Sebastien Bazin does not mince his words. Tourists in Saudi Arabia? “They may want to be able to drink.” Hotel discounts in Dubai? “They will never pay off.” Robots serving customers in restaurants? “That, I will never do,” he says.
It doesn’t take us long to realise that the CEO of Accor is not in the least bit afraid of ruffling some feathers. Then again, if you’re leading Europe’s largest hotel operator to record operating profits, you might as well say whatever you like.
The candid French has been steadily fostering the rise of the Paris-based publicly traded hotel group into one of the world’s most powerful companies with €3.61bn ($4.029bn) in revenue in 2018, up a 16.9% compared to 2017. Thanks to acquisitions of Mövenpick Hotels & Resorts and Mantra Group, Accor ended the year with a staggering 703,806 rooms in 4,780 hotels, with another 198,000 rooms in 1,118 hotels set to be built around the globe. This is not to mention the group’s expansion into new businesses ranging from digital solutions and direct bookings to private luxury home rentals and concierge services. You name it, Accor now has a hand in it. This year, it even launched a repurposed loyalty programme, Accor Limitless, which allows members to access everything from chef masterclasses to concert tickets and more, as it signed a deal with French football club Paris Saint-Germain to become its principal partner and shirt sponsor from the 2019/2020 season.
Why the new programme? It aims to attract demanding millennials who ‘don’t care’ if you give them a table book and chocolate in their hotel rooms, but want anything and everything to do with entertainment. But the programme is designed to do more than just lure in younger, experience-led consumers.
It is through its direct booking system that Bazin plans on taking back control – and customers – from dominating online travel agencies (OTAs) such as Booking.com and Expedia.
But Bazin is as diplomatic as he is uncanny. “OTAs are not the enemy here,” he says. “They really aren’t. They are super powerful platforms and they do a [great] job in the intermediary between clients and hotel companies... And, of course, there is a cost for this,” he says, revealing that the bigger hotel giants like Accor pay 10% commission – a price he is willing to pay for first time clients. What he is not willing to do, he says, is pay twice for the same client.
“[Let’s say] you come to me and you never heard of Accor before, and you come to Novotel in Marseilles. I’m very happy to host you, I’ll do a very good job – hopefully – in giving you an Accor loyalty card in the first time you pop into my hotel to make sure you understand what else we have on the planet. So, if you were to come back to Accor, this will try to incline you to go on direct bookings on Accor as opposed to going on Expedia again. Its called retention; stickiness. So, for a first time customer, I’ll be glad to pay, but for a second time customer?” he says, shaking his head, “nope.”
The eight hotel giants – or “gorillas,” as Bazin likes to call them – are “big enough for you to remember who we are,” he says.
The sharp CEO is following the same strategy when it comes to Airbnb, having acquired 80% of concierge service provider John Paul for $150m in equity and debt.
Short-term rental platform Airbnb, however, is “less impactful” than OTAs, Bazin says, as it focusses on secondary and tertiary cities due to lack of legislation in capital cities, where the larger hoteliers are focussed.
“I have a lot of respect for them,” Bazin says. He believes half of Airbnb guests wouldn’t have ever travelled if the platform didn’t exist.
“Ninety percent of Airbnb guests are also users of hotels. It’s very much complementary.”
While Accor is already the largest hotel operator in the Middle East, Bazin is driving further expansion in the region.
His eyes are particularly set on Saudi Arabia, where the group operates 48 hotels through a diverse portfolio of high-end to affordable brands, including the Fairmont, Pullman, Novotel, Ibis and more, with another 40 scheduled to open over the next three years, some in the $500bn Neom project being built on the Red Sea coast. The scheme was unveiled by Crown Prince Mohammed Bin Salman in 2017 as the kingdom looks to diversify its economy away from oil and grow its tourism sector. According to Neom CEO Nadhmi Al Nasr, the project promises to welcome “all the living standards, all the living style and community.”
The promise is one Bazin hopes will be kept.
While he believes the kingdom is ideally located four and a half hours away from Europe and boasts “a similar sea environment” to the Maldives and Seychelles, it will need to make certain exceptions for tourists in order to lure them to the conservative country.
“A destination means people want to live. They want to have fun. They want to be able to enjoy music. They may want to be able to drink. Maybe the [Saudi] government in place will allow it only in certain destinations. Neom is one of the examples of what they will be exempting from many local rules…That has to be in place, otherwise you won’t be attracting tourists,” he says, suggesting that the kingdom follow in the footsteps of its less conservative Gulf neighbour Dubai.
However, the cosmopolitan destination, which is famous for the world’s largest shopping mall, dancing fountain, indoor ski slope and tallest tower, Burj Khalifa, is experiencing difficulties of its own, with supply overtaking demand and average daily rates charges by Dubai hotels set to slip to their lowest mark in nearly 14 years in July, according to analysts STR.
