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February 2011
Euromonitor International
Scope
This global company briefing forms part of the wider travel and tourism research that covers the following categories:
Travel accommodation
Transportation
Car rental
Travel retail
Tourist attractions
Disclaimer Much of the information in this briefing is of a statistical nature and, while every attempt has been made to ensure accuracy and reliability, Euromonitor International cannot be held responsible for omissions or errors Figures in tables and analyses are calculated from unrounded data and may not sum. Analyses found in the briefings may not totally reflect the companies opinions, reader discretion is advised
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Euromonitor International
Strategic Evaluation Competitive Positioning Category and Geographic Opportunities Brand Strategy Operations Recommendations
Strategic Evaluation
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Strong portfolio
Accor Group is a major global group in hotels, providing
France
Global
Category Involvement: World hotel value share (2010): World hotel value growth (2010):
services for leisure and business travellers. The French company is one of the leading hotel chains in Europe. Accor has a diverse portfolio of brands from luxury to budget. Main brands are - Sofitel, Pullman, MGallery, Novotel, Mercure, Suitehotel, Ibis, All Seasons, Etap Hotel, Formule 1, hotelF1 and Motel 6. As at June 2010, Accor had over 4,100 hotels in 90 countries, with nearly 500,000 rooms. Western Europe, the world's largest region for hotels, is its core region.
2.9% 3.8%
strengthened the companys focus on the hospitality sector. Accor is emphasising the asset-light operating structures within its luxury and mid-scale hotels. The company expects 450 hotel assets to be restructured between 2010 and 2013 and achieve 40,000 annual new room openings. Accor aims to record EUR1.6 billion cash proceeds from the restructuring of the properties through which it plans to adjust its current debt. Accor also introduced an annual EUR200 million investment plan to support selective regional developments.
Strategic Evaluation
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Brand portfolio
Over the years, Accor has managed to develop
distinctive brands, which are differentiated from each other and from those of its competitors. The company is present in 90 countries around the world. Main brands are - Sofitel, Pullman, MGallery, Novotel, Adagio, Mercure, Suitehotel, Ibis, All Seasons, Etap Hotel, Formule 1, hotelF1 and Motel 6. Accor has a department which is entirely dedicated to making its brands more easily identifiable and increasing their visibility. It does so by improving customer knowledge and strengthening loyalty programmes. Mid-range and budget accommodation offer attractive options for the company, as it targets leisure tourism from different destinations. The changing marketplace from 5-star dominated demand to a wider market creates scope for mid-range hotels.
Upscale
Mid-scale Economy Budget
Pullman, MGallery
Mercure, Novotel, Suithotel, Adagio All Seasons, Ibis Etap, Formule 1, hotelF1, Motel 6, Studio 6
Strategic Evaluation
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Financial assessment
The results for year ended 31 December 2010 for Accor
showed signs of a recovery with hotel revenues registering EUR5,693 million, up 10% from the same period the year before. Major factors affecting these results were the expansion development projects which boosted revenues by EUR75 million, the strategy of asset-light approach of the hotel operator which decreased corporate debt significantly and its focus on the budget and mid-priced customer base. The upscale and mid-scale segments were major performance winners for Accor, contributing to the financial improvement particularly in European markets such as France, Germany and the UK. In those destinations, occupancy rates increased, which also led to improved average room rates. The French market performed particularly strong, due to an increase in inbound tourism flows and business travel to the country. Hotel value sales are expected to remain dynamic over the forecast period, growing at a CAGR of 3.6% over 2010-2015 as both business and leisure travel recover from the crisis. The cost-saving plan introduced in 2009 and the strong growth in economy hotels outside the US further contributed to these operational results.
Source: Company reports Note: Revenue consolidated and restated to account for demerger and disposals
Our common goal will be to increase the value and visibility of our brands, speed our development, and continue to diversify our operating structures through franchising and management contracts.
Strategic Evaluation
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RevPAR subsidiaries 75 58 64 74 45 60 71
Occupancy (%) subsidiaries 64.5 64.9 67.2 73.1 57.8 60.9 77.4
Strategic Evaluation
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US
Source: Company reports Notes: Includes VAT, as at 31 December 2010
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61.1
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Pipeline projects
Strong pipeline
brand portfolio operating in different market segments. This provides competitive advantage to attract a wide customer base and diversify its offerings.
development strategy, which capitalises on growth opportunities in Asia Pacific and Middle East, contributing to Accors high-profile presence in emerging regions.
overleveraged financial systems will see slower growth than emerging markets, which were relatively untouched by the economic crisis. Accors exposure in the US and Europe makes it more vulnerable to economic turbulences.
travellers can negatively impact Accor. If consumers remain cautious and businesses continue to curtail travel this could have a negative impact on the companys performance.
