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Interview with Yann Caillère, Chief executive officer of Accor Hospitality for Europe, Middle East & Africa - Chief executive officer Sofitel Worldwide : "On each identifed market, Accor aspires to being on the top step of the podium"

Our goal for Sofitel is to make it a hotel management company. As for the brand itself, there is no question of giving it up in light of the new results in recent months and repositioning that corresponds to a new approach to luxury.

HTR Magazine: After the announcement that the Accor group would concentrate its efforts once again on the economy and midscale hotel sector, what strategy do you plan to use for the brand Sofitel?Y.C.: Without going into detail about each brand, generally speaking, in both common areas and rooms, spaces are less and less broken down and interpenetrate one another easily. The room enters the bathroom and vice-versa in all the categories. We have done this in the new Etap Hotel room, as well as in the renovation of the Sofitel Vieux Port in Marseilles. The use of the room is more “fluid”, work may be accomplished on the bed, at the desk, while watching the television. Furniture has been adapted, for example with a central bed that is bigger and higher. This flexibility may be found in the common areas. The lobby is a convivial space where one checks in, eats, works or enjoys a cocktail… with a greater notion of freedom. Final essential element: design has been democratized. While the client fully accepts low-cost consumption, he nonetheless expects these products to be valorizing. This brings me back to the new Etap Hotel room that integrates all the design codes and contemporary equipment into a low price. It is a real challenge.Yann Caillère: Recentering does not mean we will leave Sofitel, but that the crisis has forced us to redirect our available financial means to what constitutes Accor's core results, the economy and midscale hotel industry, and even more so our European hotel business. More concretely this means that projects for the acquisition of buildings, which would be favorable to establishing Sofitel at a destination, or new intensive renovations are no longer in our plans. But this corresponds to a pre-existing strategy for brand management in favor of management contracts for upscale and luxury brands.HTR: Will the pursuit of operations with Sofitel cause you to “make the promise even better” for a potential buyer?Y.C.: Our goal for Sofitel is to make it a hotel management company. We have still hotel assets to sell within the framework of our “sales & management back” contracts strategy and when opportunities present themselves we will consider them. As for the brand itself, there is no question of giving it up in light of the new results in recent months and repositioning that corresponds to a new approach to luxury. Throughout Sofitel's supply, in the vortex of the economic crisis, 70% of properties post growth in the RevPAR index. We are accumulating more international awards than ever, which is a sign of public recognition. On key markets, we are perceived as the best property in town or in the region, as the Sofitel Métropole in Hanoi, the first Sofitel Legend that has been entirely renovated; same in Cairo or Montreal. It is our longwinded efforts that produce results. We are pursuing luxury repositioning of Sofitel with the installation of a “spa by Sofitel” at the St-James in London, the renovation of the Grand in Amsterdam or the work on suites at the Sofitel Faubourg in Paris. We are still working on the format of the network, which has 129 properties to date, including new arrivals that reinforce its prestigious image such as the Sofitel Rabat or the one in Dubai.HTR: Don't owners risk perceiving Gilles Pélisson's declaration as a renouncement of your implication in the luxury segment?Y.C.: I am just returning from our annual North American meeting with the owners of Sofitel and it is not at all the perception I have. I would say, on the contrary, that the Sofitel “model” seduces more owners because we have removed ourselves from the excessive deviations of certain brands and insisted on responding to what the customer expects from luxury hotels while achieving a return on investment for the owner. I am convinced that the client of the 21st century will no longer accept to pay extra for services that flatter their ego if they do not correspond to a real need. Today, we are gaining market shares and new contracts, which shows that our positioning is right. On the American market, where our notoriety is not the greatest, our repeat business rate is constantly growing.HTR: On the operational level, does the reunification of Northern and Southern Europe under one leadership cover actual differences between two hotel “cultures”?Y.C.: Europe is our first market in two ways. That is where our hotel presence is the greatest and it is also where our clients, including those for other continents, are the greatest in number. Finally it was fairly logical to bring the two areas together under a single organization. I will not establish any “cultural” difference between Northern and Southern Europe, but rather a difference in approach between Western European countries with their more mature markets and still emerging Eastern European markets. Our organization relies on the coherence of markets with an area manager each time the specific character of the market justifies it: France, United Kingdom, Germany, Italy or Benelux, Central Europe, Russia… Our strategy is simple: on each of these markets Accor has a vocation to be on the podium of hotel groups with the strongest presence, and in doing so why not be on the highest step of the podium.HTR: Will Accor's European dimension be reaffirmed?Y.C.: On the commercial level, the fact that we have brought together the two entities of Northern and Southern Europe will allow us to put all our weight into joint actions, particularly on the web.HTR: Will that lead to revisions in the expansion of hotels strategy in the future?Y.C.: That means that where we are already strong, we want to be even stronger by deploying the full array of brands, from budget to upscale. Where we are in an intermediate position, considerations must be more in-depth: do we have to push back