Accor on Thursday reported an 11% revenue increase for 2024 – a jump that largely came from its luxury division. The company’s luxury and lifestyle segment grew 19%, more than triple the 5% growth rate of the mainstream business.
The Paris-based hotel operator also said it’s focusing its expansion in high-growth markets, including South America, China, India, and the Middle East.
The board asked Group CEO Sébastien Bazin to remain in his role until he reaches the company’s mandatory retirement age of 65 in late 2027.
Ahead of Thursday’s earnings results, Skift spoke with Group Deputy CEO Jean-Jacques Morin about the company’s strategy and his management style.
Morin joined Accor in late 2015, first as CFO and quickly added the title of Group Deputy CEO. In 2013, he added the job of CEO of the company’s “premium, midscale and economy” division.
Morin spoke with Skift about Accor’s strategic pivot in key areas, including brand quality, geographic focus, business models, and technology.
Brand Quality
Accor has recently exited dozens of properties to maintain brand standards, particularly focusing on legacy mid-market brands like Novotel but also legacy luxury brands like Fairmont.
Morin said consistent quality across the portfolio matters more than the short-term loss of fee revenue.
He gave some context: Since 2023, Accor has run a so-called “Pure” project that empowers its leaders to remove what it calls “detractors,” or underperforming properties, from its system.
Property problems could include poor financial performance or a failure to keep up with property improvement plans in line with a brand’s design.
Last year, the group added 293 hotels, growing its network by 3.5% to over 5,600 properties.
Morin said Accor’s net room growth would likely be faster, perhaps 4% or higher, once it completed its brand audits.
Two-Track Strategy
Accor is pursuing a two-track strategy of mass-market lodging alongside a growing luxury portfolio.
That luxury growth may be sustained thanks in part to a partnership with LVMH on the Orient Express brand.
Morin argued that operational efficiency in mid-market brands can generate better returns than luxury properties, where value creation comes more from real estate appreciation than operations.
“The return on [economy brands] is much better than the return on any luxury properties,” Morin said.
“We are doing a lot of things which are not necessarily visible from the outside to improve the margin in the operating model in the premium, midscale, and economy division, but also across the group,” Morin said.
Overall, on the global development front, Accor has a pipeline of 1,381 hotels. Luxury and lifestyle signings are part of that, with deal volume up 39% in euro value year-over-year.
Asia as a Growth Market
The Middle East, India, and Asia Pacific will account for about 60% of Accor’s hotel openings this year because executives believe demand growth will be strongest in these regions soon.
The company said it was pursuing markets with the most growth. Last year, hotel occupancy in the Middle East, Africa, and Turkey was 10 percentage points above the pandemic level. Occupancy in Southeast Asia was also above pre-Covid levels, and Accor’s hotels saw double-digit gains in revenue-per-available room in the region last year.
One factor driving high performance at Southeast Asia’s hotels is that while Chinese travelers have pulled back, Russian and Korean tourists have filled the void in key Southeast Asian markets.
Another factor is the regional service culture, Morin said.
“Thailand’s service culture is a key competitive advantage in hospitality that technology alone can’t replicate,” Morin said. “Vietnam, they may be a bit more direct but the service is still remarkable. Singapore, it’s pristine and you get the service, too. Japan, while the communication for foreigners might not be easy, you get outstanding service and scenery.”
In Australia, Accor has about 80% of the market share among midscale hotels, he said. Guests at its Mantra and other brands in Australia are now looking to find its brands when they travel abroad in Southeast Asia.
More Franchising
Separately, Accor has shifted 10 percentage points more of its portfolio toward franchising versus management contracts (from 50% to 60%) in recent years, Morin estimated.
One driver of the change is an increasing acceptance of franchising — as opposed to having Accor run hotels on their behalf — by a younger generation of entrepreneurs in the hotel growth market of Southeast Asia.
However, Accor maintains a nuanced approach. Luxury and upscale urban properties still warrant management deals, while franchising makes more sense for economy hotels in secondary markets, Morin said.
Tech
Accor has been investing in technology to help its hotels, recently striking deals with pricing tech vendor IDeaS for revenue management help and Amadeus for a new reservations system.
These partnerships point to Accor’s overhaul of critical capabilities affecting the pricing power and cost efficiency of its hotels.
“The goal is seamless data flow between properties to enable more personalized service and dynamic pricing,” Morin said.
Accor is also moving tech operations to Bangkok and Brazil, tapping local talent pools while cutting costs.
“You basically get the same quality engineers and service but at a much lower cost,” Morin said. “We’ve now got hundreds of high-quality engineers in Bangkok.”
The deputy CEO candidly said stock investors gloss over the vital operational improvements Accor is making.
“Nobody wants to know about the plumbing,” Morin joked.
Morin’s Management Style
Skift asked Morin about his management style. Over the past nine years, Morin has worked to make relevant data more available and more central to Accor’s decision-making.
“In God we trust, for everything else we use data” is his adaptation of Google’s mantra about injecting analytical rigor into hospitality decision-making.
Morin said he was “an accountant trained to be an engineer” and was “supposed to be helping to build planes.” For a while, he did management consulting and examined Motorola’s semiconductor business. Later, he was CFO at Alstom Finance during its acquisition by General Electric.
Morin believes these non-hospitality experiences gave him a data-based, analytical view that is less common in the hotel industry, where emotion, tradition, and habitual mental frameworks have had the upper hand.
“I do not decide based on emotions,” he declares. “I decide based on data and then emotions.”
He said his management philosophy to make complex considerations more simple.
“If you try to ask people to prioritize more than three things, they probably will not remember the first one,” Morin said, noting that he works on only having a few top priorities for each of his teams at any moment.
“Simplicity is the ultimate sophistication,” Morin said, adapting a quote attributed to Leonardo da Vinci.
“We haven’t had a major M&A in two or three years,” Morin said. “There haven’t been any big surprises. The consistency of our message about what our goals are and the clear transparency about our progress toward those goals — all of that should help make our story relatively simple to understand inside and outside of the company.”
