“Once upon a time there was a blessed sector known as the hospitality industry,” Maud Bailly, Accor’s southern Europe CEO, told Investment Monitor at the Mipim Leaders’ Perspectives Summit in March. Accor broke records in 2019, financially speaking, with a phenomenal 330 hotel openings that year – almost one per day.
“But life is a school of humility,” she quickly adds. “The worst shock happened. It’s like being in a nightmare. No one could have predicted a drop of almost 1.1 billion international travellers. During the 2008 financial crisis, the hospitality industry lost revenue of only 12%. Now we’re talking about a 60% plummet.”
Accor, one of the largest players in the hospitality industry, boasts 5,100 hotels globally. In the second quarter of 2020, more than 60% of its hotels were closed.
Accor’s lessons from the pandemic
“The response has been to adapt. Rapidly. When you face exceptional crises, you need exceptional answers. We did this in [several] ways,” says Bailly.
First and foremost, Accor addressed the new customer demand for health and safety reassurance. In this vein, the company designed the ‘All Safe’ certificate for its hotels, alongside Bureau Veritas as an independent third-party monitor. In short, Accor implemented wide-ranging sanitary, cleaning and inspection protocols across all its hotels.
The second response was to offer increased flexibility for the customer. Before the crisis, 50% of Accor’s clients booked their stay ten days before their travel, according to Bailly. Today, 50% are booking their stay two days before. In short: people need to be able to book and cancel at the drop of a hat.
Accor’s third response to the pandemic was social and community service. “Hospitality is about taking care of and welcoming people,” says Bailly. “So we allocated €70m to support our employees around the world who were facing financial difficulties or medical issues, and we opened our hotels to medical staff, female victims of domestic violence, homeless people and students in need. This gave everyone at Accor meaningful purpose.”
The pandemic has also accelerated new uses for hotels. The growth of remote working means people can more easily work from hotels, something that could counterbalance what is expected to be a long-term decrease in international business travel post-pandemic. “So we’re pushing co-working and hotel-office solutions,” says Bailly. “For example, we offer corporates the possibility to book a hotel floor and transform it into a meeting and working space.”
She believes that some of the major changes brought about by Covid-19 will be long term. In particular, health and safety standards are here to stay, as is the move towards flexible bookings. Bailly adds that Accor’s decision-making processes have become more nimble, and that the group is far better prepared to manage crises of the future.
Accor is hopeful of a strong recovery
Despite the gloom and doom, there are good reasons to be optimistic, according to Bailly. “When you look at France’s summer performance last year, it was dynamic despite Covid,” she says. “There were very high occupancy rates, even in February. Look at Dubai during Christmas, we had an occupancy rate of 95%. Then look at China; by December 2020 they have had occupancy rates almost as high as 2019 levels.”
People, especially younger demographics, are indeed raring to travel. “What we need is visibility, and then the industry will flourish,” says Bailly. “The moment [UK Prime Minister] Boris Johnson gave more certainty about some UK restrictions decreasing in May and June, we registered soaring online bookings.”
Bailly expects to see a strong recovery this summer, despite this lack of visibility in some countries. “We’re taking lessons from the 2020 summer,” she says. “It will be a far more domestic customer profile, with more demand for eco and leisure segments.”
Another reason to be hopeful is the fact that industry investment has not dried up. Across Bailly’s region – which includes travel hotspots France, Italy, Spain and Portugal – Accor is still opening a hotel every four days. “So, the pipeline is still super dynamic,” says Bailly. “And we’re still seeing a lot of people investing because they trust it. People will want to travel and discover again.”