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Interview with Georges Sampeur, chairman of the board of directors of B&B Hôtels: “The economy niche deserves a good quality product”

At the helm since 2003, Georges Sampeur is in charge of conducting the company through a new phase of rapid development in order to double the number of hotels within five years. Before joining the group, he has occupied various managerial functions in Leisure companies, such as Avis Europe. In 1996 he joined Carlson Wagonlit Travel as President & CEO France, and then Executive Vice President Europe until 2003.

HTR Magazine: In what direction do you think the economy hotel product will evolve?G.S.: B&B’s management is not running a real estate or financial business. We follow a product strategy and our organization is a result of this. Eurazeo has also bought into this adventure with long-term perspectives, and supports our team. The results are very good for the shareholder and the development potential is strong. It plays more on the durability of our strategy than on tactical opportunities. This is so true that we have refused dossiers for acquisitions that would have enabled us to expand our real estate perimeter, but that made no sense in terms of our strategy for developing a quality product.Georges Sampeur: It is first and foremost a niche that deserves real consideration. Our strategy is not an opportunistic reaction. It was developed some time ago, when the company was created in the 1980s, based on the fact that the economy niche deserved a carefully studied quality product, in terms of construction, insulation, comfort, equipment and even services such as breakfast. The takeover by Duke Street, followed by Eurazeo, had no effect on this approach that is based on the quality-price ratio at the entry level range, without too much concern about classification.HTR: Have things changed since the 80s?G.S.: The evolution of consumers has reinforced our strategy because there is no longer any systematic behavior associated with a level of lifestyle or responsibility. Guests zap easily from economy to luxury without having any impression of a downgrade, as long as they feel that he is making an intelligent choice and that the product is not degrading. This is what inspired us when we rethought the concept while eliminating all signs of elements with a pauperizing character. Only good surprises should await those who aren’t expecting this level of quality for a very affordable average rate that we wish to maintain. We have received primarily reactions that are very favorable from clientele who are accustomed to products with higher standing: its is a minimalist room, but it has everything that is necessary for a spending good night and starting the day in an appealing setting.HTR: Did the change in image have any consequences on your partners?G.S.: Not only have we addressed our marketing to clients but also to investors and local administrations. Just a few years ago, municipalities were very reticent and solely swore by new 3 and 4 star properties. With our B&B product, they don't sense any degradation because integrating it into the landscape, in their community’s economic offer, is right for them as it opens up possibilities for a broader clientele than that offered by 3*. We decided to be rigorous about the concept and operations, but more flexible about the outdoor architecture. This makes it possible to adapt to local situations with an environmental concern that will soon result in initiatives in the spirit of the Green Key label. We are far from the image of the bunker-style hotel with bright neon signs flashing just off the highway. Our investors are aware of the strength of the concept with repeated good results in the long term, which are not greatly influenced by the cyclic economic results. This model makes it possible to generate excellent results of more than 30% before rents.HTR:Will you repeat the experience of a complementary offer with a more upscale brand as we have seen with Carrefour Pleyel?G.S.: Certainly, because this is a way to valorize a property and expand the hotel inventory. In Saint-Denis, we partnered with Courtyard to create a hotel pole with the same external architectural conception. This experience may be reproduced elsewhere, with Courtyard or with other hotel brands.HTR: Could the generalization of the “econochic” concept that you were one of the first to promote deprive you of your differentiating advantage?G.S.: In the services sector, differentiation is the number one challenge and it is constant. If there is any leveling out of the economy hotel product from the top down, it may generally be considered a good thing because it will globally boost the image of economy hotels. Since we cover a single segment, we do not cannibalize other brands. This is a major advantage. And then there is so much potential outside the French market that I am not concerned about the company losing speed.HTR: Where do you expect the biggest opportunities to develop?G.S.: With the takeover of Villages Hotel, B&B’s network in France is fairly complete, but this does not mean that we cannot add fifty or so additional hotels by increasing our presence in large cities and covering a few secondary cities. While we continue to be very selective, today we are more open to franchising than we used to be. Our primary goal is to accelerate the provision and thus the visibility, of the new concept on the territory. We cannot afford to disappoint our guests who have high expectations. This means forty full renovations each year and the rapid transformation of all the ex-Villages Hotel rooms before the end of the summer.HTR:Have you seen any financial benefit from this effort?G.S.: The introduction of breakfast at B&B in the ex-Villages Hotel made it possible to increase the price from 4 to 5.90 euros with a guest capture rate up by 10 points. Renovations make it possible to increase the average rate by 4 to 5 euros with improved satisfaction of the guest who has no problem paying the price for an improved product.HTR: Are your international plans more ambitious?G.S.: Our presence in a country only makes sense if we can develop a network there. We have identified four countries with this capacity: Germany, Spain, Italy and Poland where we have just created a subsidiary that also covers Central Europe. In Germany, with the franchise agreement signed with Tank&Rast, Ahead of Wyndham’s Super 8 concept, we will have 60 hotels in 2010. To me, Italy is not the country that relies on small, family-operated hotels that it is made out to be. Things are changing in terms of regulations and customer expectations for more standardized, good quality products in the economy segment. Consumers, including Italian ones, are much more knowledgeable about their purchases and don’t want any more bad surprises with regard to two basic elements: transport and accommodations. We are taking advantage of the low-cost effect that showed the difference between transportation at an economic price in new, safe airplanes and the lottery travelers participated in when flying with certain charter companies.HTR: Is the approach similar in Spain?G.S.: We are going there cautiously, staying close to the border near our French bases. The economic equation is not yet satisfactory – due to property costs – for unfurling a network that must include dozens of properties. In Poland, we are working on 8 projects simultaneously in order to immediately achieve the network effect that is primordial when guests are mostly national, and that will expand to neighboring countries.HTR: Does your major shareholder, Eurazeo, put you in the position of an opportunistic group in search of valorization before being sold at a good price?G.S.: B&B’s management is not running a real estate or financial business. We follow a product strategy and our organization is a result of this. Eurazeo has also bought into this adventure with long-term perspectives, and supports our team. The results are very good for the shareholder and the development potential is strong. It plays more on the durability of our strategy than on tactical opportunities. This is so true that we have refused dossiers for acquisitions that would have enabled us to expand our real estate perimeter, but that made no sense in terms of our strategy for developing a quality product.

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