Accor’s board said on Tuesday the company wants to simplify its organizational structure to create two business units. The move, which raises questions about possible divestitures, has been sent to employee representative bodies for their approval.
The two business units would be an “economy, midscale, and premium” division for 4,816 hotels representing brands such as ibis, Novotel, Mercure, Swissôtel, Mövenpick, and Pullman. It will have four regional headquarters based in Paris, Sao Paulo, Singapore, and Shanghai.
Another division would be for “luxury and lifestyle.” It would get four brand collections that together have 488 hotels: Raffles & Orient Express, Fairmont, Sofitel & MGallery, and Ennismore.
“By evolving from a generalist to a multi-specialist model, our aim is to further improve Accor’s appeal in the eyes of talents, owners, partners, and investors,” Sébastien Bazin, the group’s chairman and CEO, said in a statement that didn’t mention any cost savings.
Cue the inevitable questions about whether this planned restructuring makes it easier for Accor to spin off a part of its company to an acquiring investor.
“We would also expect this makes a break-up more likely longer-term, where different owners may be different in the varying merits of the two divisions,” wrote the research analysts at Bernstein in a flash note to clients.
Analysts at Bernstein also note: “It makes sense that the two divisions will have different long-term models (franchise vs managed), different target owners (“mom & pop” vs sovereign wealth funds), and different customers (international vs domestic).”
Pity the executives at Swissôtel, though. They must be asking themselves, “Why aren’t we luxurious enough?”
In a move that was no surprise, the board also endorsed the renewal of the contract of Bazin as the group’s chairman and CEO.