospitality.

So as you see here, part of what Accor has been doing in the past seven years with augmented hospitality is you’re moving away from just putting heads in beds, just being a factory for hotel rooms. And it is about trying to meet customers where they live, work, and play.

It is about, so you’ve made some purchases, last year you took full control of Paris Society, which is a nightlife and event venue and leading one in France. You took over a co-working space provider, Wojo, which is the second-largest co-working company in France and you have that.

You just have Orient Express Silenseas, which is your new… You’re taking to the water now. So you’re taking hospitality into a very different context.

So I think it’s part of this move. You’ve done, Jean-Jacques, for seven years you’ve been with Accor, you’ve done about €12 billion of transactions, I believe.

Morin: Yes, that’s right.

O’Neill: And so there’s been two actions with that. One has been filling out the brands. So you’ll have a brand where every one needs. You now have more hotel brands than anyone else, any other hotel company, in the world. So you meet the customers if they need business, leisure, economy and all the different geographies. So that’s one of your goals.

And the other has been augmented hospitality. So with augmented hospitality, at what point is this just a marketing talk and at what point is it actually non-room revenue is going to be a significant driver for Accor?

So do you have a goal by, say, 2030 a quarter of Accor’s income is going to be not from traditional hotel rooms or 50 percent is not from traditional hotel rooms or…?

Morin: Yeah, you need to again put things in perspective. It is true that this is a new challenge granted that this is only a hundred hotels today. So this is-

O’Neill: So a hundred hotels?

Morin: A hundred [out of 5,000] of our hotels are what you call lifestyle. These are way different animals. They make three, four times more fees than any of our other hotels. And the reason for that is what you kind of explained, which is that you’ve got a very significant and rich F&B [food and beverage] dimension to it.

So 50 percent of the turnover that I would do in the hotel is F&B. This is much less in the rest of the business and it is a rich F&B, i.e., an F&B that makes good margin.

And so I think the contribution is very significant to the bottom line, but it’ll always remain something of a different nature.

Some people still want to travel and get a room which is standard in a place which is standard with a breakfast which is standard, to do their standard job. And then after that when they go on weekend they may want to get something less standard in their life and they may go to one of those higher level properties.

So I think there is a trend here which is not going to change, but just to be fair to everybody around here, it is based on a springboard which is the core business.

Nevertheless, the trends that you see and the capability to expand the experience of the traveler are not going to stop. I think we’ve really tried at Accor over the last couple of years to not look at the guy as somebody who was going to stay in a room but accompany him throughout his journey.

And the fact that we went and as part of the JohnPaul acquisition, for example, there was something around concierge, as part of the AvailPro acquisition, there was a [technology and marketing company we now call] D-Edge, which is very much versed into technology and is able to provide some features that we could adapt into our own systems to make it-

O’Neill: So just to pause there, so D-Edge is your tech company and you use it as a client for your central reservation systems and a lot of tech, but you also offer it out as a service to other hoteliers.

Morin: Yes. You’re absolutely right. I should have said that. It’s mostly managing our CRS.

O’Neill: The Central Reservation System.

Morin: But it’s a company that has many, many skills and notably an immense skill in a world which is to be able to create API with all kind of environments.

So you can basically connect an effective solution with properties in any place of the world, PMSs [property management systems] in any place of the world, and so there is an immense value.

And the fact that they [D-Edge] get 12,000 external hotels in their business portfolio on top of the 5,000 plus that they get with Accor.

But we’ve tried to do that and in fact going onto the sea, and you did not mention the trains with Orient Express, is in fact another way to continue that journey of making sure that we offer to people things that they may not have even dreamt of.

And part of the battle that we went through over the last years with the direct business, the importance of loyalty, was also to make sure that people were finding into the brands things that were basically surprising them.

And so we’ve been really working hard at that and the move that we did on lifestyle way before anybody else in the industry. Today everybody talks about lifestyle. A couple of years ago people would say it’s not even a segment. And a couple of years ago is probably three years ago, so it’s not so long ago.

And so I think by being always at the forefront of what you can offer in terms of experience, we’re going to create a differentiating perception of what the company, of what the brands are. And this is what customer value is and that’s exactly why they go to see you because they know they’re going to get something different.

Just the Orient Express, it’s only two trains, so it’s not a lot of trains, but it’s a journey that you cannot even imagine. It’s something which is just from another world.

