Accor splits business into two

HotelInvest will focus on midscale and budget hotels (photo by Brendan Howard)
HotelInvest will focus on midscale and budget hotels (photo by Brendan Howard)

Accor is revamping is business, splitting its operations into two units – one concentrating on hotel operations and the other focusing on real estate and asset management.

The European hotelier said the new ‘HotelServices’ division will be a management and franchise company, while ‘HotelInvest’ will be a hotel owner and investor. All 1,400 hotels owned by HotelInvest will be operated by HotelServices through management contracts. These will form part of HotelServices’ total portfolio of nearly 3,600 hotels.

“Accor is a strong and unique group poised to derive benefit from rich opportunities. However, it deserves a much higher ambition to create sustained value. It requires the in-depth, rapid transformation of its business model and its organisation, as well as a clear and long term vision, and to stay the course. With this new strategy, our aim is to unlock Accor’s full potential through its two core activities and maximise value creation for shareholders,” said Sébastien Bazin, chairman & CEO of Accor.

According to Accor, the new strategy is designed to give the company a “value-oriented, disciplined hotel ownership strategy”, ending its reliance on expansion through leases. It also said that no more owned hotels will be sold, “unless they are structurally underperforming assets”.

The new company structure will be organised by geographic region, with the formation of a new 10-member executive committee including five regional heads. Accor’s brands will be clustered in three segments: ‘luxury/upscale’, ‘midscale’ and ‘economy/budget’.

The HotelServices division will comprise Accor’s sales and marketing, distribution and IT functions, and will focus on fee generation and cost management.

HotelInvest meanwhile, will aim to develop the company’s owned portfolio of hotels, especially in the economy and midscale sectors, in an effort to boost the share of Accor’s owned hotels from 50% to 75% of total operating profit.

Accor generated pre-tax profits of EUR526 million (US$714m) in 2012, up 3% year-on-year, and has set a target of EUR510-530m for 2013.

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