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BW Businessworld

'Focus Will Be On Human Contact’

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Fifty-one year old Sebastien Bazin took over as the chairman & CEO of Accor late last year  — an interesting appointment as this finance man with piercing blue eyes comes from Colony Capital, a private investment firm that had been involved in a fair number of buyouts of luxury hotel chains. In his very first visit to the countryrecently, to attend Hotel Investment Conference South Asia, he spoke exclusively to BW’s Chitra Narayanan on the new direction he is giving Accor, and India plans.  Accor is one of the few global chains that is actually investing in building hotels here — not merely operating. Excerpts:

An investment banker taking over as Accor CEO. Is there significance to the move?

It’s neither a bad thing nor a good thing. As an investment banker, I was happy in my prior life. But even before that I was already the CEO of a hotel company in France (Immobilière Hôtelière). As a student, I had worked night shifts in hotels for around three years, three nights a week at the Lennox hotel in Paris. I think, I know the hotel industry very well.

What skills from your investment banking experience will you bring to Accor?
I left the investment banking industry to come to a human industry, the hotel industry — and not to do finance in Accor. It’s a new job for me, a new life. But I will bring to Accor my financial discipline and probably a lot of methodology. But much more than anything else, I am bringing to Accor the direction and ambition to grow the company faster and better.

How will you grow the company faster?
First thing, when I came in was to make the diagnosis. I have known Accor for nine years – I was a board member. I identified the two bits of expertise that Accor has — one as an operator  (hotel services), and the other its competency as an investor. Starting January this year, we have separated the company into two different missions — those at the service of guests, and those at the service of investors. So different mission, different expertise, different talents, and different benchmarks.

It makes it much easier for people to take decisions. You will have different people managing investments, and different people managing the hotels. Then, in each of the different geographies we are in, we have created three segments — one for luxury upscale, another for mid scale properties, and lastly for budget hotels. I want people to understand the decision-making process.

In India, which of these segments will be the focus?
In Asia Pacific, at large, the third of our existing properties are upscale luxury, a third is mid-market and a third is economy.  In India, however, we will be 75 per cent in economy and mid-scale for the time being. But we will be going from 25 hotels today to 50 hotels by 2015- end. This year alone we will be opening 14 hotels.

That’s quite a lot of openings this year?
It’s not big enough.

Do you think the economy will bounce back and your timing of opening is right?
Hotels are a very cyclical business. You never know whether you are opening at a right time or wrong time. But it does not really matter which cycle you are in. You are making a bet on the country, on partnerships, on local talent. India is a very good bet, when it comes to size of country, energy, talent, and growth capacity. It is the perfect country for us to invest.

In terms of brands, any special focus?
The greater number of units will be Novotel and Ibis because of the emerging middle-class focus. We are also developing — not as fast though — Sofitel, Grand Mercure and Pullman.

Your vision for the future of the hotel industry?
The hotel industry is being impacted by the enormous revolution in technology, especially digital. All this helps in the expansion of the hotels. But we have to be careful with technology. Tech permits a guest to have access to his room through smartphones. So, theoretically, we could have the guest go directly to his room without stopping at reception. But the hotel industry is a warm industry. The technology should be only used to facilitate. Human contact is indispensable. And we will preserve this.

One thing which is interesting – with technology, the access to information is so large. So, we are learning what our guests want. In the past 40 years, people wanted comfort, fine security systems, etc. But today, they want emotions, experience, leisure, they want to see objects, they want interesting colours, design. So today’s hotels are far less standardised than past. This is a good thing as it forces hoteliers to be innovative.

Earlier, we were responding to client demands. But now we have to anticipate client expectations. In order to anticipate, the customer relationship management (CRM) has to deliver. This is where our worldwide loyalty programme gets important, the more you know your customer; you are able to give without him asking you.

Can you give examples of how you are changing these things around?
In Bangkok, at one of our hotels, we have four different designs for the same room. When the client is away, we take pictures of how he has kept his stuff like toothbrush, etc. Then when he is out, we change the design of the room, and put the personal belongings in exactly the same place.

How many of your guests book through the Web?
Online booking now represents more than 30 per cent of Accor’s total sales globally. People using Accor systems to do so are almost 53 per cent. For India, Accor represents over 15 per cent of our total business by web channels, of which over 8 per cent is from our online channels.

How much of the business is coming through customer loyalty?
In India, 50 per cent of the business is through loyalty. This is very big, and I want it to be even bigger. About 85 per cent of Accor India is domestic clientele. But then for Accor hotels in India, 85 per cent of the business is corporate clientele.

There is a criticism that most hotels focus too much on corporate clients, and have forgotten to entice the leisure clientele.
Yes, 80 per cent is corporate clients in India. But we have not forgotten the leisure business. Globally, a third of our business is leisure. But when I have just invested in a hotel, I want to rely on loyal repeat customers. And those are the corporate customers. The bigger you are, the more you can take risk in the leisure market. But in India, you have a lot of new travelers coming up due to low-cost airlines, and Accor wants to be in a position to tap that opportunity.

But you do charge lower rates for corporate right? So doesn’t that affect your profits?
It’s called yield management. But those systems are becoming sophisticated. The decision to target which segment is totally in the hands of  local team. It’s for them to decide what should be proportion between corporate and leisure. They know better than me.

How important is India in the Accor scheme of things?
Today, 25 per cent of Accor network is in Asia Pacific. India alone is only 2.5 per cent. Not big right now. The three main countries in Asia Pacific for the past few years are — China at one, Australia on second and Indonesia on third position. But in the next three years in terms of growing capacity, the three countries will be again China at one, India on an equal number, and Indonesia on second. We are not expanding in Australia. So you are going from about 3 per cent in India today to 12 or 13 per cent by 2016. India is a big priority for us. But again, we are doing it at  a slower pace. We are doing it for the next 20 years. India deserves many more hotels, but we want to do it hand in hand with local partners. 

(This story was published in BW | Businessworld Issue Dated 30-06-2014)