Accor CEO explains why he won’t be closing hotels in Russia

Despite calling the war in Ukraine a “tragedy”, Accor CEO Sebastien Bazin said the company has no plans to pull out of Russia, noting that it has never stopped working. operate in a war-torn country over its 50-year history, including most recently in Myanmarsite of a bloody 2021 coup.

“We’ve been to countries at war probably 30 to 40 times over the last 50 years on different continents,” Bazin said Thursday at the Skift Forum Europe in London. “Accor has never withdrawn from any hotel business when employees needed Accor the most.”

At least in Russia, Bazin argued that profit had nothing to do with the decision. Accor has long struggled in Russia, he said, where occupancy is 35-40% and the company “doesn’t earn a dime”. Instead, he said, Accor is staying because the company is betting it can provide valuable service to the remaining Russian visitors, some of whom are loyal Accor customers.

This includes journalists, employees of non-governmental organizations and Western diplomats staying in hotels in Russia. Bazin said they needed a safe place to go during the day, where they can trust hotel workers to take care of them, and where they know their gear won’t be stolen.

“Otherwise you won’t get Bloomberg or CNN or anyone on the news,” he said in a conversation with Skift CEO Rafat Ali. “They believe the brand will be the guardian of their assets.”

Additionally, Bazin noted that Accor employees in Russia should not be punished for government actions.

“It’s not their decision,” he said. “I make a very separate decision between the Kremlin and Mr. Putin and the Russian people. And I can tell you that being on the phone with them, they are in tears. These employees in Russia. they don’t understand what’s going on.

Although the company still operates most of its Russian hotels, it has made some changes to its operations. Accor suspends new hotel openings in Russia and closed five of the county’s 56 hotels because the hotel owners were sanctioned by Western governments, Bazin said.

The Middle East is booming

Elsewhere, Accor properties in the Middle East are ‘on fire’, with travelers and residents of Doha, Abu Dhabi and Dubai paying high room rates while spending hefty amounts on food and in drink, Bazin said.

“The prices are exorbitant and the traffic is extraordinary,” he said. “The Middle East is just very robust.”

The United States is another bright spot, Bazin said, even though the company there is undersized. Bazin said the U.S. market is “almost on fire,” with average room rates up 18-25%, an increase that outpaces rising hotel labor costs in the U.S., which have increased by about 12 to 18%. Other relatively strong markets are France, England and Canada, the CEO said.

Elsewhere, however, including the rest of Europe, the news is less rosy. Southeast Asia is improving, as more countries open up, but the base is weak — the region has long seen 10% occupancy rates, Bazin said — so a full recovery will take time. Meanwhile, Japan, China and South Korea remain effectively closed to many foreigners, making a hotel recovery impossible. Additionally, Accor continues to struggle in India, Bazin said.

“It’s a big domestic market and we’ve never made any money in India,” he said. “We will probably never make money in India. But we happen to be a big operator.

More local visitors

While Bazin said he was generally optimistic about an overall industry recovery, he said he still anticipated that a significant amount of business-related traffic would not return, arguing that hotels need to creative solutions to replace corporate visitors.

“We risk losing 20-25% of international business travelers forever,” he said. “And we will because the CEO or CFO will say to the guy, ‘why don’t you start on Zoom and then if you feel there’s something to travel.'”

To replace them, Bazin said he recommends hotels go to locals, who can eat at the hotel restaurant, work in the lobby or even rent a room. He notes that people who can work from anywhere will need new places to hang out.

“This customer base will add to the lifestyle and create a new customer base for traditional brands,” he said.
And this is paradise.

It could also be beneficial for the environment.

“I can promise you this respectful planet because many of them will come by bike on foot 10 minutes from home,” he said.

In some ways, Bazin admitted that this new post-pandemic local business would provide him with vindication. In 2017, to much fanfare, he unveiled what he called Accor Local, a platform that would connect more local residents to the services of a nearby hotel. Bazin wanted to compete with newer lifestyle hotels that derived a significant portion of their revenue from locals, including Hoxton, Mondrian and Mama Shelter.

But at Accor, it never worked. Bazin told the Skift Forum Europe audience that his hotel general managers have never bought into the idea, even though hotel brands like Hoxton make up to 55% of their revenue from people who don’t stay in the hotel. room.

“They don’t give a fuck,” he said. “They said to me, ‘of course. Yes sir.’ But they didn’t mean it and it got no traction.

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