Chapter3 Complet

8/12/2019 Chapter3 Complet

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1

Accor Hospitality: The New Business Model

Chapter III

Optimizing operating performance

The Right Approach

The RightServiceProviderCulture

The RightAsset

ManagementPolicy

The RightBrands

The RightNetwork

The Right

Operating

Performance


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Battle of revenueBattle of revenue

Yann Caillre

COO Hotels France, Southern Europe, Middle East & Africa and CEO Sofitel Worldwide


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The Battle of Revenue : 360

Marketing andCommunication

Sales andDistribution

Marketplacestrategy

RevenueManagement &Dynamic Pricing

Loyalty ProgramAMiles

Reservation(Accor Hub)

New team spirit

New tools

New market share


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Marketing andcommunication


Marketplacestrategy




New team spirit

New tools

New market share


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Aligning marketing strategy with mature and emerging markets

ObjectivesObjectives LeversLevers ImpactImpact

+30M

Variation

07 vs 06

Variation

06 vs 05

+35M

Worldwide

MarketingSpending

Accor will adapt its marketing

strategy depending on whether

it is market

leader

or

challenger

in order to maximize the

Marketing spend

ALIGNING MARKETINGSTRATEGY WITH MARKET

PENETRATION

-------------------------------------------

When Accor is

market leader

Strengthen our positioning withpowerful advertising campaigns

When Accor is

market challenger

Become the leader and strengthen

the brand strategy

When Accor ispenetrating a market

Move up to the front ranks and

rapidly gain market share to boost

brand recognition


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When Accor is leader, poweful advertising to strengthen brand strategies

Print advertis ing campaign

in France, Germany, UK

Print advertising

campaign in France,

Germany

TV advertising in

France

Note: Marketing Plans - 2006 - 2007


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Marketplacestrategy




New team spirit

New tools

New market share


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Reservation Accor Hub


Get connected to everybooking channel and

source

Make the bookingprocess as simple as

possible for the customer

Use all the channels tomaximize conversion

Get connected to everybooking channel and

source

Make the bookingprocess as simple as

possible for the customer

Use all the channels tomaximize conversion

Connectivity and

innovation: unique TARSreservation system

Availabi li ty and user-

friendliness

Connectivity and

innovation: unique TARSreservation system

Availabi li ty and user-

friendliness

30% of room nights

generated through central

systems 50% of conversion rate forcall centers Up to 50% in ARR vs.direct hotel with TARSreservation system (upscale

& luxury segments) 100 millions of visitors inAccor websites

30% of room nights

generated through central

systems 50% of conversion rate forcall centers Up to 50% in ARR vs.direct hotel with TARSreservation system (upscale

& luxury segments) 100 millions of visitors inAccor websites


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On Line hotels

Electronic Distribution

Travel Agencies

Brand web sites Accorhotels.com

Voice Booking TARS

OPENCLOSE

Rates

Infos,

photos

Room

typesSales

Conditions

Call Centers

Sales ForcesCommissions management

B to C Web SitesB to B Web SitesTour Operators Web SearchEngines

TARS, a HUB linking hotels to distribution

Intra-hotel &

inter-hotel


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TARS room nights

Room nights per year

1996 2006 2010

40 million

2 million

20 million

2006

>31% through central system2010

>40% through central system

CAGR19% in 4 years (2006 to 2010)

CAGR

26% in 10 years (1996 to 2006)


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Expedia : A worldwide agreement

+30%

+335%

Roomnights

0

50 000

200 000

YTD July 2005 YTD July 2006 YTD July 2007

New

Contract

Direct

connect

North America

55%

Rest of the Worl

12%

France

13%

United Kingdom

20%

A specific channel in order to target additional clientele

Driving an increase in total of room nights

75% of customers are from the US and UK

Origins


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Marketplacestrategy




New team spirit

New tools

New market share


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Sales and Distribution


More revenue:Capture the demand fromall the existing channels

Better revenue:Set the right price for theright channel, enhancebusiness visibility

Optimized

distribution costs:Maximize cost-revenueratio: lower costs, higherimpact

More revenue:Capture the demand fromall the existing channels

Better revenue:Set the right price for theright channel, enhancebusiness visibility

Optimized

distribution costs:Maximize cost-revenueratio: lower costs, higherimpact

Effective sales force to

capture potential

wherever it is:- Hotel sales force- Global multi-brand sales force- Dedicated sales force for luxury

segment

Appropriate offers for

every channels:- Corporate/Leisure/MICE/Airlines- Distribution- Online / Offline

Effective sales force to

capture potential

wherever it is:- Hotel sales force- Global multi-brand sales force- Dedicated sales force for luxury

segment

Appropriate offers for

every channels:- Corporate/Leisure/MICE/Airlines- Distribution- Online / Offline

Access to more than65,000 large accounts

worldwide

Up to 80% of revenue

generated through salesand distributionprocesses (upscale andluxury segments)