It’s going into those old times from the beginning of the century and crossing Europe. It’s something which again, if you are versed in those kinds of experiences, it’s unique. The boat is the largest sailing boat in the world.

O’Neill: So this is a boat that’s going out in 2026?

Morin: Yes.

O’Neill: And it’s a new private yacht-style experience.

Morin: So it’s the largest sailing boat in the world. We are not going to own it, we’re going to operate it. Right? Because we are in the business of managing. The fact that people spend time on the boat. We’re not a boat company, but it’s a 220-meter boat…

And so it’s again something that is unique and the boat by itself is in fact very much ESG compliant because it’s a sailing boat. It’s three rigid sails, and when there is no wind, then you use hydrogen.

So there is an element also of it, which is the recognition by Accor that ESG is an extremely critical component to incorporate into the way you develop the business going forward. And that will be one of the champions of showing how much we care and what we do for that.

So I know it’s a lot of information, but in the end what matters is not so much the detail of all the information which is shared, than the direction which is taken and the spirit in which the group is moving forward and has been moving over the last years.

Morin: We don’t want to be the standard US corporation, I hope there is nobody-

O’Neill: You don’t want to be the standard U.S… sorry?

Morin: No, we are different. We’re European.

O’Neill: European, you’re European, not like the U.S.-based companies. What are your three priorities over the next five years? It’s asset-light… Finish the move to asset light.

Morin: Yeah.

O’Neill: In May, you’re leaving the chief financial officer role. You’re staying as group deputy CEO. And then you’re becoming the CEO of the premium, mid-scale, and economy brands.

Morin: Yes.

O’Neill: So what is the purpose of that reorganization? Is one of the potential advantages that by making that split where you have lifestyle and luxury in one place and premium, midscale, and economy in the other, that a couple of years down the line you would have the option to split the company? Is that one of the potential benefits or…?

Morin: You have a financial background?

That’s what I get from every investor. No, I mean clearly, no. I cannot say it more clearly.

I think is it an optionality that you create when you create two divisions that you make it something which is more capable of being split? Obviously, but this is not at all the intent.

I talked to you about the fact that the company has changed a lot, and you mentioned one dimension, which is the asset-light and I mentioned the other one, which is getting more into luxury.

I think what we’ve got today is we’ve got a lot of brand, more brands than anybody else. We’ve got 43 brands in the company. And the realization that we’ve made with the board, with Sébastian, is that we now need to reap the benefit of it. And in order to heap the benefit of it, what we’ve been thinking through is that we needed to be more focused.

We’re trying to ask everybody to do everything, which is never the right answer to resolving an equation. You want people to be more focused, more focused means what? It’s difficult for someone to deal at the same time with the development of an Ibis and the development of a Raffles. It’s not the same owner, this is not the same timeline, this is not the same customer, this is not the same requirements — nothing is similar.

We’ve been specializing the team over time, and we want to move it to the next level. Moving it to the next level means that you create two divisions. Now one division will be the premium, midscale, economy and will be kind of the “old Accor,” if you will. The historical Accor. Accor was born on Novotel, it was born on Ibis, it grew and then it acquired Sofitel.

But it’s fundamentally a midscale and economy DNA that you’ve got in the company, and it’s a very rich DNA. I mean, 80 percent of what you will open in a year is midscale and eco[onmy] in Accor today.

And so we want some people to focus on that, and they will be organized by region just like it is today. And they will be very much focused on scale, i.e., the business model that you are into when you do midscale/eco/premium is a business model into which you always push the top-line and compress the structure so that in fact you drive an increased profitability to the bottom line. That’s what everybody does in the industry.

Then we’ve got something which is the lifestyle and luxury. And we’ve realized that managing them by geography doesn’t work. What you want there is you want what the luxury brands would call Maison. It’s the Maison if of LVMH if you will..

O’Neill: So like fashion houses have a head leader.

Morin: The Gucci of this world, The Chanel, the Dior, many, many of those brands are part of the same group, except that nobody really knows that they’re part of the same group — unless if you get interested in understanding that.

And by the way, LVMH has got 80 brands just to put it in perspective, they don’t communicate one with the other one. So it’s a model that absolutely works because it’s been pushed through for many, many years.

And by doing that, you really put back the focus and the onus on the brand. And to sell a property at, you know, €1,000, €2,000, whatever is the price [per night] … You really have to be able to get something which is unique, different and that the people will understand as being the better value proposition.

