ACCORHOTELS’ DIGITAL TRANSFORMATION

ACCORHOTELS’ DIGITAL TRANSFORMATION

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ACCORHOTELS’ DIGITAL TRANSFORMATION 2

The hospitality industry is rapidly being disrupted by new digital giants who have

entered the industry and challenge the conventional hospitality approach. In particular, the

collaborative consumption with companies such as Uber, Airbnb and Bla-Bla making waves

across the globe a new provocation, if not a threat, to well instituted hotel chains has come to

light (Dogru et al. 2019). To safeguard their market share and maximize their revenues

against a thirty-billion tech driven organization (Airbnb) and other disruptive business

models, Europe’s leading hotel group, AccorHotels roped in its new Chief Executive Officer

Bazin Sebastian to lead their strategical response. Resultantly, AccorHotels is going via a

fundamental digital transformation that has impacted its value proposition, organizational

structure, corporate culture, as well as its overall business model. The goal is to completely

modify the ancient asset-heavy organization into a contemporary energetic and dynamic

player in the fast-changing hospitality industry, able to successfully compete with the hotel

economy’s digital disruptors. In this paper we will look at the ongoing digital transformation

of AccorHotels and the firm’s intention to alter itself for the foreseen future.

Evaluation of AccorHotels digital strategy.

With the dramatic alteration in the new generation customer’s needs, Jelassi &

Martínez-López (2020) documents that AccorHotels started to go digital via a series of tech-

driven inventions including the roll out of mobile applications and then via a series of

acquisitions and mergers to make their products more reachable and relevant to the

customers. The 2014 acquisition of Wipolo, creator of a mobile travelling companion app,

jumpstarted AccorHotels mobile activities. A single application took charge of all the duties

associated with the consumer’s journey, making flexible the consumer’s principle contact

with the organizational (Jelassi & Martínez-López, 2020). With Sebastian Bazin’s induction,
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the mobile application has seen significant changes in terms of interfaces and customer

satisfaction.

One problem which the company sought to tackle when it decided to create its new

mobile application was that, up until the app’s launch, the facility experience was restricted to

the period a client spent with the organization during a business trip or holiday. In order to

broaden the experience, Bazin Sebastian craved for a service where clients were also engaged

and supported both after and before their visit. With the newly launched AccorHotels mobile

application, consumers are able to get an insight of the company’s hotel options- which

includes over six thousand independent and branded locations. Clients can now choose

between luxury, mainstream, cut-price or chic options, with each option accompanied by a

complete city guide, accessible in nine distinct languages to give counsel on shopping,

gastronomic, as well as cultural preferences (Lenoel, 2020). Mood Match- a particularly

smart feature permits guests to put in place a complete depiction of their dream experiences,

which are then compiled by the applications’ logarithms to generate an ideal location. Guests

are able to set preference based on various criteria including neighborhood, aesthetics, as well

as ambiance, and then add other factors like family, romance, etc. In addition, travelers can

utilize the application to book almost everything ranging from planes and trains to taxis and

room services. Unlike its rivals-Airbnb, AccorHotels stands out in taking an online travel

agency approach to the selling of its fourteen brands. The company has thirty-two localized

websites like a Portuguese site, an Arabic site, etc. and these sale points offer all fourteen of

the brands for the three thousand six hundred hotels conglomerate. Market research survey

posits that today, a little more than half of AccorHotels $2 billion in digital revenue will be as

a result of the mobile app. Besides offering car and air rental reservations, like the Airbnb app

does, the AccorHotels app will offer local attraction and restaurant information. The intention
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id to make the application a travel companion rather than a trip planning application as in the

case of their rivals.

Another way AccorHotels is employing technology to enrich experience for its

customers (particularly those with minimized mobility) is via its soon to be launched concept

of smart room. Developed in conjunction with designer Versavel Didier, AccorHotels’ smart

room will greatly boast its luxurious and innovative features. Connected tablets will permit

customers adjust music and light, adjust the beds’ headboard, close the curtains, as well as

manage the audio-visual features. Wearable technology with the ability to sense brain energy

developed in the form of a headband will be availed to guests in attempts to help them

concentrate or relax. The rooms will also have customizable scent devices fitted to make sure

customers wake up to tantalizing aromas like sea air, tea or coffee. As noted by AccorHotels

CEO, Bazin, with such rooms technology, the objective is to influence and impel the

hospitality industry by bringing into light new approaches to the traditional rooms, which are

most of the time unoccupied and not very welcoming. ‘’we have visualized rooms for each

person, with creativity and design cohering to PRM practices and standards’’, said Perrot

Damien, AccorHotels’ vice president of design solutions.