+50% of increase in

sales by 2010 (2005 to2010)

Access to more than65,000 large accounts

worldwide

Up to 80% of revenue

generated through salesand distributionprocesses (upscale andluxury segments)

+50% of increase in

sales by 2010 (2005 to2010)


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Internet Distribution

Eric Lepleux

Chief Marketing Officer


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Accorhotels.com and brands.com: a major online player

300 000 visits per day

100 mill ion visitors per year

11 millions room nights

7 languages

30 000 room nights per day

1 room night every 3seconds

KEY FIGURES

2007


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2007: changing the business and running the business

Rebuild all brands websites in line with the new portfol io strategy

Support the arrival of All Seasons and Pullman

Improve content and functionalities

(ie new hotel presentation, Google search engine, interactive city guides )

Develop Chinese platforms for our future sites

Increase by 31% our volume of room nights


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Rebuilding all brands websites


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Our portal strategy

Brand

customization

PortalStrategyGeneric content

BrandStrategyCustomized content

Mutli brand

customization

2010


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Forrester 2006 In % of revenue

A strong opportunity to drive direct bookings

12%

19%

14%

19%23%

0%

5%

10%

15%

20%

25% WorldWide

USA

Price transparency

Interconnectivity

Brand loyalty

Booking experience

and simplicity

to increase our

internet penetration

KEY

INITIATIVES


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Penetration ratio by brand

6%9%

7%

20%

13%15%

17%4%

4%

4%

7%

3%

10%

14%

11%

27%

16%15%

17%

31% overall growth in2007

Double digit target growthuntil 2010

14% overall penetrationin 2007

Penetration ratio target25% by 2010

PERSPECTIVES

2007 - 2010

Direct on our site

Indirect from third party


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Third parties: a continued focus on other major online players

Accor Websites

76%

7,8 millions

room nights

Third PartyWeb site

24%

Other third

parties31%

Bookings

17%

Expedia16%

HRS14%

Hotel.de

10%

Wotif.com

10%

Ctrip.com

3%

Laterooms

2%

3,2 millions

room nights


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Accorhotels.com and Brand.com: better conversion ratios than thecompetition

5,80%4,70%

Accorhotels.com

& brands.com

Competitors

Bookings/Visits Competition Forrester 2006

Range of offer: full coverage of the market

High operational performance

Clear privacy and security policies

Logical flow and navigation

Graphics and maps adding value to the

booking experience

Home page provides clear answer to user

OUR STRENGTHS

Forrester Web Site Review


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Improving our internet reach

Capture additional traffic

- Travel Search Engines (Kayak, Kelkoo...)

- Parternships (Europcar, Club Med Air France)

- New 2.0 players (Tripadvisor, myspace.com)

Retain our customers

- Develop loyalty and customer knowledge (launch of loyalty program, pre arrival mail,conversional agent, e-mail campaigns)

- Offer a wide range of products and brands (Accor Brands and partners brands)

Develop direct connectivity

- Existing interfaces GDS/Pegasus (Orbitz, Lastminute, Travelocity)

- Direct Tars (Expedia, Booking, HRS, Hetel.de)

Enhance our BtoB solutions

- Specific portal and home page

- New functionalities for different segments (MICE, Travel Agents, Corporate)


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Revenue Management and Pricing

CLOSEOPEN

Revenue

Management

optimizes what

to open for saleand

when for when

+Rate is PRICED ()

For the room type,the date of stay

and number of persons

Pricing

Is to optimize

to always target the right pricefor the

right moment

Hotel Level OPEN for sale

Room type OPEN for sale

Rate OPEN for sale

Booking is possible only if


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REVPAR growth INDEX =1 in 2004

Trainings

for all

+ 8 pts

Implementation of a new tool: Revenue Management System

255 hotels

114 hotels


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AA new policy has been launched in 2005: Dynamic Pricing

A new policy has been launched in 2005: Dynamic Pricing

AFTER

3 public rates

Fully flexible Rate

Restr ictive Rate

Prepaid rate

AFTERAFTER

3 public rates3 public rates

Fully flexible RateFully flexible Rate

Restr ictive RateRestr ictive Rate

Prepaid ratePrepaid rate

Revenue Management System supports Dynamic Pricing

BEFORE

10 publ ic rates

without any logic

For the customer

BEFOREBEFORE

10 publ ic rates10 publ ic rates

without any logicwithout any logic

For the customerFor the customer

No control

over the

final result

No control

over the

final result

Easier

to manageEasier

to manage

With immediate

resultsWith immediate

results

+ 30 pts


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Example of results : 4 Sofitel in Germany