Largest franchisor
Focusing solely on
Credit availability
New build hotels are
contracts in Asia Pacific in 2010, adding 16,000 hotel rooms to its portfolio, Accor has strong competitive advantage to continue growing in the region.
tourism following the demerger of its voucher business, there are opportunities for Accor to become Europe's largest franchisor through further expansion.
expected to struggle in the short term, mainly due to the strong dependence on credit availability and an investors willingness to enter into credit agreements.
upward pressure on global inflation, which in turn could damage the speed of the economic recovery especially consumer spending. This can impact the demand for Accors hotel offerings.
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Strategic Evaluation
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which can be currency risk in markets where the company is highly exposed. Latin America is a case in point, where currently, Accor generates more than 40% of its operating profit. Hotels expansion has remained slow due to high real estate prices. Hence, franchising became the main way for chained hotels to develop quickly and with reduced investments. Accor is following its development plan through franchises, with a strong focus on the budget market. It aims to become a leading hotel group by number of rooms and Europe's largest franchisor. Occupancy rates have been the major concern for hotels in 2010. They have used different strategies to maintain the occupancy rate at the highest possible level. One of the measures adopted, was the lowering of price per room. Accor has invested heavily in economy travel accommodation. In Russia, Accor has experienced difficulties in developing its brand, due to a difficult operating environment; thus, the destination remains a challenge for the company. Corruption and excessive bureaucracy deter many foreign investors from operating in the country.
Improved 2010
Strong pipeline development. Investment in economy brands. Room for growth, key area for chain
Double dip?
Rising fuel prices impacting industry. Reliant on business recovery to maintain
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Strategic Evaluation Competitive Positioning Category and Geographic Opportunities Brand Strategy Operations Recommendations
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Competitive Positioning
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demand increasing, the performance of Accors upscale and mid-scale hotel revenues stabilised as well. This has led to Accor outperforming the global hotels industry in 2010.
Low-cost brands
The economic slowdown did not impact the performance of economy brands Ibis and Formule 1 mainly because of
their accessible prices. Budget hotels benefited from the economic downturn, as consumers traded down and avoided luxury hotels.
Demerger and divestment of assets helped the French operator to minimise its debt and generate cash reserves to withstand the impact of the economic crisis.
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5 0 -5 -10 -15 2006 8.2 10.9 2007 12.2 13.1 2008 5.3 13.9 2009 -10.7 -10.9 2010 3.5 3.8 12
Competitive Positioning
Euromonitor International
Global ranking
Hotels Top 10 Global Companies by Value 2006-2010
5-year share trend % share 2010 5.0 4.0 3.7 2.9 2.5 1.9 2006 2007
Company name
Marriott International Inc Hilton Worldwide InterContinental Hotels Group Plc Accor Group Starwood Hotels & Resorts Worldwide Inc Wyndham Worldwide Corp Choice Hotels International Inc Best Western International Inc Hyatt Hotels Corp Carlson Cos Inc
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1 3 4 5 6
1 3 4 5 6
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environment and escalating operational costs were the main factors influencing the introduction by Accor of a asset light strategy in 2010. With the majority of its brands positioned as budget and mid-scale, the company has managed to minimise the impact of the downturn. Strong occupancy rates and brand awareness particularly in Europe along with increasing demand helped maintain Accors good performance.
2008
2009
2010
Global pipeline
Accors expansion in 2010 has
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1.5 0.8 0.7
boosted sales growth. Aggressive pipeline development particularly in Brazil, China, India is expected to increase Accors market positions in those destinations. For the year ended 31 December 2010, Accor opened 214 hotels and 24,800 rooms, through management and franchise contracts. Russia/CIS and Morocco are considered important emerging markets targeted by Accor.
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Competitive Positioning
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Regional performance
Western Europe remained a core market for Accor in 2010, where it generates the bulk of its hotel revenues.
Nevertheless, strong value growth is likely to derive mainly from Asia Pacific and Latin America, as Accor increases its hotel penetration in these regions. Increasing consumer spending, an emerging middle class and investment will drive the economy of Latin America. Brazil is the rising star, as its economy proved resilient to the global economic recession thanks to great financial flexibility and improvements in commodity prices, which left travel and tourism unscathed.
