The persistent rumor in the hotel industry is that Paris-based Shakur – which owns brands such as Raffles, Sofitel and Fairmont – will merge with UK-based IHG Hotels & Resorts. IHG is the conglomerate behind Holiday Inn, as well as luxury offerings like InterContinental and Regent.
Marriott bought Starwood in 2016 for $13 billion in a major merger that brought brands like St. Regis, Westin and W under the same umbrella as The Ritz-Carlton, Edition and Residence Inn. For anyone to compete against this new Goliath, there would have to be more mega-mergers across the industry, it said.
Hyatt was also reportedly in talks to buy Starwood. Left hanging at the altar after Starwood ran off with Marriott, the Chicago-based hotel company suddenly found itself in a pool with IHG and Accor as people wondered who might be next for the pair.
In recent years, the focus has narrowed on IHG and Accor, as their networks complement each other. Accor’s strength is mainly outside the US, while IHG – although based in the UK and having its own strong European network – has a large presence in America.
“Well, the only thing that comes up more is Jen and Brad getting back together,” IHG CEO Keith Barr told me with a laugh two years ago.
The other CEO wanted at the merger table seems to have similar thoughts about the idea of a mega-merger similar to that of Starwood and Marriott.
“These mergers make sense on paper when you’re an investment banker,” said Accor CEO Sebastien Bazin in an interview with TPG during the Americas Lodging Investment Summit held this week in Los Angeles. “They make economic sense, but they fail in execution, and there’s no need.” .
Bazin, like other big hotel CEOs, prefers a brand-by-brand approach to growth these days. Acquisitions in recent years have favored a screw-up strategy that fills a geographic or brand gap rather than a transformational approach like the Marriott-Starwood venture (which created the world’s largest hotel company). Most of them, since the company is only a few brands shy of reaching the 50 brand mark.
Accor’s recent growth has included single-brand additions such as the Emblems collection. It has also joined forces with Ennismore, owner of brands such as The Hoxton and Gleneagles, to create a lifestyle hotel arm with selected Accor brands such as Delano and 21c Museum Hotels.
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Leadership teams at Hilton, Marriott and IHG have similar positions on mergers. what gives
“The reality is about the execution, the ability to carry out the deal and then the cultural gaps,” Bazin pointed out as reasons not to proceed with the mega merger. “Mergers across countries, across continents, I think two-thirds of them fail.”
If anything, Accor and IHG are acting more like rivals than potential partners: Accor partner Faina’s planned hotel in New York comes at the expense of the planned Six Senses. It was her first New York outpost for the ultra-luxury brand IHG.
A brand spark on both sides of the Atlantic
A battle is brewing between the major hotel companies as they begin to move into each other’s historic geographic base.
Hyatt, Marriott and Hilton have each pushed more significantly into Europe, where Accor has the largest presence of all the major hotel groups.
“They killed me in America, and I’m going to make sure they don’t grow so fast elsewhere,” Bazin said of American brands suddenly being pushed into Europe. Accor has around 350,000 rooms in Europe across all its brands.
At the end of 2021, Marriott had just over 133,000 rooms in Europe, according to the company’s most recent annual filing with the U.S. Securities and Exchange Commission. By comparison, Accor has just over 102,000 rooms in the Americas, according to its most recent financial filings. Marriott has close per million
However, American travelers will get a taste of French hospitality in the coming years.
Accor has recently restructured in a way that encourages further growth among its luxury hotel brands. It even stationed its headquarters for the particularly prestigious brands Orient Express and Raffles in New York. Further growth plans stem from three of Ennismore’s lifestyle hotels and further expansion of Sofitel, Fairmont and some of the company’s soft brands.
However, all this growth requires making inroads with American hoteliers and developers.
“Can the lifestyle sink us in the US as a niche player? The answer is definitely yes,” Bazin said. “Is it difficult? Oh, yes, it is. It’s a market controlled by six gorillas. They know that the streets, the neighborhoods [and] The travelers are much better than me.”
“If we wanted to go with Mama Shelter, Hoxton or Delano or SLS more in the US, I need a partner. I need an American partner that I can trust to bring me the knowledge, and I can bring them the new experience of the brand,” he added.
