Accor reported an 11% increase in revenue for 2024 on Thursday. This is a jump that came mostly from its luxury division. The company’s luxury and lifestyle segment has risen by 19%, and has more than tripled the 5% growth rate of mainstream businesses.
The Paris-based hotel operator also said it is expanding in high-growth markets, including South America, China, India and the Middle East.
The board asked group CEO Sebastian Bazin to remain in his role until he reached the company’s 65-year-old forced retirement age in late 2027.
Prior to Thursday’s revenue results, Skift spoke with group associate CEO Jean-Jacques Morin about the company’s strategy and management style.
Morin joined Accor as CFO in late 2015, and quickly added the Group Deputy CEO title. In 2013, he added the company’s CEO job for “Premium, Midscale and Economy.”
Morin spoke with Skift about Accor’s strategic pivots in key areas such as brand quality, geographic focus, business model and technology.
Brand quality
Accor recently quit dozens of properties to maintain brand standards. It focuses in particular on legacy mid-market brands like Novotel.
Morin said consistent quality across the portfolio is more important than short-term losses in fee revenue.
He gave some context. Since 2023, Accor has been running a so-called “pure” project that allows readers to be removed so that they can remove “defenders” or poorly performed properties from its system.
Property issues include poor financial performance and failing to keep up with real estate improvement plans that align with the brand’s design.
Last year, the group added 293 hotels, increasing its network by 3.5%, growing over 5,600 properties.
Morin said that Accor’s netroom growth is likely to be more than 4% faster once the brand audit is completed.
2-Track Strategy
Accor pursues a two-track strategy for mass market accommodation along with its growing and luxurious portfolio.
That luxury growth could be partly grateful for its partnership with Orient Express brand LVMH.
Morin argued that the operational efficiency of mid-market brands can generate better returns than luxury properties. There, value creation is more from real estate viewing than from operation.
“The profit margin for (economy brands) is much better than the profit margin for any luxury property,” Morin said.
“We do a lot that isn’t necessarily visible outside to improve the margins of our operating models in the Premium, Midscale and Economy sectors, but even in the entire group,” Morin said. .
Overall, in terms of global development, Accor has a pipeline of 1,381 hotels. Luxury and lifestyle signatures are part of this, with trading volume increasing by 39% year-on-year.
Asia as a growth market
The Middle East, India and Asia Pacific are expected to account for around 60% of Accor hotel openings this year.
The company said it is pursuing the most growing market. Last year, hotel occupancy rates in the Middle East, Africa and Türkiye were 10% points above pandemic levels. Southeast Asia’s occupancy rate is also above pre-Covid levels, with Accor hotels earning double-digit profits in revenue rooms for the region last year.
One factor that drives high performance in Southeast Asian hotels is that while Chinese tourists have pulled back, Russian and South Korean tourists fill the gap in major Southeast Asian markets.
Another factor is the local service culture, Morin said.
“Thailand’s service culture is a critical competitive advantage in hospitality that cannot be replicated by technology alone,” Morin said. “Vietnam, they may be a little more direct, but the service is still amazing. Singapore, it’s untouched and you can get the service too.
In Australia, Accor has around 80% of the market share among midscale hotels, he said. Guests of Mantra and other Australian brands are looking to find a brand when traveling to Southeast Asia.
More franchises
Separately, Accor estimates that in recent years it has shifted 10% points of its portfolio to franchise and management agreements (from 50% to 60%).
One factor in the change is increasing franchise acceptance, as opposed to Accor running hotels, by younger entrepreneurs in the Southeast Asian hotel growth market.
However, Accor maintains a subtle approach. While luxury and upscale city properties still guarantee a managed transaction, franchises make more sense for secondary market economy hotels, Morin said.
Technology
Accor has invested in technology to help hotels and has recently made impressive deals with pricing technology vendor ideas for revenue management help and new booking systems Amadeus.
These partnerships point to Accor’s overhaul of key capabilities that affect the pricing power and cost-effectiveness of hotels.
“The goal is a seamless data flow between properties to enable more personalized services and dynamic pricing,” Morin said.
Accor has also moved high-tech operations to Bangkok and Brazil, tapping on the local talent pool while reducing costs.
“We basically get the same high quality engineers and services, but at a much lower cost,” Morin said. “We currently have hundreds of high quality engineers in Bangkok.”
The deputy CEO was frank about the gloss that stock investors are making about key investment improvements ACCOR has made.
“No one wants to know about the plumbing,” Morin joked.
Morin’s management style
Skift asked Morin about his management style. Over the past nine years, Morin has worked to make relevant data more accessible and at the heart of Accor’s decision-making.
“In God we trust, for all the other things we use our data” is his adaptation of Google’s mantra about injecting the rigour of analysis into hospitality decisions.
Morin said he was a “accountant trained to become an engineer” and “should be helping out with the construction of the plane.” For a while, he provided management consulting and researched Motorola’s semiconductor business. He then became CFO of Alstom Finance during an acquisition by General Electric.
Morin believes that these non-hospitality experiences have given him an analytical view of a database that is less common in the hotel industry, where emotional, tradition and habitual spiritual frameworks dominate.
“I don’t make a decision based on emotions,” he declares. “I make decisions based on data and emotions.”
He stated his management philosophy to make complex considerations simpler.
“If you try to ask people to prioritize more than three things, you probably won’t remember the first one,” Morin said.
“Simplicity is the ultimate refinement,” Morin said, adapting the quote attributed to Leonardo da Vinci.
“We don’t have any major M&As in two or three years,” Morin said. “There were no major surprises. The consistency of our message about what our goals are and clear transparency about progress towards those goals. It’s all about our stories being inside the company and It should help to make it relatively easy to understand the outside.
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