Accor CEO makes Italian entreaty; holds court at investment powwow

RIMINI, Italy — "It’s about time I made it to Rimini." And with that declaration, Sébastien Bazin, the earnest and outspoken CEO of French hospitality giant Accor, made an impassioned plea to the Italian investment and ownership community, seated at the Italian Hospitality Investment Conference, to work more closely with him.

"Here, 90 percent of the hotels are still in the hands of family ownership or private Italian institutions," he said. "It's the most difficult market to penetrate. Help us distribute better in Italy." 

Of Accor's more than 5,300 hotels worldwide, around 82 are in Italy.

Bazin wasn't in Italy just to drum up business. Disarming the audience with his unique brand of frankness and bonhomie, Bazin expatiated on myriad hospitality-related topics, often ending in sincere applause from the audience. 

A history lesson first. "The hospitality sector has been blessed for the last 50 years, growing 2 to 5 percent per annum since the 1960s," he said. "We are blessed with sustaining demand, which is twice stronger than the increase in supply. What other trillion-dollar industry has so much visibility?"

Rumors of the hospitality industry's death have been greatly exaggerated, according to Bazin. "Anyone saying hospitality will suffer long term is foolish."

He offered that the hospitality of tomorrow will just look different, what he called "a different mix" than the one we've seen over the last five decades. Opening that vein even further, he said that the mix of work and play—historically, business travelers helped drive bookings Monday through Wednesday, but as the "bleisure" trend grows, Thursday and Sunday nights are now outpacing historical business travel bookings—is making it hard to distinguish between what is leisure travel and what is business travel and further evidence for why hotel rates have sustained throughout the pandemic and are now outpacing 2019.

A Finger on the Future

Bazin is a futurist in his own right. The mix of brands within the Accor orbit—from traditional hotel brands to home-sharing and co-working—a testament to his multidimensional palate. Accordingly, he has a unique view on development, one that discounts the hotel guest and makes the local community the inspiration for design. 

"You have to first think about what are you building and design for the local community, not for the travelers." he said, adding that hotel revenue is turning increasingly ancillary and not coming from the sale of rooms. Creating a hotel for the local community, he said, benefits sales and marketing to prospective guests of the property. "Travelers opt for a brand because it's trendy and adopted by the local who comes maybe twice a week to the bar, the restaurant or just to hang out in the lobby," Bazin said. "Repeat customers come by foot or bike and not an OTA. You have to rethink what you are building and who for."

In 2017, Accor launched Accor Local to broaden its marketing to locals, instead of targeting only visitors and travelers.

Travel, Bazin contends, is not about the products or even design, both of which are table stakes. It's experience and memories that Bazin said are the backbone to travel. "They want to remember what they have done and share it on social," where he said that half of all social posts link back to the act of traveling. 

Five years ago, Accor acquired 50 percent of the Orient Express brand and its eponymous luxury train line with plans to put it back on European rails in early 2025, in partnership with Gruppo Barletta. The new train will follow the historic route of the Orient Express, linking Paris to Constantinople/Istanbul from 1883 to 1977.

Bazin said he routinely asks people what the Orient Express name evokes. Answers swing from Agatha Christie to various black-and-white films or even luggage. In Bazin's estimation, travel is a sentiment, a feeling and not an object. "The Orient Express is not the product," he said. "A train journey is something everyone and anyone will remember."

Like experiences, luxury is a subjective term that comes in many forms. Accor recently convened a board meeting at the Habita79 Pompeii MGallery, where one of the members for two straight says wore a pair of Air Jordans that he bought for $11,000. "That's his luxury," Bazin said. 

Costs of Doing Business

In 2020, Accor established a lifestyle division on the heels of its acquisition of Ennismore, composed of The Hoxton, Gleneagles, Delano, SLS, Mondrian, SO/, Hyde, Mama Shelter, 25hours, 21c Museum Hotels, TRIBE, JO&JOE and Working From_ brands. Bazin said that these brands represent 3 percent of Accor's total hotel count, but 30 percent of newly signed deals are Ennismore brands. He said the robust pipeline is more a result of the service and people who staff these properties. 

But labour and other line item costs remain thorny issues for the hotel industry. "We went through hell with COVID," Bazin said, adding that Accor put aside €70 million to subsidize employees through the pandemic. 

In the U.S., for example, some 50 percent of the hospitality labor force is not back or not coming back. Bazin said it has little to do with pay and more to do with work constraints and the inflexibility that comes with it. "They see their friends work remotely, but you can't work remotely at hotels," Bazin said. 

In Europe, energy costs are going through the roof. In the UK, some provincial hotels are even contemplating shutting down for the winter months. According to HotStats, electricity costs in Europe on a per-available-room basis are are up 97 percent year to date compared to the same period a year ago. 

Bazin said that energy costs for Accor total around 8 percent of total costs, but that could go up to as high as 25 percent of total costs, which would eviscerate a hotel's margin. "Energy alone could take away the entire profit at a hotel," Bazin said. Though Russia's war on Ukraine is portrayed as the culprit, Bazin put the blame squarely on government and politics and not relying more on nuclear power. "France has 32 [nuclear] plants and a few working," he said. "It's stupid not to maintain because of politics."