Public rates 2006

Average = 159

Public rates 2006

Average = 159

Public rates 2007

Average = 186 Without any lost room-nights

No increase of the full rate

Public rates 2007Average = 186

Without any lost room-nights

No increase of the full rate

Jan-Jul 06Jan-Jul 07

Sofitel network wor ldwide impact: +3M

gained with RA3 closed 15 days before


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Revenue Management Worldwide Map in 2006

Full Revenue Management System and Methods

Or Trained (REV chalenge and / or Revmaster)

200 hotels equiped in 2006(maximum target=1200)

200 hotels equiped in 2006(maximum target=1200)

R M t W ld id M i 2009


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Full Revenue Management System and Methods

Or Trained (REV chalenge and / or Revmaster)

Revenue Management Worldwide Map in 2009

800 hotels wil l be fully

equiped in 2009

(maximum target=1200)

800 hotels wil l be fully

equiped in 2009

(maximum target=1200)


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Revenue Management & Dynamic Pricing

Ex: Sofitel USA

Don Kelly

VP of Sales, Pricing, Distribution and Revenue Management for Sofitel Worldwide

S fit l USA ( bl ) C titi S t


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Sofitel USA (comparable) vs. Competitive Sets

------ADRADR

80%

85%

90%

95%

100%

105%

110%

115%

2001 2002 2003 2004 2005 2006 YT D

2007

PENETRATION INDEXES

------ REVPARREVPAR

------ OCCOCC

Results were driven primarily through the management of our public pricing

S fit l E l S fit l N Y k C titi S t


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Sofitel Example: Sofitel New York vs. Competitive Set

------ADR IndexADR Index

85%

90%

95%

100%

105%

110%

115%

2004 2005 2006 YTD 2007

PENETRATION INDEXES------ REVPARREVPAR IndexIndex

------ OCCOCC

--- Competitive Set (Intercontinental, Loews, Parker Meridien, Omni, Royalton, Muse)

Public Prices Definition:

- RA 1 - (best unrestricted)- RA 2 - (72 hour cancellation)- RA 3 - (pre-paid rate)

YTD Room nights (+24% in 2007)

YTD ADR (+11% in 2007)

- RA 1 - $527- RA 2 - $395

- RA 3 - $367 YTD Room Revenue (+37% in 2007)

The Price Movement CRITERIA


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Lead TimeLead Time

RevPar PaceRevPar Pace

Competitive SetCompetitive Set

Booking PaceBooking Pace

The Price Movement CRITERIA

3 Automatically Linked Criteria

Lead-time

Revpar pace at the specified lead

time

Booking pace of key sub-segments

at the specified lead time

1 Subjective CriteriaCompetit ive Sets Weighted Average

Rate is reviewed by the Revenue

Manager at the specif ied lead time

The combination of all fourcreate the probabil ity rules or

If statements

Price Movements


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Price Movements

360 EXECUTION


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360 EXECUTION

Sofitel

Profitability

Change of Mindset

Revenue Quality

Account BehaviouralModel

Psychological PricingWillingness to Pay

PerformanceIndexing

New DiscountingGoals

PerformanceMeasurement

System



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MarketPlacestrategy Revenue

Management &Dynamic Pricing



New team spirit

New tools

New market share


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A unique advantageA Marketplace Strategy


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What is La Place ?

A consistent geographical market

impacted by the same environment,business flows and events

A battle field where Accor can

leverage its broad, powerful offering(multi-brands, multi-size, multi-

segmented) to pump out extra value

from demand through coordination

and synergy from each Accor Hotel

q gp gy

Each hotel is a key-player of the global

marketplace strategy

Each hotel is a key-player of the global

marketplace strategy

A Marketplace Strategy


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Increase and maximizeAccor RevPar

