30 August 2009

Accor to Change Focus

Bowing to the inevitable Accor - one of the strongest players in the Hotel business - is considering splitting its Hotel and Services business. In much the same way that Marriott did with what is now a part of Sodexo. (I hope I have the branding right now!)

In the case of Accor it will mean a forced more wider review of its Hotel operations which has benefited in the past from the financial strength of the Services unit. Thus Accor has been able to develop much of its own facilities at lower financial costs (through self funding) than its competitors.

Where Accor has had its strength in the low end brands (Formule 1 and Motel 6 for example) however this has not returned as much value to it as it lacked high end brands. Indeed its product portfolio has become more and more confused as it struggled to upgrade the Sofitel Brand, raising the profile of Mercure with the Grande Mercure brand and (re)introduce the Pullman brand. Sadly this has not translated to the bottom line. Accor has suffered in line with the other hotel companies worldwide and not been able to capitalize on what should be its strengths in an economic downturn. This is as much a result of Accor's strategy as it is the extent of the worldwide Travel recession.

Another problem for Accor has been its inability to control the franchises. Its franchise arrangements have tended to be looser than some of its competitors - again in particular at the higher end of the brand. I witnessed this personally with a Sofitel product in Asia Pacific recently.

Will Accor go the way of Club Med and become an anachronistic icon of a bygone age? Hardly! But look for a change in direction and perhaps even a less Gallic perspective in the coming few years.


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