What does it take to grow a hotel group to 1,000 properties in Asia Pacific? Well, if you ask Michael Issenberg, CEO, AccorHotels APAC, it takes time and investing in people on the ground, helped of course by a handful of acquisitions.
Michael Issenberg: “We wouldn’t have had the success we’ve had if we had not invested in people to back up our strategy.”
“When I joined Accor 24 years ago, we had fewer than 50 hotels in the region. When I took on Asia in 2003, we had roughly 200, 100 of which were in Australia,” said Issenberg.
“It’s been a long road, the company’s changed remarkably and we’ve accelerated the past five years through acquisitions.” (Accor purchased Fairmont Raffles in 2016 for US$2.7b, Movenpick Hotels & Resorts in April 2018 for $567m, and the month after, Mantra Group for $1.2b.)
Another deliberate approach has been investment in human capital. “We wouldn’t have had the success we’ve had if we had not invested in people to back up our strategy,” said Issenberg, who’s led a loyal and rapidly growing team in APAC in the past 15 years.
It would also not have achieved the diversity in business that it has today without putting the right people in the right place.
“We now have offices in all the key countries – we have 115 hotels in Indonesia, 75 in Thailand and 50 in India. We have a diverse business and we don’t have too many eggs in one basket.”
Of course, it wouldn’t have got to 1,000 without China. Issenberg recalled the tipping point of growth – China’s opening up following its joining of the WTO in December 2001. “That was the key change and that changed our entire industry. China is the biggest economic story of the 21st century and of the hotel and travel industry.
“Our growth curve followed the growth of China.”
Today, Accor has 270 hotels in China compared with 330 in Australia but in terms of rooms, the Chinese count of 200,000 exceeds that of Australia.
What this means is that Accor’s biggest markets in APAC are in the two very different economies of China and Australia “and I get to live in the middle in Singapore”, laughed Issenberg.
There’s a twist though in the story. In 2007, Issenberg was given the decision to pick a new Asia headquarters. He looked at Hong Kong and felt it was too China-centric. Bangkok was also an option but political instability was a worry at the time.
In the end, he picked Singapore because one of the attractions was it didn’t have any Accor hotels “and I didn’t want corporate office to get in the way of local hotels”.
Today, after the acquisition of Fairmont, it is the largest hotel operator in Singapore with a total of 15 hotels (6,400 rooms) in the island state, among them the Raffles Hotel set up to relaunch next year following a multi-million dollar restoration.
Is it then time to move corporate headquarters to another location?
“No, Singapore still has a lot of advantages. It’s a great place to live, there is increased capital, the number of REITS here, and there’s good capital outflow.”
Issenberg though is keeping a watchful eye on 2019. With the softening of the Chinese economy and the trade war between the US and China, there is concern that this will have a significant impact on Asia.
“There is definite concern, how it will play out, we don’t know. We don’t think it will be solved in the near term, so we are preparing the business for a softening.
“We are being prudent in how we budget and invest, especially in human resources. The tap will not be turned off – travel is a consumer item today but travel is always impacted by the economy.”
All in the family now: Movenpick (pictured)Movenpick Resort & Spa, Maldives), as well as Mantra.
Acquisitions one after the other – Fairmont, Mantra and Movenpick – have meant a lot of integration work for the team “but I’d rather have too much to do than not enough”.
Other than completing all the integrations necessary to move the new united Accor in one direction, Issenberg is working to ensure that, for 2019, it leverages China more for the entire company.
“What that means is better capabilities in our corporate office, better technology for the China market – that’s our responsibility.”
Gary Rosen: New chairman and chief operating officer for China.
It’s appointed a chairman and chief operating officer for China, Gary Rosen, who’s got both a hospitality background (he was senior vice president of sales and marketing, APAC, Intercontinental Hotels Group) as well as external experience in other industries. “We wanted someone with deep China experience, who also understands tech and marketing, and Gary’s got both,” Issenberg said.
A new vice president for digital marketing for Greater China has also been appointed, Vivian Yeh, who joined the group with 20 years of experience in digital marketing from internet advertising agencies, corporate banking and FMCG industry having worked in New York, Taipei, Hong Kong and Shanghai.
“Fortunately the biggest beneficiary of us upping our game in China is APAC,” said Issenberg, “with how China’s outbound is growing.”
To balance out the softening of China, Issenberg is optimistic about inter-Asia travel which will remain the biggest driver of growth. “I am a big believer in ASEAN which has great travel destinations.”
Investments in loyalty will also pay off next year – its acquisition of John Paul for instance is to provide concierge services for its members. Accor is also rolling up the three loyalty programmes of Fairmont Raffles, Movenpick and Mantra into Le Club.
“Travel has increasingly become experiential but where is the experience heading and how can we make the best of it? How can we use CRM and loyalty programmes to make their stays more meaningful?”
He’s also excited about the acquisitions of lifestyle brands such as 25 hours, SBE and Mama Shelter. “These brands are right on point and the right time for the Asia market.”
In previous years, there was a trend for hospitality companies to hire talent from other industries – tech and marketing skills versus industry knowledge – but Issenberg said, “You need both. If I went to another industry, my leadership skills are transferable but I’d want my team to have industry knowledge.
“It is true that we need fresh eyes on technology but we are still a hospitality company looking after people when they travel.”
Its acquisitions of tech companies is only a small part of the bigger picture. “At heart, we are still a hospitality company. We want to improve our tech, extend our reach, but the core remains hospitality. People don’t travel for tech, they travel for service and experiences.”
Technology is still a long way from truly transforming hotel operations. “We are not yet able to crack room cleaning – we’ve seen attempts but there’s nothing close – and you can automate some of the food processes but the further you go up the quality chain, the harder it gets.”
“We are a million miles away from automating a chef with real skills, a sommelier with real knowledge and someone to smile at you.”
(Featured photo: Pullman Tokyo Tamachi, Accor’s 1,000th hotel in APAC)