Australasia
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
Regional Market size US$ million 2010 Bubble size shows company share of region in 2010
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Competitive Positioning
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Number of rooms 27,898 19,078 3,528 1,802 2,649 3,988 5,541 64,484
% share of rooms 43.3 29.6 5.5 2.8 4.1 6.2 8.6 100.0
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Competitive Positioning
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Number of Rooms 39,934 15,160 2,414 2,639 4,898 1,552 9,013 73,403 149,013
% share of rooms 26.8 10.2 1.6 1.8 3.3 1.0 6.0 49.3 100.0
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Competitive Positioning
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56 hotels
Asia Pacific
Latin America 7 hotels 27 hotels
10 hotels
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Strategic Evaluation Competitive Positioning Category and Geographic Opportunities Brand Strategy Operations Recommendations
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Sofitel, Pullman, Novotel and Mercure, in cities such as Guiyang, Changsha, Zhuhai and Huizhou. The companys presence in the country is quite strong, with 100 hotels and 26,500 rooms in 42 cities. Its portfolio of brands comprises 23 luxury hotels, 15 upscale hotels, 18 mid-scale hotels and 44 economy hotels. Accor, however, is keen to enhance its presence in China and in particular second- and third-tier cities.
India
In India, the French company is planning to invest US$130 million to reach 50 hotels by 2012. Three major brands
are operating in the country under the umbrella of Accor - Novotel, Ibis and Mercure. Early in 2010, the company outlined its aim to launch 90 hotels by 2015 in India. By December 2010, already 60 hotels were under contract to be built. The company intends to introduce other brands in the market, such as Sofitel, Pullman and Formule 1, by 2011. India was relatively untouched by the economic crisis. Being a large, dynamic economy with an expanding middle class and rising income levels, the country continues to represent huge opportunities for businesses, which Accor aims to take advantage of.
hotels will be opened in Padang, Surabaya, Manado, Balikpapan, Kuta, Denpasar, Jakarta and Bangka. This major expansion will be expected to increase its value share and surpass some of its main rivals in the hospitality industry. The company also announced that it will develop 12 more hotels, with 2,000 rooms, in Vietnam, by 2013.
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company has nine hotels opened in the region already. Currently, four hotels are expected to be opened by 2012, and Ibis Aleppo Taj Halab in Syria is to be launched in 2014. Other pipeline projects include Bahrain (2 hotels) and Saudi Arabia (2 hotels) and Syria (3 hotels) creating 1,500 new jobs. Expansion through local franchise partnerships are planned in Jeddah, Damman and Makkah. Saudi Arabia is of great interest to the company, as it is a market which helps Accor to diversify away from the United Arab Emirates. Another key trend, which is significant for attracting hotel chains such as Accor, is the fast growing business environment in the Kingdom fuelled by the new economic cities to be built. This was stimulated by the thriving banking sector with an increasing number of investment banks opening in the Kingdom and servicing high net worth individuals and corporations in the region. This means that there will be more demand for corporate outlets. In Saudi Arabia, Accor operates nine hotels and has long-term plans to add 15 new properties over the next five years. In 2010, the French company opened Sofitel Al Khobar The Corniche, Mercure Al Khobar and Novotel Damman Business Park. One of the major challenges faced by Accor in Saudi Arabia is the stringent visa regulations. Saudisation became compulsory for all major companies in the country, whereby these are compelled to have a large proportion of Saudi employees. The domination of expatriate workers in the workplace became an issue and hence since 2006, companies have been employing more Saudis who often require more training.
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UK, and London in particular, are of great interest to the company, also due to the Olympic Games in 2012, which is likely to strengthen the UKs hotels industry. London continues to be one of the most desirable cities for hotel development and is key for hotel operators looking to expand their networks internationally.
properties were opened in the region in particular Colombia (Bogota and Santiago), Chile (Antofagasta) and Paraguay (Asuncin). The brands major goal is to tap into all the capitals in this part of the world, as well as major cities, which are experiencing business growth. By the end of 2011, Ibis is expected to have another 10 properties in Brazil (Curitiba, Santos, So Luis, Belo Horizonte and Recife), one hotel in Chile (Concepcion) and one property in Peru (Lima). By 2015, 57 Ibis hotels will be opened, with 51 in Brazil, 4 in Chile, 1 in Colombia and 1 in Peru.
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sustainable and eco-tourism. Accor is renowned for its sustainable initiatives such as the Green Key Eco-Rating programme. Initially launched as a pilot scheme in 20 locations in the US, the Green Key Eco-Rating Program (Green Key) will be rolled out to all Motel 6 and Studio 6 properties. It is expected that by the end of 2011, these two brands will be certified. Green Key programme certifies and inspect hotels and resorts based on their commitment to sustainable green practices. Much attention is expected in sustainable tourism in the coming years. Hotels, which are able to maintain operational costs (energy, water and waste) at a lower level and enhance services through the offer of healthier environments and more comfort to tourists, are likely to strengthen their competitive advantage in the short term.