It was abundantly clear this week during the ALIS conference — which can feel like a giant dating pool of hotel brands vying for new deals with developers and lenders to drive growth — that Shakur means business.
The company had a larger presence with executives than at previous ALIS conferences. This came shortly after the company’s reorganization; There are different CEOs under Bazin who now oversee entire brands instead of geographies.
Maud Bailey – who was Accor’s Southern Europe chief executive and is now chief executive of Sofitel and the MGallery and Emblems collections – previously told TPG she was targeting the US with the brands they now lead.
Some may scoff at the idea of Accor ever gaining much of a foothold in the U.S., but the signs do point to owners open to doing business with companies simply because they’re not Hilton or Marriott. Sonesta’s international hotel corporation has exploded in growth during the pandemic, in part through hotel conversions Various Marriott and IHG.
A hotel needs more than guest rooms
U.S. travelers shouldn’t expect to find Accor hotels in the economy sector. Hilton has made moves to push into luxury hotels with its recently announced Spark brand, and Marriott bought the affordable City Express brand from Mexico. This has suddenly thrust two of the world’s largest hotel companies into a travel segment they are not known for. rule.
Accor has some budget brands such as Ibis and Greet, but those are not part of its U.S. expansion strategy. The company previously owned Motel 6 before selling it to Blackstone in 2012 for nearly $2 billion. Accor is unlikely to go back to the U.S. budget hotel pool. “B
“In America, it’s necessary,” Bazin said of the economics section. “In Europe, we dominate this game.”
Instead, he pointed to the recently announced Handwritten Collection, a medium-soft brand, as a way to grow. The brand responds to the growing travel preference for more experiential offers and better connectivity to the surrounding neighborhood. It’s part of Accor’s broader push into lifestyle hotels. (Company leaders previously defined lifestyle hotels as properties that earn at least half of their revenue from food and beverage.)
Achieving the characterization of the lifestyle requires the construction of more hotels that cater to local residents who spend money in bars and restaurants but not in a guest room on the top floor.
“Don’t build for travelers,” Bazin said later this week during a general session at the conference. “This is the recipe of the future.”
product refinement
Accor’s smaller presence in the US may give it an edge on the guest experience front; travelers here are likely to associate the company only with high-end hotels with strong bars and restaurants.
Some guests complained about the disjointed experience in hotels associated with all the major brands; This is especially true considering how brands have relaxed their standards during the pandemic. The hotels were not renovated according to regular schedules, because the big brands preferred to let the owners hold on to cash during such an uncertain travel time.
While Accor may not face as much of a disjointed customer experience problem in the U.S., Bazin admits it’s still something the company faces in Europe.
“What’s happening to the legacy brands in the U.S. is they’re facing the same problem I’m facing in my home market,” he said. “We haven’t been paying enough attention, [and] The owners have been friends for 40 years, so you don’t mess with them. This is a real problem. It needs to be fixed.”
The silver lining is that owners come up with the idea of renovating their hotels quickly, as it means they can start charging more for rooms.
“Many of the owners realize that if they spend the money, they have a big return,” Bazin said. “This was not the case before COVID-19. Today the pricing is very strong. Every hotel we renovated in France we got paid back within two and a half years. I’m sure it’s very close to that in America as well.”
Another summer of expensive hotel stays
While the global economy may have a huge question mark, that doesn’t mean there will be a wave of bargains at your favorite Accor hotel. Again, summer will likely be great for hoteliers but not so great for your wallet.
“I start with the truth [and a] Big statement: 2023 will be better than 2022 – no doubt,” Bazin said.
The optimism comes amid growing sentiment that a recession, if there is one, is likely to be short this year in some parts of the world. Marriott CEO Anthony Capuano also told TPG this week that he sees no signs of hotel rates going up this year.
Bazin is bullish on demand for travel in the Middle East and Southeast Asia amid China’s reopening. He also pointed to destinations such as Egypt, Turkey and Brazil that demand is increasing. The Accor chain’s continued diversification and global expansion help fuel Accor’s CEO’s outlook.
“When 80% of the company was concentrated in continental Europe 10 years ago, my answer was different,” Bazin said.
