Accor Global Chief Development Officer – Premium, Midscale and Economy Division, Camil Yazbeck, discusses premiumisation in the hotel sector and shares his outlook for 2024.
The economy segment has elevated in recent years with a stronger focus on design, technology and service. How is Accor elevating economy and what does that means for rates?
Globally, we are witnessing a consumer trend toward ‘premiumisation’ in all sectors – cars, airlines, dining, retail shopping, and so forth. Consumers have always appreciated a well-priced product or service that delivers good value – and in our current market, good value can be felt through an experience of well-being, an appreciation of good design, or genuine, heartfelt service.
The fact is, there is no reason why an economy or mid-priced brand cannot make their customers feel respected, connected and valued – these are not qualities exclusive to luxury, rather, it is the essence of delivering a great hospitality experience.
Among Accor’s brands for example, Ibis was one of the first in the industry to deliver modern, comfortable hotel experiences at an economic price. Today, Ibis Styles leverages the powerful awareness of the Ibis name, while bringing a fresh, trendy, and delightful experience to design-driven guests and families. With 650 hotels open and ambitious development underway, Ibis Styles enjoys an excellent brand love score and one of the strongest ADRs in the market. We also have Ibis Budget, which allows guests at a lower price point to also enjoy the quality of ibis with a fun, social, and sports-driven experience.
Tribe is another fast-growing brand in the midscale segment. Tribe offers well-priced and cleverly designed guestrooms with advanced technology, lively bars and outdoor terraces for great social experiences. So, while we continue to elevate the experiences of our economy brands, the purpose is not to aggressively raise rates, it is to continue to offer a rich diversity of experiences across all our guest segments.
The economy segment is not as dominant in Australia as it is in other markets like the US and Europe. Why do you think this is and do you see it changing?
We do see the current economic climate as temporary, yet very challenging. We continue to support our partners and hotel owners by helping them find the right solutions and opportunities in their markets. Having the most diverse portfolio of hospitality brands in the world helps us to provide options and flexibility for our partners. For example, Accor is the hospitality market leader in the midscale and economy segments of the Pacific region, with strong brands such as Mantra, Mercure, Ibis and Novotel. Traditionally, we have experienced excellent ADR growth in Australia, with these brands accounting for a high portion of new development projects. As debt and construction costs continue to prove challenging, we are finding that midscale and economy brands are quite appealing to investors as they require easier financing. We are also experiencing strong demand for mixed brand projects, such as Novotel and Ibis Styles Melbourne Airport (opening 2024).
Accor is investing heavily in the extended stay segment. In what ways is this offer evolving to meet modern guest needs?
Accor has developed expertise as one of the world’s largest operators of extended stay and serviced apartment properties, with a diverse portfolio of more than 300 extended stay properties all over the world. Here in the Pacific region, two of our most popular brands include The Sebel and Mantra. These apartment-style living accommodations are increasingly attractive to younger generations of travellers who enjoy mixing business trips with leisure pursuits and want to explore destinations while feeling like locals.
For example, Mantra Bunbury Lighthouse allows guests to enjoy the beach lifestyle of Bunbury while staying connected to vibrant arts community and nightlife of downtown. Similarly, The Sebel Wellington Lower Hutt offers apartment-style accommodations that allow residents to live like a local, while relying on the brand’s high level of services and amenities. Many of Accor’s extended stay properties are designed to be as attractive to locals as they are to travelers, with lively bars and patios that draw local crowds for socializing after-work, weekend brunches, and fun nightlife scenes.
From the perspective of developers and hotel investors, there is growing interest in extended-stay properties given the segment’s attractive business model. The operating model for extended stay is often more cost efficient, with properties requiring less changeover and lower demand on housekeeping. This can mean lower breakeven occupancy rates, higher operating margins, and ultimately higher return on investment.
Boutique and independent hotels are on the rise. Can you share any thoughts on how hoteliers can balance demand for trendy hotels with the importance of creating a timeless offering?
Since 1967, Accor has been at the forefront of introducing great brands that are in sync with the times and consumer sentiment. We deliver on the evolving trends that travellers crave when it comes to food and drinks, entertainment, and even décor, but we also recognise that some elements of the guest experience will never go out of style – a great sleep in a comfortable bed; friendly, genuine service; and a positive sense of well-being throughout the stay.
With this in mind, Accor recently unveiled Handwritten Collection, a global portfolio of charming bespoke hotels that offer an intimate and stylish hospitality experience. Handwritten Collection brings together hotels with individual personalities, reflecting the character and warmth of the people who love and look after them. From a warm welcome to freshly baked treats, no two hotels or stays are the same. Handwritten Collection properties that arrived in Australia this year include Wonil Hotel Perth – Handwritten Collection, and Hotel Morris Sydney – Handwritten Collection. The Handwritten Collection portfolio is expected to reach more than 250 hotels by 2030.
How are major global events, such as the Rugby World Cup in Paris, impacting Accor’s hotels?