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Strategic Evaluation Competitive Positioning Category and Geographic Opportunities Brand Strategy Operations Recommendations
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Brand Strategy
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Sofitel
Pullman
By the end of 2010, 60 hotels were in Europe, Africa, Middle East, Asia Pacific and Latin America.
MGallery
Upscale hotel brand characterised with distinctive settings reflecting the individualism of 40 new properties will be added to the companys the particular destination. portfolio by the end of 2011. Brand repositioned at the top of the mid-scale segment. Mainly located in major international cities and tourist destinations, targeting business and leisure travellers. Mercure brand features contemporary style at low prices appealing to both leisure and business travellers. In 2010, the brand launched novotelstore.com responding to demand from customers for products specific to the Novotel brand. Franchise agreement with Focus Hotels, adding 10 hotels to its UK network in Q1 2011.
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Novotel
Mercure
Brand Strategy
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Apartment hotels mainly located in Europe and targeted at business and leisure travellers.
All Seasons
Non-standardised brand located in city centres and major business areas for business travellers.
Ibis
Economy brand targeting both leisure and business travellers, which seek value for money, even among those with the highest income levels. Awarded "Best Economic Hotel Brand" in China.
In 2010, 22 new Budget travel accommodation in large metropolitan areas. Outside Europe, the brand is establishments were opened in Western Europe. known as Formule 1.
hotelF1
Low-cost hotel brand featuring modern interior design and a strong focus on sustainable development.
Its primary brand location is in France, with 261 hotels in the country.
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Brand Strategy
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Motel 6
Low-cost travel accommodation brand, with 1,090 locations mainly in the US and Canada.
Studio 6
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Brand Strategy
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brand aims to capitalise on the brand power of Novotel for international expansion. With 26 hotels located mainly in Europe, Accor intends to grow the new Suite Novotel brand internationally and further enhance its competitive positioning in the all suite segment in Europe. The re-branding gives Novotel a suite version, and helps it boost its presence in the centre of major cities. The new Accor brand offers suites of 30 sq m, and innovative services in catering, relaxation and multimedia. It is an upper-mid-priced brand targeted at business travellers or families on city holidays. Following its debut in Luxembourg and five other countries, where Suitehotels were already present France, Germany, Austria, Morocco and Dubai new Suite Novotels opened in Malaga, Spain, in 2010. It is expected that Paris-Issyles-Moulineaux, France, will be opened by early 2011.
Suite Novotel With its upper-mid-priced positioning, Suite Novotel targets business and leisure travellers with its all-suite concept. Novotel Brand repositioned at the top of the mid-priced segment. Mainly located in major international cities and tourist destinations, it targets business and leisure travellers by offering a home-like experience.
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Brand Strategy
Euromonitor International
compensate for the weak demand. In some instances, this resulted in the emergence of new hotel layouts and a more focused brand positioning. The Ibis brand from Accor, for example, introduced a brand new advertising campaign in July 2010 that moves away from the traditional sales focus on pricing and service. Instead, it focuses on a rock n roll image, repositioning the economy brand for the young summer leisure market in Europe. This strategic move, makes Ibis more appealing to young tourists. The campaigns main protagonist is the rock band, TENor15, which is influenced by Queen, the Village People and AC/DC. A 140-second video is to appear on YouTube, Facebook and MySpace Europe-wide. It features the hotels various services, using a day in the life of a rock band on the road theme. To attract younger guests, Ibis is also investing in high-tech services, offering free nights and supplementary services like the Web Corner. Planned to be installed in all Ibis hotels by 2011, Web Corner is a form of budget business centre, called Self Service Business Centres that augment the existing wi-fi with a 24-hour dedicated area offering net surfing, a webcam, Skype, e-mails, chat and sending Ibis e-cards.