Accor has itself faced “difficulties” in the market over the past 18 months, according to Bazin. And while the company is “at guilt” for taking part in the oversupply through new openings, Bazin says he is depending on Expo 2020 Dubai to swallow the excess properties.
“Expo 2020 will be enormous in terms of impact, in terms of tourism and people visiting Dubai. All that oversupply will be swallowed over the next 18 months or two years, so I’m not at all worried about the excess supply,” he says.
What he is worried about, on the other hand, is hotel discounts that “never pay off” but are leading to a “blood bath” in Dubai.
“The big [hotel] groups know [discounts] never pay off. So the first guy discounted, people followed and it became a blood bath. Since the [big hotel groups] have huge staying power, we are getting more and more sophisticated and less and less worried. And we basically weather the storm,” he says, adding that he believes the discounts will soon stop in the city.
“I think they will stop. It’s not only because you give a 40% discount that you’ll get more traffic to Dubai. That’s nonsense. So just weather the storm and make sure you give seven to 10% [discount] to people for them to appreciate that you’re going through some difficult time. But you’re not increasing demand by being a deep discounter. We’re not in the food or retail industry here,” he says.
Bazin’s reasoning? “The attractive prices get you a foot in my door, so you understand what we do and you’re very sensitive to what we offer, because you know you’re going to get something, but you also know it’s a rare availability. So we’re not discounting for one week at 20%. We’re discounting for one particular weekend at 40%,” he says.
And while there’s “nothing worse than an empty room,” Bazin says Accor will not lower its prices because “it’s very expensive to build a hotel. It’s very expensive to pay the staff. And then you get the freshness of the food delivery. You can’t discount that,” he says.
One thing Bazin himself cannot do, he says, is food and beverage.
“F&B is not a sport for amateurs. Some people have golden fingers. They know exactly what it takes to be alive for five years. Some of them know and some of them don’t, and they could be cousins. It’s a business [where] you can lose a lot of money…” he says, so he hires the best to do the job for him. Among them, he confesses, is US hospitality mogul Sam Nazarian, founder and chairman of SBE Entertainment Group, in which Accor bought 50% of in a $319m deal last year.
“He is the master of F&B in Las Vegas, Miami and New York. This is not an amateur. I don’t know what they [restauranteurs] have but they have something that I don’t, so I need them.”
With the rise of artificial intelligence (AI), will Bazin ever have robots serving customers at restaurants?
“That, I will never do,” he says. “I really believe the human touch makes that difference in the hotel space, which is why we’re so different from Booking.com and Expedia, who will never see you or meet with you, but, unfortunately for me, half of what I should be doing is not what I think personally.”
“If I want to be client minded, it’s about what you want. So maybe I want to impose on you that human touch, but maybe millennials and others don’t care about the human touch and want their toothpaste [to be delivered] within five minutes [by a robot],” he says.
The CEO sports the common senior executive attire: sharp blue suit, safe pastel tie and, of course, an expensive watch.
But as our conversation with Bazin comes to end and we shake hands to say goodbye, we notice a collection of funky thread bracelets hugging his wrist; some are pink, others green or in multi-coloured patterns. The contrast is hard to miss, and we later find out that his collection of the pieces was spurred by a particular one given to him by a friend who had shortly after passed away in a helicopter crash.
We recall Bazin’s interview with Arabian Business in 2014, a year after he was appointed CEO of Accor.
He said at the time that he is a “nobody” compared to the CEOs of same-size competitors Marriott, InterContinental and Hyatt, because people did not recognise him when he walked into a room, referring to Accor’s lack of market visibility.
Today, funky pink thread bracelets or not, Sebastien Bazin is a man that is hard to miss.
“It is worth it,” the CEO says of working with social media influencers to market hotels online. But, can you quantify it? “No,” he says. “It’s just a matter of followers. If somebody has 10,000 followers or 500,000 followers, you know there’s a marker there, [but] you don’t know how many people will be using the bloggers. The best thing is not for them to talk about it but for them to be seen in that place,” he says, adding that he knows within 20 minutes if the influencer is ‘smoke’ or has substance.
Sebastien Bazin’s jet lag cure:
He travels for 260 days out of the year. Bazin’s secret to dealing with jet lag? Never close a curtain.
“Any place I go, I sleep, and I sleep very well. It could be on the airplane or in a hotel. The problem is, every time I wake up, I don’t know where I wake up. I’m constantly jet lagged. [But] what I do now is I never close a curtain; never, ever,” he says.
“I go to my room, I fall asleep… and if I [wake up and] see that it’s still dark outside, I don’t look at my watch or iPhone, I try to go back to sleep until I see some light...”
Hospitality group aims to expand its presence in the region and Africa
Accor will open 60 new hotels in 14 countries in Africa in the next four years, its CEO for Middle East and Africa Mark Willis said. During the next two years, the European hotel operator will open more than half of them in Egypt, which Willis said is rebounding after “external factors” hurt the industry. “Egypt is resurrecting after 10 years of a tough situation,” Willis said in an interview in the Kenyan capital.
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