Accor’s CEO, Sébastien Bazin, took to the stage at the Sofitel St James Hotel in London in October 2014 to unveil the company’s bold new digital strategy: "In this industry, those who master digital will win," he said with confidence. "We see digital not as a threat but as a massive opportunity."
At the centre of Bazin’s vision is an attempt to wrest back control over the company’s booking channel from the grip of online travel agencies (OTAs).
His announcement that Accor purchased French app-maker Wipolo, as well as its plans to improve its online booking websites, marked a major move by Europe’s largest hotelier to take on OTAs.
It’s an issue anyone remotely familiar with the hotel market will be aware of. There was a time when hoteliers were much more casual about the threat posed by the internet; people will still need physical rooms, the thinking went, so whatever challenges the web brings to the industry will surely be limited. That proved wrong. For years, guests have been gravitating to websites such as Expedia and Priceline, and the margins for hotel chains have suffered as a result.
If Accor’s announcement in late 2014 marked something of a sea change, its latest move has been seen by some to be a declaration of war. In June, a few months into the company’s new digital strategy, Accor announced it would open its AccorHotels.com booking system to non-affiliated independent hotels, creating an online marketplace that effectively challenges OTAs at their own game.
The idea is simple: boost the flow of visitors to Accor’s own website so that even when people don’t stay at a hotel across one of its 21 brands, it still drives traffic and awareness, while undermining some of the OTAs’ power. By 2018, the objective is to have more than 10,000 hotels on the system in 300 locations around the world. Though the company isn’t defining its success strictly on that figure, six months in, Romain Roulleau, Accor’s senior vice-president of e-commerce and digital services, says the strategy remains well on track.
"In terms of signing and enrolling hotels onto the platform, we are on par," he says. "Our target is to have a few hundred hotels on the platform by the end of this year, a few thousand by the end of 2016 and a complete selection by 2017. So far, we have hotels in France, Italy, Spain, London, Thailand, Singapore and Malaysia, and we are going to open in more markets.
"We have a lot of candidates, and there is no issue when it comes to incoming volumes, but the idea is to make sure we select the right ones. We are more focused on the way we open regions, and the way we reach the right hotels and the right destinations, rather than on a precise figure. It’s about the quality of the hotel and the selection".
Everyone’s a critic
When the company announced the new plan, it’s fair to say not everyone in the hotel industry believed in the mission. The travel website Tnooz quoted IHG’s chief commercial officer in Asia, Middle East and Africa, Nick Barton, as saying: "Independents will not move the needle on hotel distribution. The OTAs are too powerful and they [independents] are too dependent on them."
Even Accor’s own deputy CEO, Vivek Badrinath, admitted in an interview that it was a "leap of faith". So, how will the new system try to distinguish itself from what the major OTAs already offer?
"We’re putting forward a curated platform that has the best choices available in the best destinations," Roulleau says. "We live in a world where you have too much choice and often feel like there is something else on the web that might be better.
"The basic concept on which OTAs have been founded is a no-selection criterion. If a hotel wants to be distributed on Booking.com or Expedia, they get a contract and are distributed. The quality will be displayed based on reviews. With our concept, if a hotel wants to be distributed but is not eligible by our criteria, they won’t get on the website. That’s a very significant difference".
The differences are perhaps more significant than the similarities with successful platforms that are already in existence. "The planet does not need yet another copy of Booking.com or Expedia," Badrinath previously said.
"But if AccorHotels offers an absolute catalogue covering the planet with hotels that are all well done, then there is room for a customer to come and say ‘Here is a good list of reasonable-quality hotels by someone who knows the business, and if I do not find what I am looking for here, then I can go elsewhere.’"
Major differentiator
AccorHotels hopes that its reputation as a leading hotelier will convince customers and independent hotels that their curation has some merit.
"The fact that we are hoteliers is a major differentiator," Roulleau says. "People will see us differently from hotels that are distributed on Booking.com or Expedia. We’ve had a lot of hotels tell us that being displayed on AccorHotels is a proof of quality because they are being acknowledged and distributed by one of the highest-quality branded hotels".
AccorHotels also hopes to convince independents that the new system is fair. All the hotels already on board have been displayed in an objective and transparent way, according to Roulleau, and website placement is determined by a hotel’s distance from the point of interest the customer selects, not by who is paying a higher commission or which hotels happen to be branded.
"If you type in Champs-Élysées, or the Vatican in Rome, you will see hotels displayed according to the distance," Roulleau says. "We’ve had hugely positive feedback from independent hotels because they are pragmatic and believe it’s a safe, smart idea to test.
"If we increase volume, then that’s good for them, and if we don’t increase volume, then there is no real risk. It’s a cheaper channel for them, it’s a well-known hotel chain and it’s good for them to have the visibility."
Of course, the detractors still remain. Even with a system that is well constructed and well differentiated from other OTAs, some analysts doubt a distribution platform with 10,000 hotels can compete with websites that feature hundreds of thousands. For Roulleau, this is something of a straw man argument though. Accor, he says, is not trying to replace OTAs and is certainly not in some kind of battle.
"We are not in a war," he says. "I know it has been published in the press, but what we’ve been saying is that we want to have a fair equilibrium. We are already able to drive very significant amounts of business to our hotels, and we are now able to drive very significant business to independent hotels too.
"We will never replace the power and the strength of Expedia and Priceline. What we always say to hotels is not to stop their business with OTAs, because they are volume-drivers. But we think we can deliver something better, cheaper and fairer to these hotels. It’s about having a fair relationship."
Two months ago, hoteliers in the US were in uproar over a decision by the US Department of Justice to allow a merger between Expedia and Orbitz, two of the world’s largest online booking agencies. The consolidation follows a number of similar moves by OTAs, such as Priceline’s acquisition of Booking.com, and Expedia’s acquisition of Wotif and Travelocity. Compared with these big companies, Accor’s new system may look like it’s playing a limited game but, as OTAs move towards even greater consolidation, the alternative it is providing may prove to be invaluable.
Getting the booking ball rolling
The opening of AccorHotels.com to independent hoteliers went live in selected markets in July. In time, the objective is to offer more than 10,000 hotels in 300 key cities worldwide – a threefold increase in the number of hotels currently on AccorHotels.com.
The independent hotels distributed on the platform alongside the group’s brand hotels are selected on the basis of hotel criteria, with guest reviews considered. AccorHotels.com is already the leading online hotel-booking platform in several markets, including France, Brazil, Australia and Germany. It promises to provide independent hoteliers with a powerful alternative and qualitative distribution channel that meets their specific needs.
"Transforming our distribution platform into an open marketplace is a major initiative for the group, and the result of a new approach to our profession and business model," said Sébastien Bazin, AccorHotels chairman and CEO, at the time of the launch.
"AccorHotels is placing its powerful digital tools at the service of independent hoteliers and increasing the choice available to its customers by adding more hotels and more destinations. We are becoming a trustworthy, selective and transparent third party, and we are once again amplifying the in-depth transformation undertaken within the group since 2013.
"These initiatives and the launch of the new AccorHotels application are designed to enrich the content of our digital ecosystem, and reinforce our position as a hospitality industry pioneer and trailblazer," Bazin said.