Switching gears, hospitality giants are showing a spiked interest in the luxury rental

market. It’s no secret that AccorHotels and Airbnb are expanding at an astonishing speed.

That is because both organizations are constantly on the radar for growth opportunities. More

recently, the luxury rental industry has attracted the two giant’s attention, leading to two

mind-blowing acquisitions. The motivation for Airbnb’s 300 million dollars acquisition of

luxury retreats, a high-end vacation rental firm based in Montreal is crystal clear; the

company is looking for chances to scale. This includes widening its target customers to

include higher-paying clients. The organization does so hoping that clients willing to pay for
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glossy villas will with no doubt be willing to pay a couple more dollars from Airbnb’s luxury

tourism service. To retaliate, AccorHotels has also joined the luxury vacation rental market.

The hospitality giants are now currently in negotiations to acquire Travel keys. AccorHotels

CEO, is open about his reasons for the acquisition of luxury rental companies. Like Airbnb,

AccorHotels’s goal is also linked to scalability- to become the leading private rental player

across the globe. Bazin’s objective seems reasonable, given the enthusiasm with which

Travel Key’s CEO brings to the acquisitions.

How different are AccorHotels and Airbnb’s value propositions?

It is without doubt that the new trend od shared market has rattled numerous

businesses, more so in the travel and hospitality industry. Airbnb and AccorHotels target

same consumers, however, they differ significantly in terms of products and service

offerings. Are the two giants truly competitors? Both Gremillion-Airbnb’s CEO and Bazin-

AccorHotels’ CEO unmistakably agree that no, they aren’t. In fact, they hold that both

entities complement each other as is seen by the market situation in France. Airbnb owns

over forty-four thousand apartments in Paris however, AccorHotels is also doing

exceptionally well. Sebastian Bazin argues that as long as users of Airbnb remain steadfast

and true to their initial purpose and concept and don’t employ the platform for industrial or

commercial purposes, AccorHotels will adapt itself to the rapidly changing landscape where

the fundamental experience is currently with the customer.

Sebastian Bazin states further that the success of Airbnb can be attributed by the 5

percent annual growth of travels worldwide. Hotels tend to grow at a more modest rate of 2

percent. One area that is fundamentally distinct between these two organizations is their cost

of capital. According to Loonam et al. (2018), capital markets value Airbnb company based

on clicks and number of travelers whereas AccorHotels is valued based on its income and
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earnings. As a consequence, the market capital of Airbnb is superior to AccorHotels even

though the tech giant does not possess any actual estate. This unfair playing filed presents

AccorHotels with a significant challenge as it attempts to expand as fast as Airbnb but is

often suppressed by its weight. Furthermore, Airbnb tends to offer a shared accommodation

platform that facilitates transactions between the customers and the host. On the other hand,

AccorHotels is a traditional provider of hotel services that targets consumers from economic,

mid and luxury segments. From the perspectives of Jelassi & Martínez-López (2020),

AccorHotels is a hospitality organization attempting to integrate technology in its activities

whereas Airbnb is a tech company attempting to improve its hotel services. Airbnb is a tech-

company at its core, and therefore files income taxes. Hospitality firms such as AccorHotels

on the other hand pay corporate taxes.

It is important to note that traditionally, hospitality companies focused on brand and

product building however since 2005, the industry has undergone rapid alterations with firms

such as Orbitz and Expedia entering the industry, replacing distribution channels and in turn

eroding profit margins. Sebastian Bazin agrees that the hospitality industry didn’t react fats

enough to these changes and now Airbnb introduces a new threat to the prevailing and

existing model in the hospitality sector by taking advantage of the collaborative consumption

(Mody, 2017). There’s nothing left for AccorHotels to do but to seize being a spectator and

become one of the actors. According to studies, Airbnb is a company that is much focused on

design, for instance by spending lots of dollars and sending photographers to take images of

upward of 50 percent of locations in main cities. The company unlike AccorHotels is more

dynamic, lighter, reactive and takes great advantage of its ability to quickly move and create

a buzz.

What are the strengths and weaknesses of each company’s business models?
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As with every business model both AccorHotels and Airbnb business models have

their strengths as well as weaknesses. One of the biggest strengths of AccorHotels’ business

model is its segmentation strategy. As documented by Lowe & Howells (2018), segmentation

in the hospitality market most of the time encompasses a jumble of demographic and

behaviour segmentation. AccorHotels segmentation approach create four major segments:

upscale, midscale, luxury and economy (Demirçiftçi & Kizilirmak, 2016). AccorHotels

functions in all these segments, ensureing that each customer is able to afford a hotel based

on their price ranges. In addition to market segmentation, the company’s wide spread across

the world is advantageous. Based on business analysis reports, the company has over 4,500

hotels, residences and resorts across one-hundred nations. Other strengths include but not

limited to the company’s tracking and database systems of the clients, and their ability to

offer good features such as loyalty programs, online check-ins and exclusive guest

executives.