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Brand Strategy
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Social media
TripAdvisor and Accor
Accor has included the TripAdvisor link on the websites covering its 4,000 hotels, which aims to increase the
transparency about its hotels and urge customers to provide their feedback on a hotels prices, services and facilities. TripAdvisor branded sites make up one of the most popular online travel communities, with more than 25 million unique monthly visitors. Customer feedback is seen as a tool which can boost guest service and generate first-hand insight to the service provided.
can upload clips of snorers or create "snorchestra" snore sounds mixed with music. The concept introduced in one of Accors hotel brands, Etap, seeks to showcase that the hotel rooms provide a comfortable nights sleep by having thicker insulation. The initiative is seen as a fun way to engage with customers using social media, but equally to raise the profile of the brand in an increasingly competitive environment.
the World Photo Hunt, where players had to spot the differences between two nearly identical photos from a selection of Accor properties worldwide. In 2010, Accor has put strong emphasis on technological tools by improving the accorhotels.com website in order to better answer clients' demands. Besides promoting the breadth and diversity of its hotel brands around the world for an entire month, Accor encouraged participants to share scores on Facebook and Twitter, and challenge friends to try to beat their score. The grand prize is a 12-night European holiday for two adults to Paris, Berlin and Barcelona. In order to adapt to technological innovation and to better respond to clients online expectations, Accor has implemented online tools such as iPhone and iPad apps. In 2010, Accor introduced a new version of the iPhone application, which delivers a better and more improved search function for booking its hotel rooms. Rates are provided in real time, facilitating the clients choice depending on location and budget. The application is available in several languages, such as Portuguese, French, English, German, Spanish and Italian.
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Strategic Evaluation Competitive Positioning Category and Geographic Opportunities Brand Strategy Operations Recommendations
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Operations
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Hotel-focused business
Demergers and divestments
In June 2010, shareholders approved the
demerger of Accors two core businesses Hotels and Prepaid Services. The decision creates two separately listed companies. As the Hotels and Prepaid Services businesses developed distinct business models, the idea of a potential demerger offered great opportunities for individual growth. It is expected to speed up future growth within hotels through a more focused direction, management performance and optimised allocation of financial resources. As Accor prepares to turn into a major franchisor and hotel operator, it plans to sell 450 hotels or the equivalent of 25% of its properties in the next four years. Accor also sold its investment in Compagndes Wagons-Lits trains to Newrest in order to become a pure hospitality ie industry player. The French company aims also to sell a 49% stake in casino group Lucien Barriere to the financial holding company Fimalac, for EUR343 million.
2 July 2010
Stock market listing of Edenred following the demerger of the Services business.
7 July 2010
Partial divestment of Compagnie des Wagons-Lits trains Launch of Ariane 2015 corporate project. Ongoing cost-reduction plan aiming to save EUR45 million in 2010.
21 July 2010
Creation of new hotel investment fund in India. Sale of 48 hotels in France, Belgium and Germany for EUR367 million.
Operations
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Strategic Evaluation Competitive Positioning Category and Geographic Opportunities Brand Strategy Operations Recommendations
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Recommendations
Euromonitor International
franchise player, it is pivotal for the company to continue diversifying its brand positioning, but also continuing its brand revitalisation. Although 2010 saw a slow recovery in the hotels industry, the threat of a double-dip recession is a risk to the future performance of Accor and increases its vulnerability to an unstable economic environment.
the growing number of travellers staying connected while travelling, thus achieving greater operational efficiency. Accor must continue to innovate in order to attract a diverse client base. Capitalising on the power of social media to get guests to learn more about different brands, can enhance brand exposure and build brand loyalty. Accor must increase investment in new distribution platforms such as mobile and social media.
furthered its development in Latin America in 2009-2010. The fact that Latin America is repositioning itself as a luxury destination presents enormous opportunities for growth not only for Pullman but for Accors other brands.
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Report Definitions
Euromonitor International
Definitions
Hotels
Hotel outlets that provide lodging include independent and chained operators as well as all company-owned, leased,
managed and franchised outlets. Aparthotels are included. Residences or serviced apartments are the same as aparthotels with the rental of apartments offering the service of a hotel. The word residence is not used with this meaning in English-speaking countries. Hotels include French pensions, Spanish hostals and Italian pensione. Extended stay hotels are included. Villas attached to hotel resorts are also included in the hotels category.
Occupancy rates
This expresses the relationship between available capacity and the extent to which it is used. It may refer to either
the use of rooms or of beds. Occupancy rates are based on the number of nights of both domestic and international tourists.
is part of the calculation along with % occupancy to generate revPAR (revenue per available room). ADR is based on the actual rate offered to the consumer taking into account discounts, not the rack rate advertised by the hotel.
RevPAR
This signifies revenue per available room. It is calculated by occupancy multiplied by the average daily room rate per
company. RevPAR is based on rooms available for use by domestic and international visitors. Euromonitor International measures system-wide revPAR i.e. for company-owned, company-operated, licensed and franchised outlets.
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