The Economic Times: June, 2014
Mumbai: Sebastien Bazin, chairman and CEO of Europe's biggest hotel group Accor, is one of those rare 'insider-outsider' executives helming a global giant. In his earlier avatar as a private equity honcho, Bazin served on the board of Accor for nine years, representing its largest investor Colony Capital. Now as the new boss since last August, Bazin has been undertaking a huge transformation in Accor's 45-year-old history: dividing Accor into two business poles, fuelling power brands and focusing on key geographies. During his maiden trip to India recently, where Accor has 25 hotels through Sofitel, Novotel, ibis and Formule 1 brands with plans to open one hotel a month, Bazin — in a long chat over coffee and cookies at Sofitel's presidential suite in Mumbai — tells TOI the rationale for the re-organization and why client data is hotels' biggest asset. Excerpts:
You have been one of the rare insider-outsider CEOs. How has the transition been?
I have lived three lives — as a Wall Street trader, an M&A banker and then as a private equity executive. I am living my fourth life as Accor CEO. I have been on Accor's board for nine years and as an outsider I thought I knew the company very well. But now, I feel there is still a lot to learn. I want to leave my print on Accor by making it more ambitious and giving it more resources. Here, I am kind of a locomotive, where I give the train speed, fuel and direction.
Accor is undergoing the biggest-ever transformation globally. Where does India figure?
I don't want Accor to be the biggest hotel company, but I want it to be the best-performing and the most-valued. We have split the business into two: HotelInvest, which owns our properties, and HotelServices, which manages all of our 3,650 hotels. Among all the hotel companies, HotelInvest owns the highest number of properties at 1,400. Taking a leaf out of my private equity experience, I decided that I want executives dedicated to investment and another team on operations. This, I thought, would allow us to measure risks, costs and yield. For this model to work, the organization had to be lean and agile, where decision-making process is simplified and localized. Besides, we have made another assessment in terms of our priority markets. Today, we have 14 brands and operations in 93 countries, which is a hotel chain's largest ever presence, but do we need to be in so many markets? We would like to focus on 20 countries and India is one of them. It doesn't mean we exit the other 73 countries, but we need to make our priorities clear.
Technology and the digital interface are changing the entire way businesses are being run. How is it shaping Accor?
The six chains that have been dominating the hotel industry for the past 50 years did nothing during the two digital revolution waves. The first wave was emergence of online travel agencies 12 years ago and the second one was five years ago, when advisory sites made an impact. Soon we will have a third wave, and this time I want Accor to be an actor and not a spectator. The industry felt or still feels that the client will at the end of the day stay at hotels and hence the business is safe. But now, your margins are getting squeezed as they are being paid to online travel aggregators. Technology too will play a vital role as hotels can give access to rooms on smartphones without the guests having to go to the desk. So client database will be a crucial asset for a hotel.
In the new arrangement, will you reduce your investment exposure?
Financial investors prefer asset-light hotel companies. But I want to be a contrarian. We are way behind on HotelInvest and my task for the next two years is to improve its operations. We need more investments but that is a risk in several emerging countries. Hence, we need partners. I don't intend to buy 100% of a hotel in India, Indonesia or China.
So will ownership be limited to Europe?
Yeah, big and full ownerships will be limited to Europe, while partial and minority investments could be in select emerging countries, Brazil and India being among them.
Where does India figure in your growth plans?
In India, we are going to open one hotel a month. We have 25 hotels here so far. We want to double the number in the next two years. Interestingly, the first time an Accor chairman visited India was in 1977 to look at and smell the market here. But we entered India only in 2006. By that measure, we have been quick in terms of expansion compared to others.