Gain extra revenue

Gain profitable marketshare without dilutionand cannibalization

Optimize each brands

value for money in eachsegment

Increase and maximizeAccor RevPar

Gain extra revenue

Gain profitable marketshare without dilutionand cannibalization

Optimize each brands

value for money in eachsegment

ObjectivesObjectives

Global competitive markettools

Accor integratedreservations system

Coordinating Revenue andPricing Management

Rerouting inter-hotelindividual and groupdemand

Synchronizing marketingand sales initiatives

Global competitive markettools

Accor integratedreservations system

Coordinating Revenue andPricing Management

Rerouting inter-hotelindividual and group

demand

Synchronizing marketingand sales initiatives

LeversLevers

Performances:Tracked Key Metrics(ARR, RevPar &RGI) above Off-marketplace hotels

13 marketplaces inFrance will generate

8M incrementalrevenue in 2008

Performances:Tracked Key Metrics(ARR, RevPar &RGI) above Off-marketplace hotels

13 marketplaces inFrance will generate

8M incrementalrevenue in 2008

Financial ImpactFinancial Impact

p gy

Focus France


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La Dfense

Orly

Roissy

Strasbourg

Lille

Bordeaux

ToulouseMarseille

Nice Cannes

Lyon

Paris Sud

Today in France :13 marketplaces (incl Paris IdF: 6)

260 hotels (incl Paris IdF: 90)

36 000 rooms (incl Paris Idf : 20 000)

Representing :

66% of revenue (40% for Paris IdF)

70% of GOP (43% for Paris IdF)

Paris Bercy

Paris Centre

Optimization levers some examples


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Over 100 000 individual room nights cross-sold yearly in FrenchPlaces Ex : Paris Sud

Over 10 000 groups room nights rerouted yearly Over 10 000 individuals room nights cross-sold yearly

Over 100 000 individual room nights cross-sold yearly in FrenchPlaces Ex : Paris Sud Over 10 000 groups room nights rerouted yearly Over 10 000 individuals room nights cross-sold yearly

Reservations

cross-selling &

rerouting

Reservations

cross-selling &

rerouting

Example la Dfense :

Ibis, Suitehotel rack rates adjustments: +400K Last room availability optimization: + 600K Calendar optimization (calendar, events, environment) for2008 vs 2007 (+ 1,5M)

Example la Dfense :

Ibis, Suitehotel rack rates adjustments: +400K Last room availability optimization: + 600K Calendar optimization (calendar, events, environment) for2008 vs 2007 (+ 1,5M)

Price

Optimization (*)

(*) vs daily market demand bycategory and segment

Price

Optimization (*)

(*) vs daily market demand bycategory and segment

Local special offers on needy periods Sales blitz

Local special offers on needy periods Sales blitz

Marketing &

sales initiatives

Marketing &

sales initiatives

2012 Vision: A worldwide strategy deployed in over 80 Places


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Asia Pacific

15 Places

Europe

60 Places

Americas

5 Places



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Marketplacestrategy




New team spirit

New tools

New market share

How the AMiles loyalty program will work


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Web basedprogram

Top membersget Gold and

PlatinumStatus

Convert

AMiles into

Hotelchecks Airline miles

Earn AMilesfor each

spentEnroll for free

Miles

1 Million members 2007

4 Million members 2012

AMiles will catch up with our global competitors


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Economy

Mid scale

Upscale

Luxury

InterContinentalPriority Club

+ 2 500 hotels

StarwoodS. Preferred Guest

700 hotels

HiltonHHonors

+ 2 500 hotelsAccor

A Miles

+ 2 000 hotels

MarriottMarriot Rewards

+ 2500 hotels.

Miles


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The battle of Revenue : 360The battle of Revenue : 360Consequence onConsequence on

RevParRevParIndex FranceIndex France

France : The battle of the RevPar index (from 2004 to 2006)


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90

100

110

120

130

140

2004 2005 2006

Ibis and Etap Hotel

90

100

110

2004 2005 2006

Mercure et Novotel

Ibis and Etap Hotel

Market leaders

+ 0,7 Pts increase

Mercure is strengthening its position

Novotel is maintaining its positioning

+ 2,5 Pts increase


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FlowFlow--Through BattleThrough Battle

Yann Caillre

COO Hotels France, Southern Europe, Middle East & Africa and CEO Sofitel Worldwide


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Productivity gains through changes inProductivity gains through changes in

management of operationsmanagement of operations


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Y. Lecret 56

Novotel Caf

Concept


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Concept

Bar more than a restaurant

Trendy and high-quality products

Simplified menu 5th products generation in partnership with Lentre

Open 24/7


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Olivier Devys

Chief Executive Officer of SuiteHotel


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Previous advertising: Good Morning by Suitehotel


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20 original new recipes, especially created by a chef and a nutritionist,presented in individual transparent glass casings.


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4 kinds of Dammann-brand teasSeasonal fruit

selectionFresh milk

Trays designed forSuitehotel to meet

Good Morningspecifications

3 kinds of bread,freshly baked in the

hotel + minicroissants.

2 kinds of organiccereals.

Selection ofon-demand ground

coffees such asespresso andcappuccino.

Creamy hot chocolate

and hot water for tea.