And so in order to do that, you will have a focused teams by brands that will provide that tailored experience.

O’Neill: That’s something that I heard last night when I was talking at the opening night reception with some people. We were talking about it’s so important in luxury and lifestyle that there’s a leader. That the brand is not too big, it’s not geographically structured, like you say, it’s much more led by a thinker.

I’d like to move on to your special purpose acquisition company. I think by June 1st, you have to announce a merger target, or else you’ll have to give the money back to investors. Is there still hope that you’ll be able to find a target and announce a target?

Morin: Listen, it’s not really something which is decided at this time. Because if I were decided on that, I should make a statement. It’s a publicly traded company.

But you see the direction that the SPACs have been taking. And so I think we will probably follow what the general direction has been on SPAC, but I cannot state it formally because it’s a traded public company

O’Neill: And so one of the new things that Accor recently re-launched in the past month or so is your first global subscription card. So for a couple of decades, you had an Asia Pacific business discount travel card, and you have about 600 workers focused on that over there. So it’s a significant business. But what is your ambition with this global subscription card?

Morin: I think the idea of the global subscription card, it’s interesting, it’s coming exactly from what you say, which is an experiment done in Southeast Asia, which has been steadily and regimentedly making good money for 20 years plus.

And so what we did last year is we tested China, Gary is here and he’s been leading that. And we tested Latin America, Brazil. And it just ended up that those two tests were extremely fruitful.

And when I say extremely fruitful, I mean it’s basically the fact that the people are consuming more versus what was happening when there were none of those accounts. We estimate that it’s a 10 percent more that they would basically consume by having the card because the card only works if you do a minimum of X number of trips.

O’Neill: So conceptually, if I’m in Nice, France, I would be a resident. I might pay something like €99 or $106 a year, and then when I’m traveling to your property in Dubai or somewhere, I get an elevated level of status, and I get discounts —

Morin: It’s more than discounts. It’s like a loyalty prrogram, you don’t only offer money, you also offer also status. You also offer the capability to reserve at the last minute. It’s also the capability that you’ve got to choose some elements in your booking, i.e., the room that you want. Also the fact that you can book at the last minute and still get the capability to get space if you will. And so it’s financial elements but wider than that, it’s also smoothness of your capability to travel.

O’Neill: That sounds very interesting. And last-minute availability is… A hotel that looks like it might be booked, if you’re a member of the card, you’d be able to actually get access to a room.

Morin: Yes.

O’Neill: Loyalty sort of ties into this, you just mentioned it.

Morin: Yes.

O’Neill: So you revamped the loyalty program around January of 2020, and you’ve changed some of the tiers. Since then, you’ve added Onefinestay, your luxury home vacation rentals product, as a redemption option.

Morin: Yep.

O’Neill: You’ve had about a year now or more of the post-pandemic surge to see how it’s been accepted. So how is the loyalty program doing?

Morin: I think in the loyalty program, the most important element is first that the people know the loyalty program. And we did spend quite some monies back in 2018 when we launched ALL, some promotions with sport events, so we made that name knonw…

And then the other element that we’ve been building over the last years is the ecosystem into which people can earn. Because in the end, it doesn’t really matter if you have a loyalty program if you don’t have the capability to earn the points.

And so exchanges with airline companies, like Air France, capability also to earn those points by, for example, booking taxis, all that monetization is very critical. And we have been launching also co-branded cards, one in France with BNP Paribas, another one in Abu Dhabi, there is one also in Malaysia.

And so we are, in fact, as much as we can, creating some kind of a pool by which people get points. But those points have got to have value and the value is that they can exchange it to get something that is valuable to them.

So many people have got points in airlines but they don’t have enough in order to book a ticket. When you have not enough to book an airline ticket, you may still have enough in order to get a room for one night somewhere else. This is kind of the principle of it.

And so we’ve been building that ecosystem. It’s quite comprehensive nowadays. The other thing that we’ve done is we spent a large effort, starting 2021 on the CRM, customer relationship management, with Adobe but also Salesforce, a combination of the two capabilities.

And just as an example on the quantification, the amount of business that we’ve been able to push through in 2022 compared to the one in 2019 was 18 percent [higher].

So just for the push on the email, because it’s much more personalized, because it’s an omnichannel solution, i.e., you don’t only get garbage mail, junk mail into the mailbox of the people, but it’s something which is better tailored than attributes but also going through other means than purely the email.

