Accor’s distribution gamble takes shape
23 SEPTEMBER 2015 8:22 AM
Since launching its new distribution strategy in June, AccorHotels has been busy testing, tweaking and structuring the inclusion of independent hotels to its brand.com distribution platform.
PARIS—French hotel company AccorHotels has integrated its first independent hotels on its booking platform and announced the initiative’s commission structure.
The strategy, first announced 3 June, allows independent hotels not franchised or otherwise associated with AccorHotels to distribute rooms through the global chain’s booking engine for at most a 14% commission.
The chain at launch said it would open the channel to approximately 7,000 independents to expand guest choice and strengthen its proposition. Four independent hotels were up and running as of press time, according to Romain Roulleau, the company’s senior VP of e-commerce and digital services. They include:
- 53-room Hotel de la Bourdonnais;
- 40-room Hotel Maison Albar Champs Elysées Mac Mahon;
- 33-room Hotel De Nell; and
- 30-room Vic Eiffel.
All are in Paris, the company’s home.
“We’re on target to have 500 independents in our system by the end of 2015,” Roulleau said.
Independents will sign contracts, not with AccorHotels but with digital services provider Fastbooking.com, which AccorHotels bought in April.
“The commission is 14%, whatever size, whatever region, whatever hotel,” he said. And if hoteliers sign an additional contract with Fastbooking.com for other services such as website design or Internet booking engines and functionality, the commission drops to 12%, he said.
AccorHotels is focusing its initial rollout in markets where it already has scale: Côte d’Azur and The Alps, France; London; Rome and Florence, Italy; Barcelona, Spain; as well as in Thailand, Singapore and Malaysia.
Other criteria for inclusion:
- Does the hotel have a 3.5-star TripAdvisor rating if it is an economy hotel, a 4-star rating if it is a midscale or upscale hotel and a 4.5-star rating if it is a luxury hotel?
- Does the hotel have sufficient rooms to make sense to add to the platform?
- Does it pass an inspection by AccorHotels itself?
“We need the rollout in places where we are already strong, so as to be even better. It would be a mistake to try and be everywhere in the world right from the beginning,” Roulleau said.
The United States, where AccorHotels has very little scale since it sold Motel 6 and Studio 6 in May 2012, will be targeted in 2016. “The logic there is to have choices to bring business from outside the U.S.,” Roulleau said.
The concept will be very transparent, Roulleau said. When guests search on AccorHotels.com for hotels in a given destination, the list of properties returned will include both those among the company’s 19 brands as well as independent hotels, which are designated as Partner Hotels.
Everyone has questions
Hotel owners and shareholders had questions when AccorHotels announced it would include independent hotels, Roulleau said.
“The first reaction was surprise, as our initiative is a fully disruptive enterprise, the first from a major hotel chain,” Roulleau said. “Owners had many operational, concrete questions, but we’re not cannibalizing our branded hotels, and they see that.”
Owners of independent hotels wanted to know if signing up would constitute the first step to their properties being franchised, Roulleau said. That’s an option if owners want it, he said, but independents are otherwise free to sign up with other distribution channels as well.
Independent owners also can sign on as Le Club AccorHotels loyalty partners for an extra 5% commission per booking. Such partners can then exercise discounts, loyalty symbols and other differentiating calls to attention to their property on the platform.
Roulleau said that the 5% fee is an “opt-in model by independent hotels wishing to attract frequent and loyal customers from AccorHotels Group.”
Roulleau added shareholders welcomed the plan, seeing that enlarged distribution is key to overall company value.
Since AccorHotels’ executives outlined their distribution plans, they have stressed they do not mean to spark a bidding war against OTAs by offering lower commissions.
AccorHotels regards OTAs as partners. CEO Sébastien Bazin said last November during an analyst presentation he wanted AccorHotels to reverse the direct-versus-indirect booking percentage from the current 60/40 figure favoring OTAs.
“We’re positive it will not be tomorrow they stop driving business to us,” Roulleau said. He believed guests understood the enlarged platform’s value proposition.
Marketing the initiative to guests will occur when independent scale has been attained, Roulleau said. With the French government recently outlawing rate parity, Roulleau also believes the initiative is well timed.
An outsider’s perspective
Chris E. Bates, MD of distribution consultancy Enrich Revenue, said the success of AccorHotels’ program will depend on how is it positioned and built. He is watching it closely, even more so now that one of his independent hotel clients has jumped on board.
“They’re testing the waters but still competing with Expedia, Booking.com … Airbnb … OTAs with hundreds of thousands of properties. … (AccorHotels’ move is) a good way of signing up properties without full agreements that might take a couple of years to negotiate,” Bates said.
The initiative will have little impact initially, with all parties taking time to digest AccorHotels’ message, Bates said.
“It might be of more benefit for (AccorHotels’ loyalty) members … It enhances loyalty where their portfolio might not have any scale. Members can still earn miles and points, and they will have confidence (AccorHotels) is recommending hotels with the same standards,” he said.
Any booking channel that can realistically compete with the higher-commission OTAs should be considered seriously by independent hoteliers for a couple of reasons, added Angelene Bungay, revenue and distribution manager at consultancy and technology company Guestline.
“By driving reservation traffic through cheaper commission sites, hotels will not only benefit from smaller commission bills but will hopefully help push for change within the OTA sector,” she said.
Bungay added that all hoteliers need to perfect their own websites and booking engines to consistently drive commission-free, direct bookings and capture guest data.