4 flavors of jam,porcelain mugs,

glasses, cutlery,sugar, etc.

3 fruit juices,

100% pure juice,100% fruit taste.

Good Morning by Suitehotel


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A new breakfast concept introduced by Suitehotel in two test hotels in late 2006

and deployed across the network in 2007.

Innovative both in its design lay-out and in the quality of the products,

Responding to customer values: simplici ty, independence, easy access,

generosity

Anticipating emerging customer expectations: broad offering, low-fat, healthyproducts, unusual recipes, an unexpected experience, etc.

Considered by customers as good value for money (12)

and highly profi table for Suitehotel (GOP: 45% of To)

A high satisfact ion rate and a 60% increase in breakfast revenue.

An innovative breakfast concept based on emerging customer expectations


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Organizational and skil ls management programs

Salvatore Serio

Managing Director France Hotel Division

A team organization program


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Organizes work schedules depending on the

hotels forecast demand

Organizes work schedules depending on the hotelsavailable human resources (quantity and skills)

Ensures compl iance with each countrys labor

legislation

Reduces time spent on administrative tasks and

improves cost management.

FORECAST DEMAND

AVAILABLE PEOPLE

COMPLIANCE

COST MANAGEMENT

The right person in the right place at the right time to improve

cost management and increase customer satisfaction

A skills development program


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An employee skills evaluation system

Training programs providing certification

in various fields of expertise

By developing identical ski lls recognized

across the global Ibis network

A career plan for each employee

ASSESSING

TRAINING

ENCOURAGING MOBILITY

OFFERING A CAREER

A holistic management process


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Identify skills

Integrate employee desires

Offer training

Anticipate demand

identify skills + resources

Build the hotel organization together

Equipe

Hotel

Acteurs

EmployeesCompatibility

Equipe

Hotel

Acteurs

Employees

Guest satisfaction Employee turnover (- 5%)

Labor costs


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ProcurementProcurement

Jol Vatan

Chief Procurement Officer

A i th t d li l t t

Procurement


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Net rebates (% of revenue) 1.0%Net savings (% of revenue 2.6%

Average 2006 Ebitdar rate 30.5%

(Accor Hospitality)

2006 total Hospitality business volume = 10bn

Procurement volume = 3.4bn

The Procurement process is geared to offer hotels

solutions that increase their productivity while preservingtheir flexibil ity and abili ty to meet customer needs

The Procurement process is geared to offer hotels

solutions that increase their productivity while preservingtheir flexibility and abili ty to meet customer needs

A service that delivers value to our partners

Procurement: an ongoing strategy to deliver value

to all our business partners


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3 countries

Vol. nom. Purchases = 0.3bnNet savings: 12%

Creation

1992 - 1997

Extension1998 - 2005

20 countries

Vol. nom. Purchases = 1.5bnNet savings: 10%

35 countries35 countries

Vol. nom. Purchases =Vol. nom. Purchases =2.6bn2.6bn

Net savings: 8.5%Net savings: 8.5%

100m in savings in 5 years (2006-2010)

Impact on PBT: 65m

100m in savings in 5 years (2006-2010)

Impact on PBT: 65m

5 drivers for 100m in savings in 5 years PBT impact: 65m


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Openings

in newcountries

Expansion of

categories

managed by

the

Procurementdepartment

International

sourcing

in low costcountries

6 new

categories

in 5 years

New sourcing

team

in Asia

Expansion

of

internationalcontracts

From 10%

to 20% of

our spend

Improvement

of the terms of theexisting contracts

Category

management

benchmarks

USA

UK

Germany

Category

Manager

2005

Coverage

rate

201010 countries

in 5 yearsArg enti na

ItalyChina

Indonesia

Middl

e East

South Africa

10 new countries

in 5 years

15m 40m 10m 10m 25m


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France: Significant growth in results


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Development / Network

rationalization

Topline

Maximization

Profitability

(drop through)

2007 RevPar : 49.4 (+9% vs 06)2007 Ebitdar Drop through : 57%

2007 PBT : 261 M (+28% vs 06)

France: RevPar and Drop-Through Impact


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REVPAR (in )

41,243,1

45,3

49,4

2 004 2 005 2 006 2007 E

+ 8,2

(07 est. vs 04)

Drop Through Percentages

43,0%

20,3%

27,6%

57,0%

2 004 2 005 2 006 2007 E

+ 36,7 Pts(07 est. vs 04)

France: Impact on Profit Before Tax


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+ 66 M(07 est. vs 04)

Profit Before Tax

194200

204

261

2 004 2 005 2 006 2007 E

Documents

Chapter3 Complet