frontiers or leave the country, or do we assume our intermediate position, while waiting for the market to become strategic? One example is Africa: we have left several African countries where we had only one hotel, but on the other hand we are accelerating our implantation in Algeria, Morocco and Tunisia, for example, particularly with economy brands. The Ibis hotel opened in Algiers has an occupancy rate of 86%. This strengthens our conviction about these markets' potential.HTR: What is happening in Southern European countries, which are still presented with strong potential, but difficult to tackle, such as Spain or Italy?Y.C.: In Spain, we have been the leader of the economy chain hotel segment since 2008. Our current strategy is to accelerate with brands such as Ibis and Etap Hotel. In Italy, we were N°1 among hotel groups before Jolly was taken over by NH, it is our vocation to regain that N°1 position on this difficult market, which must be understood. We had a few bad surprises regarding the location of our hotels. It is typically the country where our development in franchising is relevant.HTR: Are Central and Eastern Europe still a strong market?Y.C.: We will not try to force our strategy in Poland, Hungary and the Czech Republic-where we already have a strong presence when the situation is becoming difficult. On the other hand, Russia remains a priority in a complicated context. We have opened successfully the first Ibis and there is good potential for Mercure.HTR: In the current financial crisis France remains a market where the group's resistance is strongest. What lessons can you draw from this?Y.C.: The first lesson is that we meet the best success where we are market leaders, and where we have a good breakdown of hotel supply in all categories. It is not enough to be leader on a niche because a turnaround can weaken the business. The balance of the offer across all categories allows us to work well and take advantage of the “place” concept that is central to Accor's organization. The goal is for the client to always find an answer regardless of budget, which may change with the current economic situation. This practice in France and Germany has allowed us to resist. The second lesson is that the franchise development model, when worked intelligently, is truly a winning combination. With the franchisees, we share the same goals and tools. The good experience developed in France acts as a model for our development of a very professional franchise policy with rules that combine respect, rigor, and a support platform with different kinds of expertise such as marketing, distribution, purchases and construction.HTR: Will the crisis have major and permanent consequences on how to manage a hotel group?Y.C.: My deep conviction is that the client will not leave the crisis the way he entered it. The way he spends will be significantly modified and he will no longer accept extra service charges, regardless of the sector. The “Value for money” notion becomes central with a practice of complex-free negotiations that are here to stay. Hotel groups must integrate this rapidly. Moreover, with respect to our organization and human resources in particular, the crisis has made us revise our practices, tighten screws, and this must not result in reduced services. Training is key to getting out of this cri-sis. It must cover the technical aspects, such as revenue management, commercialization, languages … and behavioral aspects, particularly in terms of reactivity. A client no longer accepts a delayed response. We must adjust our tools for that and instill the passion for reactivity with teams that are increasingly client-oriented. This also requires a consideration of the notion of “real service” and not “false marketing”. There is a chain that is set into motion to satisfy the client, and at each level personnel must know their business and establish a true relationship with the client. This notion will be central in the demand from clients that goes beyond the most sophisticated equipment available in hotels. The new element is undoubtedly that this expectation is no longer limited to upscale hotels, but is also strong in economy hotels.HTR: How do you approach your new responsibility for hotel construction worldwide?Y.C.: What are the strategic challenges for the group? First continue to build quality economy hotels, by reviving the one-thousandth rule, which has withstood through time. We have experienced inflation in building costs with the multiplication of security and environmental standards. We have sometimes allowed ourselves to be influenced by marketing pressure to be bigger and more beautiful. But the limit is reached very quickly when you want to preserve a realistic return on investment. The second major challenge is renovations. The two notions are not related enough, and yet starting with the development of new concepts, it is necessary to anticipate maintenance and renovations. We also must be more disciplined with regard to non standardized properties and avoid having each project mobilize its own designers and art directors who all want to sign a work, which ends up costing a fortune.HTR: Do some elements recur in the new hotel concepts?Y.C.: Without going into detail about each brand, generally speaking, in both common areas and rooms, spaces are less and less broken down and interpenetrate one another easily. The room enters the bathroom and vice-versa in all the categories. We have done this in the new Etap Hotel room, as well as in the renovation of the Sofitel Vieux Port in Marseilles. The use of the room is more “fluid”, work may be accomplished on the bed, at the desk, while watching the television. Furniture has been adapted, for example with a central bed that is bigger and higher. This flexibility may be found in the common areas. The lobby is a convivial space where one checks in, eats, works or enjoys a cocktail… with a greater notion of freedom. Final essential element: design has been democratized. While the client fully accepts low-cost consumption, he nonetheless expects these products to be valorizing. This brings me back to the new Etap Hotel room that integrates all the design codes and contemporary equipment into a low price. It is a real challenge.

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