The past few months have been busy for Accor, which has more than 5,000 hotels and residences in its hospitality portfolio. In addition to expanding at the rate of approximately one new hotel a day, the group expanded its sustainability commitment in late January, pledging to remove all single-use plastics from its hotels worldwide by 2022. That same week, Accor unveiled a partnership with Sabre to develop what Sabre says will be a new cloud-based, flexible platform for all hotels. Hotels editor Christina Jelski sat down at the Americas Lodging Investment Summit with Accor chairman and CEO Sebastien Bazin to talk about some of the group's latest initiatives as well as Accor's initial response to the coronavirus outbreak in China.
Q: With coronavirus continuing to evolve into a serious global threat, how has Accor handled the early impact of the outbreak thus far?
A: When something happens like this, the first thing you do is think about your people and the client. It's about well-being and safety. That's been our first focus, and that is now under control. We now know exactly what we need to be doing to help clients and employees in terms of disinfection, hygiene, symptoms, etc.
Next, we've made sure that those who booked with us can rebook without fees or penalties. And we're also trying to make sure Chinese travelers, if they had traveled abroad and can't return, are looked after. Because it was Chinese New Year, a lot of people were traveling.
Then, we look at how impactful it is for our overall business and for the region. Within China, Wuhan is less than 10% of our exposure in China. It's roughly 6,000 rooms, and we have around 70,000 rooms in China. And a lot of China is master franchised with [Chinese hotel company] Huazhu in the economy segment. So we have seven hotels in Wuhan, and five are master franchised with Huazhu. It's fairly small for Accor because of the master-franchise agreement. However, it doesn't mean we shouldn't be looking at it 24/7.
Q: What are some of the biggest benefits set to come out of your collaboration with Sabre? And how will this cloud-based platform improve the guest experience?
A: We are putting together what Sabre does very well, which is the central reservation system, or CRS, with what Accor has experience with, which is property management systems, or PMS. If you create something that's unified and combined under one single platform, then you gain a lot of different benefits.
One of those is agility. It's going to take much less time to connect a new hotel to the combined CRS-PMS. The second benefit is much less investment on behalf of the owners, because they won't have to install hardware in a physical location.
And three, we'll be in the cloud, so it'll be much easier to retrieve and use data. That benefit is really about how to respond better to the client, with better personalization and sharing of information. And it's very much linked to what Accor has been building over the last few years, which is this idea of augmented hospitality. Whenever we deal with you as a guest, we really want to get into your life and provide new features relevant to wherever you are. If you're in the cloud, then it can be much easier to get that information to you through your mobile app. The unified ecosystem still needs to be built, but we expect to have it ready 18 months from now.
Q: Among some of Accor's more notable high-end hotel openings are recent expansions of the 21c Museum Hotels brand and the Raffles flag. What's your approach to scaling these two concepts?
A: There's a lot of stickiness and loyalty to the 21c brand, and there are many different cities in the U.S. in which you could deploy a 21c. Are we going to be going outside the U.S.? Very likely. But we're going to go gradually, first through North America and then Central America before we go to a different continent. The minute you go global too quickly, you impair the uniqueness of a brand. A lot of brands have failed by going too global too fast. The Raffles brand is a pure diamond, so we also have to work to preserve it as we scale it. I think Raffles could be deployed in as many as 70 capital cities and resort locales. London, Madrid, New York. You'll see Raffles in those cities for sure, and I think you'll certainly see between one to three Raffles announcements signed every year.
Q: What's the latest news on luxury homesharing concept Onefinestay?
A: No one has created a homesharing brand as pure as Onefinestay. It's the creme de la creme. But the difficulty with Onefinestay has been how to make a viable business model out of it. It is extraordinary properties, and those extraordinary properties require a lot of care and manpower. And the welcoming of the guest in those properties takes time, because guests have to [have a greeter come and] explain how the property functions. It works well for the guest, and it works well for the owner. But for me, as the service provider, I still need to find the right recipe. It is an excellent benefit to our clients of Sofitel, Pullman and other brands. They're very happy to come back for longer stays in someone else's apartment. So it's here to stay. And the one thing that we've really been focusing on for the last few years is making Onefinestay exclusive apartments. You don't find a Onefinestay apartment listed on Booking or Airbnb or any other platform. If you want to find it, it's only on Onefinestay alone, or on the Accor Live Limitless [loyalty program platform].
Q: Last year, Accor made a big jump into the coworking sector with the launch of the Wojo brand. How much progress has Accor made on this front thus far?
A: I am a big believer in coworking, and I've always been a big believer, despite the WeWork saga. We've partnered with the biggest real estate developer in France, Bouygues, forming a 50/50 partnership with them three years ago. We now have over 60,000 square meters, [or nearly 650,000 square feet], of coworking space across nine locations in France, and we're growing. And all the locations make money. Today, it's around 5% or 6% of the total office supply, and I think it's going to be far beyond 12% or 15% in the longer term. But you just have to run it as a viable model. Go gradually, and make sure you have those big spaces next to airports, next to train stations, that's where you should be located. And have the right talent. The only thing I am assessing is that coworking, I think, should mirror the hotel companies and go into the management side of things. And the other important thing, especially with coworking, is not to enter into very long-term real estate commitments when you have short-term commitment revenues from your users. That's one big thing to be avoided, which is true for many different industries. But we're going long on coworking. Coworking will continue to exist and will expand for sure.