Sébastien Bazin, CEO Accor shares his vision of the hospitality world and today's globalized economy, against a data war backdrop.
At Accor, France represents 20% of the group whereas not long ago it was 60%. Europe represents 45% of the group but it represented 75% of the supply. We accelerated growth in other regions while bearing in mind that our competitors are also very strong at these destinations.
The diagnosis is simple, there are three groups of actors in the hospitality world: the first group is digital, which did not exist 20 years ago, Booking, Ctrip, Trip Advisor, Kayak, Expedia, Airbnb... It is growing at a rate of 30 to 50% per year. They may seem unstoppable because they have global market shares with huge margins and stock market values. They have very talented staff and very keen mastery of data. They take between 10 and 15% of the cake, or the $6.5 trillion that the hotel industry is worth.
There is a second group of 8 "gorillas", including 5 American groups, 2 Chinese groups and Accor. These experience growth by 8 to 15% per year, which could be satisfactory, however it represents only one third of the growth rate of group n°1.
And then there are the others, terrific ones, groups that do not have a global presence, small groups, independent hotels. In the third group, 5 to 10% die each year, they disappear, or seek help in the second group to protect themselves from group number 1. They have no balance sheet, no financing, no technology, no loyalty program... No more time and no brand that is strong enough. So, half of the growth of these 8 gorillas is solely based on this third group that is joining me. So all Accor's hotel acquisitions, all the franchise creations, regardless of where they are, cime because they do not want to stay or cannot stay in group number 3. They will do very well up to a certain point and end up in basket 2.
But I forgot one: there is also group 0, the "gorillas » (5 Chinese and 5 American) from group 1: the GAFA and BATX. Will they attack group 1 or 2? Attack Trip Advisor and Airbnb or the hoteliers? OYO is an interesting case. It is the only one that combines 1 and 2. A combination of an OTA, a CRS and a PMS, with facility management. And they attack a formidable segment that has been ignored by group 2 which had structure costs that were too high: hotels with fewer than 30 rooms. And yet, these hotels with under 30 rooms represent 60% of the global market, 70% of the market in France. They allow these hoteliers to grow their occupancy rate from 50 to 75% in 4 months while improving the properties' profitability by around 50%.
It is imperative to look around, undoubtedly Amazon will enter the dance, few industries in the world are so blessed by the gods, it is scalable, lends itself to forecasting, profitable... So everyone wants to participate in the adventure. So everyone will be here soon. Take Alexa, this interactive speaker has an answer for everything, but most of all it records everything. So, very rapidly this speaker will enter your life without asking any questions; it will tell you what to do and where to go. Group 0 goes beyond group 1 by skipping 1 and 2 and entering the client's home without knocking. So why has Accor grown so much? Because groups 0 and 1 know everything about you and interact with you several times a day. Whereas we hoteliers interact three or four times a year. We cannot survive with an industry like that, that needs to be increased to several times a month and once a week if possible. But how? Our clients don't need to come to our hotels once a week. It is important to expand the touch points, we must reach out to you when you are not traveling, when you just need a concierge, to go out, to work, to go to the restaurant... This is Accor Augmented Hospitality's strategy: increase touch points. We have 20 years ahead of us to take the right decisions. Create an Accor universe. Groups 0 and 1 know everything about you, but have never met you. The data is cold and inhuman. In Group 2 and 3 the data is warm, we meet you. So it's possible to cross-reference the data. And whoever does the cross-referencing will dominate. In Europe we were had by the 10 groups that dominate the industry worldwide. We know co-working is on the rise, and we are making the same mistake with an American that is taking over the market with We Work whereas the owners are European. By joining forces great things are possible.