Accor: The winner takes it all, even (more) behind the walls

How Accor has shifted its operating focus, leaning assets but boosting presence

Accor is the world’s largest hotel operators  across the globe.






Sofitel Sofitel Noumea Sofitel Champs Elysees


Accor Hotels’ (AH) business model focuses on welcoming: Welcoming guests, partner hotels under Accor Brand, and welcoming independent hotels under their web portable. The firm has remarkably shifted its focus and aligned business and operating models. Accor brings brand, customer experience, and hospitality features (rooms, food & beverage, customer fidelity) to the world across the 3700+ establishments it manages through franchise, ownership, management contracts.

AH is definitely a winner. The Business model has indeed shifted the operating model, from Hotel owning to brand operating.

The operating and business models are currently aligning, supporting each other: resources made from leaning real estate are reinvested in web presence, geographic expansion and brand building, which in turns fuels better real estate portfolio and ability to generate higher returns. The core of the operating model is its ability to expand through different channels rapidly – the internet is becoming a source of income as a platform versus a brand vector only- and allowed AH to reduce its dependence on Online Travel Agencies. Under Sebastien Bazin’s leadership, AH has rebalanced its focus on hospitality operations, heavily investing in online presence to dispute online travel agencies (“OTA”s such as expedia,…) costly channel and margin intermediation, after having freed resources.


AH has significantly decreased its capital intensity in recent years, to lighten its structure and free up resources (see Graphs).


AH current operating model and business strategy lie in two axes:

1- Separate management business & asset businesses: AH has split its investment business and would potentially list it, acknowledging its focus on hotel management. Bazin however admitted that selling assets hasn’t always been a good deal for AH. AH is hence taking the opportunity of this asset split to divest from low to average performing hotels, while keeping strategic high performing hotels under ownership, generating more resources to in-turn invest in significant opportunities. This skimming translated into higher operating performance.

2- Focus on digital capabilities: AH has invested €250M to build and expand in-house ebooking capabilities, through an internet portal, in a move to halt OTAs’ incursion within its business model (and regain the intermediation fee OTAs charge). Boosting internet bookings, AH has increased customer loyalty, and reduced reliance on commissioned-third parties. It even generated new revenues by opening up the portal to third party hotels, increasing the value of its visitor flow, and reducing customer acquisition cost. This move is critical in aligning AH’s refocus: the Group builds new revenues as a Hotel Operator by providing third parties (independent hotels) a booking service, generating further traffic for its own hotels and disintermediating online rivals . This move allowed AH to rely more on its own booking system than on OTAs, surpassing American rivals (who rely by 20% on OTAs). It also helps AH to attract more independent hotels to join its brand. Accor plans to roughly triple the number of hotels available on its websites. It is currently in testing with just 3 hotels, but Accor says that it has been approached by 500 hotels who want to join the system. Increasing the number of its hotel offer will lower customer acquisition costs for its own hotels, by making Accor Hotels a more effective destination for customers planning travel. It will also allow Accor to bid more effectively for search terms, as it will have a broader coverage of any city, increasing its conversion ratio.
This realignment of the operating model has paid off, providing AH significant strategic impact over its peers: least reliance on OTAs, and sustained higher operating margins . See the KPIs

Bazin comments on these results, summarizing the alignement strategy



Finally, AH will use its improved investment capacity to further expand, more specifically in North America. It has named a new US CEO, Christophe Alaux, and has an active pipeline of investments to boost hotels under management in the US.

UPDATE 12/09/15: Accor Just announced its acquiring of FAIRMONT RAFFLES HOTELS, Confirming our note on its wish to expand in North America.




Personal phone and email exchanges with Christophe Alaux, CEO, Accor North America, Member of Accor Executive Committee

Morgan Stanley brokers’ note, August 4, 2015, “Accor, Buy On Weakness”

Exane BNP Paribas brokers’ note, February 26, 2015 : “What’s behind the walls”






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Comex, a pool of paint.

Student comments on Accor: The winner takes it all, even (more) behind the walls

  1. This is a great example of house AH changed their operating model to match their business model. AH moved away from owning the real estate assets, and focused on a way to serve its new customers, their franchisees. AH used the resources from their divestment to ensure their hotels had an online platform and presence to boost occupancy. This moves make AH to less asset heavy and more nimble in the competitive hotel space. Great post!

  2. Thanks Gilles,

    Very interesting model; it raises two main questions for me:
    – To what extent the change in strategy led to a change in the group’s culture and managerial practices? Was the group able to leverage its own talents to develop it or how did they built this incremental skills sets (especially in terms of IT)?
    – How does this model answers the changes in the global hotel landscape and the entry of new market participants such as AirBnB? What is your view or their mid-term perspective?

    Again, great post!

    1. Thanks Noémie for the feedback. You are touching to the sensitive point:

      The change in the strategy was actually led by a change in the leadership, and hence culture. Accor has been owned for a long time by Colony Capital, where Sebastien Bazin is coming from. Colony urged Accor to dispose some assets and there is no mystery as to why Bazin tookover Accor as CEO. That said, Accor had started switching gears years before, but the change in top management accelerated change.

      Bazin’s first move was to recruit top management from the outside to handle digitalization, and this is how Accor switched from late come to precursor in e-lodging. Bazin accelerated the mutation, putting €250m on the table, and giving Accor an edge.

      To your second question, Accor is undeniably embrassing the future: Bazin has repeatedly mentioned that he wasn’t seeing AirBn’B as a threat. Repositionning Accor as an operator, versus a hotel owner changes perspectives. The biggest US hotel chains turned asset light in the 90s but have not focused as much on the change of competitive landscape. Operators have initially been annoyed and upset by Airbn’b’s disruptive entry. However, they just repositioned on their core customers: business commuters and high-end leisure travelers. Airbn’b’s arrival has hence pushed Hotel players to skim their clientele and focus on brand awareness. Accor is no exception…

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