For the business model weaknesses, although AccorHotels has made significant steps

in integrating technology in the backend process, the company has not been able to harness

the power of modern tech in the front-end processes. This has in turn seen the hotel giants

lose its business to tech companies like Airbnb. Furthermore, although franchising has aided

the hotel chain in cutting its cost to a large extent, the service levels, particularly in their

luxury hotels such as Fairmont, Sofitel, and Novotel have suffered a great blow because of

lack of enough attention (Demirçiftçi & Kizilirmak 2016).

On the other hand, Airbnb is globally recognized as the cheaper alternative to hotels.

The company has a first mover advantage in peer-to-peer lodging industry. This advantage

has played a vital role for the firm in terms of creating a strong and prominent brand

recognition as well as achieving private brand valuation. According to McMillan (2016) a

paramount piece of the success of Airbnb business model is an easy premise: disappointment

equals expectation minus reality. In order to manage the expectations of its customers, the

company ensures that each of the listing offers an error-free portrayal of the type of

experiences and amenities customers would encounter, by recording the advantages and the

potential negative features of the accommodation. Airbnb firmly believes that clear-cut and

high-quality images make a significant difference, and therefore professional photograph

services are offered in numerous cities at no charge. Total transparency is what fuels the

consumers and ensures high rates of satisfaction. Throughout the while process, guests and

host find social media connections and reviews to help establish trust. Using the online

reputation system developed by Airbnb, both guests and hosts provide feedback and reviews

at the end of visit with customers rating the accommodations’ features like convenience,

cleanliness, location, etc. Beyond providing platforms to locate accommodation, Airbnb

offers its clients a genuine experience, an easier way of discovering out how it feels to live

amongst locals. Offering a pocket-friendly prices, Airbnb rooms do not require 24-hour check

in desks, administration office, concierge and management apparatus as in the case of hotels.

Despite having refashioned the travelling and accommodation experience, Airbnb’s

business model is not without its hiccups. At the top of the list, as a result of its business

model, the company is unable to control the quality of adventure services, experiences, and

accommodation services provided by hosts to clients of Airbnb services. As postulated by

Mody (2017), the company can only encourage host to offer quality services to customers. If

host fail to offer quality accommodation, they get negative reviews and low scores from

clients making it hard for them to land new guests. Such a control system sounds perfect,

however, the lack of tools the company may use in ensuring high quality services proactively

remains among the major weaknesses of the business models. Furthermore, the company’s

brand image is highly vulnerable to scandals. In numerous cases, the causes of scandals are
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outside the company’s control. Other weakness includes disturbances, property damages, and

the conversion of apartments to illegal hotels by landlords.

References

Howells, J., & Lowe, M. (2018). Innovation, market segmentation and entrepreneurship in

services: The case of the hotel industry. In The Routledge Companion to the

Geography of International Business (pp. 493-508). Routledge.

Jelassi, T., & Martínez-López, F. J. (2020). AccorHotels’ Digital Transformation: A Strategic

Response to Hospitality Disruptor Airbnb. In Strategies for e-Business (pp. 665-689).

Springer, Cham.

Lenoel, T. (2020). The impact of a digital transformation strategy: A case study of the

AccorHotels group (Doctoral dissertation, Griffith College).

Loonam, J., Eaves, S., Kumar, V., & Parry, G. (2018). Towards digital transformation:

Lessons learned from traditional organizations. Strategic Change, 27(2), 101-109.

Dogru, T., Mody, M., & Suess, C. (2019). Adding evidence to the debate: Quantifying

Airbnb's disruptive impact on ten key hotel markets. Tourism Management, 72, 27-38.

Mody, M. A., Suess, C., & Lehto, X. (2017). The accommodation experiences cape: a

comparative assessment of hotels and Airbnb. International Journal of Contemporary

Hospitality Management.

Demirçiftçi, T., & KIZILIRMAK, İ. (2016). Strategic branding in hospitality: Case of Accor

Hotels. Journal of Tourismology, 2(1), 50-64.

McMillin. (2016, October 3). 2 reasons why Airbnb is achieving so much success. Pcma.org.

http:// www.pcma.org/news/news-landing/2016/10/03/3-reasons-why-airbnb-is-

achieving-so-muchsuccess#.WKsJoX-UJb0