Sébastien Bazin, CEO of the Accor Group, sat down for a conversation with Vanguélis Panayotis, CEO of Hospitality ON, about the evolving world of hospitality and the prospects for Europe's n°1 hotel group.
How are the future prospects for the hospitality industry?
The industry is very much alive, it is very robust and will grow for the next 50 years. But it will probably be a different industry. As such, we need to change in the customer interaction, we need to change entirely the way we hire people: better pay, lesser constraints, and a greater evolution. We need to get our eyes wide open; we need also to accept that the international business customers will not come as frequently as they did in the past. This likely means that if people were to come, they going to stay longer, which basically leads to discovering more about where they want to stay for a 4- or 5-day period.
You also have the famous ‘staycation’, which was not as strong before the pandemic. We’ve seen it now and we’ve seen it grow very quickly. When you mix everything together, the industry is still blessed and will still be growing, but with better adapt and listen.
Will the ‘software’ of the industry change in the coming years?
The software will be different. The hardware, which is the brand, the site, the bricks, the views will be probably 90% the same, in terms of recipe and how it functions. However, the software has to be adapted.
How have you prepared Accor in order for the group to face these changes?
We did one big transformation seven years ago, which was to decide no longer to build and own hotels, we called it ‘get light’, or asset-light. This took three years to complete. We unshuffled 1,200 hotels – leased, ownership and so forth. Then, we had a second transformation a couple of years later, which was ‘get broad’. It was really about trying to go into the luxury, premium, lifestyle segments and to move away from Europe. Then the third transformation, through Covid, which was ‘get fit’. We reduced the numbers of people in corporate functions in order to have more people on-site.
The last transformation is to say, “we need to get focussed”, and ‘get focussed’ means we organise Accor into very different on-par divisions. The first is called ‘Power Brand’. It is all Accor’s legacy brands, from ibis, Novotel, Mercure all the way to Pullman, Swissôtel, Mövenpick. That’s a big beast, it contains 90% of the hotels, meaning 650,000 rooms. It will be run, probably in a more processed, more industrialised way, meaning we have to think further on going deeper on the franchise model and trying to create a machine which is resilient, predictable, cash-flowing and the best-of-the-best in terms of density and leadership. Jean-Jacques Morin, my deputy-CEO, is taking the helm. It is furthermore a linear organisation, but still geographic-led.
The other beast, which is smaller but growing faster, is called ‘luxury lifestyle’. It is exactly the opposite in terms of organisation. It will be brand-led, i.e. brand CEOs as opposed to geographic (on the ‘Power Brand’). It’s the “LVMH of hospitality”, meaning Brand Houses, if you like, and people fight to defend the brand content and/or the brand image of Sofitel, which is different from Fairmont’s. As for the first division, the ‘Power Brand’, I call it the “Zara of hospitality”. It still has fun and nice collections but is more predictable. These changes were implemented a few days ago.
It was necessary for Accor to realise that we have, within the same umbrella, two different types of owners and clients, and we need to adapt to that. Anything which is shared platform/procurement remains at the top: IT, Digital Factory (which is the Accor app), Accor Live Limitless (which is the loyalty system) – these should be centralised. I believe that the new organisation will work.
How can we revamp the employee-employer relationship?
There are industries, which are industrial industries like hospitality, where you cannot work remotely. You have to be physically there at your work, whether it is 7 or 8 hours per day. It is super pertinent today as it is probably why we have 25% of the people leaving. Those who left, left because of this.
The second reason is we probably did not pay enough to a lot of people in difficult jobs. It’s difficult because many of us simply can’t afford it. It’s better today because we have better pricing and better demand, but we’ve been going through heavy losses the last four years. Let’s be very careful because we’re never going to be able to meet exactly the demands for the salaries, but we’ll go halfway.
The third reason is mobility, and that’s probably the one we need to work on. Anybody will accept constraints – sacrificing nights, sacrificing weekends – if it is for a short period of time, be it two or three years. Make sure that after two/three years you recognise the quality of that person and you offer him or her a different, better position with lesser constraints. If you can make that promise, people will stick and be with you for 20 years. But that’s another mistake we made, we left people with the same constraints for 10 years in a row, without realising it.
My belief is you will find people ready to accept those sacrifices, but they’re only going to be working for me, or for Accor, for two or three days a week. Call it ‘flexibility’. When you go to a supermarket, for example, you have students working as cashiers on Fridays and Saturdays, but they can only afford to do it twice a week because this is when they are not at university. The same thing will apply to the hotel industry, and that means greater training for greater numbers of people where you know they’re only going to be with you for two or three days.
Soft skills are the real value creators in the industry
It’s the reason why I’m so happy at my job today. We happen to be in 120 different countries, we open one hotel per day, and we hire 80,000 new people per year – 30,000 who left that we need to replace, 50,000 people that we need to fulfil the 365 new hotels. And guess what, a half to a third of those new employees come from under-privileged populations – no background, no education, no prior job experience, they could be in Sri Lanka, they could be in Chile, they could be in Algeria, they could be in Pakistan, they could be in Laos. The miracle of Accor, and this is what sets us apart from the others, is that capacity to accept, nurture, train, give a hand to under-privileged people in the world.
You have worked in many different industries over the course of your career. How has your time in hospitality changed you as a person?
What has changed about me is my order of priorities and values. Probably for a long time, money was pretty high up in the hierarchy and I think today it’s pretty low down the list. What I want to leave behind me is: the people I’ve met, the people who have progressed in their careers, the people who think they won’t be able to replace me and then find out that, actually, they can surpass me.
In my next life, I want to be a professor. For two reasons: I want to give something back and there’s nothing better than to be with young people when you’re getting older. I think that will be my way of giving back, but they will also be giving me that added energy I need. That’s my next life.
What three values would you recommend to upcoming leaders in the industry?
I’ll put the three values in order of importance in the decision-making process.
- Stomach, what your instinct tells you.
- Heart, which is basically generosity.
- Brain, it will give you the timing by which you have to make that decision.
If you stick to ‘stomach, heart, brain’, I think you should be happy in your job.