You can go through WeChat, you can go through WhatsApp depending on who you are. And so all of that creates the capability to communicate omnichannel, and so more transversely to people on what they can do and then giving them the opportunity to earn those.

And the loyalty is super critical to the direct business, super critical to the [customer] acquisition than we found with the OTA [online travel agency] and super critical to the end customer but also to the owner of the [hotel] asset.

O’Neill: So it’s very powerful that you’ve unified the data that you have. You have a partnership with Salesforce, the customer relationship management system. So you’re much more savvy about the targeting, the remarketing.

We have some audience questions, and of course, throughout the day you can put your questions into the app, and we’ll try to get to them in the last minutes of each session.

So here’s a question. You are a chief financial officer, so this is a great one. So what metrics… So conceptually, the hotel industry is always using revenue per available room as the standard. But you’ve talked a lot today, especially with lifestyle and luxury, that it’s about revenue beyond the hotel room.

What would be a better metric that sort of captures — like an earnings per square meter concept — that you think is better?

Morin: So it’s very interesting because one of the way by which we explain what a lifestyle property does versus the standard properties is the fact that we’re able to generate somewhere around 20 percent more revenue per square meter in a lifestyle property versus the standard product.

After that you need to be going down to the bottom line, because it’s not only the revenue that makes your bottom line, you’ve got costs which are also of a different nature in a lifestyle property. But that’s exactly the way how we present it to asset owner.

And just one word on this one-

O’Neill: Please.

Morin: Because it’s very important, you may wonder what makes a good lifestyle property. There is definitely the guy who created it and the guy who is at the head of the concept and was able to think, create, not everybody’s a creator, but there is super importantly the people in the hotel.

If you go to some of those properties, the recruitment is different, the nature of the relationship is different, and the cost is different too, but that’s what makes in fact the experience different. Sorry.

O’Neill: No, no that’s great. And so revenue per square meter is something you find is in a lifestyle or luxury property, that would be what you would say?

Morin: Yeah, we use that typically to explain the differences-

O’Neill: To the asset owner.

Morin: To the asset owner.

O’Neill: So has COVID changed loyalty and the contribution of your loyalty members to your bottom line?

Morin: I mean the COVID years for loyalty were a disaster. In my case, I had my hotel filled notably in Asia with people that were, in fact, forced into the properties by the government, and in my numbers, but obviously not loyal customers. So if you just look at the ratio without extracting that, you’ve got a totally disrupted and wrong picture of what is really happening.

So now it’s getting back to normal. Notably, since I’d say things have really changed starting Q2 last year, and so things are getting back to normal on the loyalty…

I’d say something that I already said, which is in the way people look at the loyalty, they really look at where they can burn points. And if you don’t have in your offering some properties which are properties where people would like to burn their points, I think you are probably missing a large part of the value creation.

Give you an example, many of us would travel in a Pullman during the week because the Pullman is great for convention. You’ve got all the meeting rooms and stuff, but you probably don’t want to take your family to the Pullman for a nice weekend on the seaside, not necessarily. You may want to go to a nice hotel.

O’Neill: So it’s about having a different offerings for both needs. And then the loyalty program-

Morin: You take into account how people think. Sorry, I’m not probably enough specific. Post COVID, what is changing is the fact that people now go to the hotel over the weekend.

O’Neill: Ah, I see.

Morin: And so you need to offer them the capability to go over the weekend. And why is that? Because as there is ESG constraint, people don’t want to travel. As people have not been able to travel, they want it more.

And hence, what we see is that people basically are piggy-backing on business travel and doing so-called work-leisure, by which they do their normal trip, which normally they would try to get fewer trips but longer trips.

And on top of that, when they do the longer trip, they try to associate some personal things, either the family or for themselves to stay the weekend in New York or whatever-

O’Neill: That’s great. Unfortunately, we do have to end it there. I’m sorry. Jean-Jacques, I’ve really enjoyed this conversation with you. Thank you so much.

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Tags: accor, adobe, cruises, ennismore, ESG, future of lodging, hotel brands, hotel CRM, hotel pricing, hotel technology, hotels, hybrid hospitality, inflation, lifestyle hotels, loyalty, luxury hotels, orient express, pricing, revenue management, salesforce, skift future of lodging forum, skift future of lodging forum 2023, skift live, spacs, trains

Photo credit: Jean-Jacques Morin of Accor speaking at Skift Future of Lodging in London. Russell Harper / Skift

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