Accor has a proud history of supporting and partnering with leading global sporting events. Our hospitality expertise has contributed to the success of the FIFA World Cup, the French Open at Roland Garros, the Tour de France, the Rugby World Cup 2023 – and soon, Paris 2024 Olympic and Paralympic Games.
In terms of the Rugby World Cup, France’s biggest sporting spectacle of the year provides the opportunity to promote ALL – Accor Live Limitless and ALL.com as a hotel booking platform, bringing to life the benefits of ALL as a lifestyle loyalty program, and showcasing Accor’s hospitality expertise through its 1,600 hotels and 21 brands across the country that will welcome and host fans from across the world.
Our expertise in sports partnerships has also led us to fantastic opportunities such as Accor Stadium. Accor has the naming rights for Stadium Australia, the iconic venue in Sydney Olympic Park. Accor Stadium is one of the world’s most exciting and diverse entertainment venues in the region and was the centerpiece of the Sydney 2000 Olympic and Paralympic Games. With a capacity to hold concerts for 100,000 spectators and over 80,000 people for seated sporting events, the stadium has hosted the world’s best in entertainment. Following the summer concert season, Accor Stadium hosted some of the Australia’s biggest sporting events, including five key matches of the 2023 FIFA Women’s World Cup.
Another recent partnership we are very excited about is the Qantas Partnership. Members of Qantas Frequent Flyer and ALL – Accor Live Limitless can be rewarded twice when they fly with Qantas and stay at one of Accor’s hotels. This is a first for a hospitality group and airline in Australia. We have joined forces to reward our customers, delivering exceptional travel benefits and unrivalled service for people who enjoy our two much-loved brands.
What exciting new brands or openings are on the horizon at Accor?
Across the Pacific region, our Premium, Midscale and Economy division is poised to capitalise on the opportunities for growth with new hotels and new brands coming including Handwritten Collection and Tribe.
Pullman Sydney Penrith, which is now open, is the city’s first international five-star hotel, located adjacent to the Western Sydney Conference Centre and Panthers Leisure and Entertainment Precinct. It features 153 sophisticated guest rooms and suites along with some of the region’s best dining, bars, elite fitness center, sauna as well as a fully equipped 1,250sqm premium Conference and Exhibition Centre.
Te Arikinui Pullman Auckland Airport opens in Q4 2023. The 313-room hotel will provide a spectacular gateway for guests arriving and departing Aotearoa New Zealand. Infused with uniquely Waikato-Tainui cultural elements, the hotel features a top floor restaurant and bar with spectacular views across the runway and out to the Manukau Heads, and a ground floor café.
Peppers Gladstone, which opens in 2024, will refine the hospitality landscape in Central Queensland. The hotel merges the prestigious 32-room Peppers Gladstone with the stylish 60-room Mantra Gladstone under one roof in a vertical, dual-branded hotel concept. Guests can take advantage of the hotel’s heated outdoor swimming pool, complimentary drinks at the pool deck bar, exclusive access to Peppers’ eight-seater cinema room, a gym, undercover car parking, a choice of two onsite restaurants, plus a member’s lounge offering a welcoming space for a hot or cold beverage.
Novotel and Ibis Styles Melbourne Airport also opens next year.It’s a new-build 464-room Novotel and Ibis Styles hotel at Melbourne Airport located steps from Terminal 4 within a new Melbourne Airport precinct. The 10-storey hotel will be dual-branded operating under Accor’s Novotel and Ibis Styles’ brands, offering guests a signature restaurant, gym and pool facilities, a café and bar plus innovative co-working facilities and conference facilities.
We also have the 60-room Tribe Auckland Fort Street opening in 2024 with a bold design, the latest technologies, a lobby bar, and terrace.
What is your outlook for Accor and for the hotels industry more broadly in 2024?
We are optimistic about 2024, as we continue to see an increasing number of investors enter the hospitality space, attracted to the sector’s ability to deliver high returns versus other asset classes. The industry is also experiencing numerous tailwinds which bode well for future growth, such as the re-emergence of demand for corporate travel and events; and demographics that increasingly support travel as a priority.
As we look ahead, it’s important to note that Accor’s development teams are committed to expanding responsibly and sustainably – a factor appealing to a growing number of investors and owners. As building costs continue to rise, conversion and collection brands are a huge growth driver, accounting for more than 40% of Accor’s worldwide development projects. These projects can be easier on the environment than undertaking new construction, although our new building projects are equally designed to support the achievement of Accor’s strong environmental, social and governance (ESG) commitments.
Mixed-use projects are now more popular than ever, as traditional asset classes continue to be challenged by shifting consumer behaviors. Accor was at the forefront of this movement, reimagining how the population could live, work, and play, all within the same building or location. A project may include one or two hotel brands, branded residential, extended stay along with elements including excellent food and drinks, comfortable coworking spaces, boutique wellness and fitness offerings, lively bars and patios that draw local crowds for socialising after-work, weekend brunches, and fun nightlife scenes.
Our development partners seem to appreciate Accor’s approach to augmented hospitality as an essential way to diversify risk, unlock value and compress their cap rate when these various businesses are amalgamated together.
Meanwhile, the resilience of the leisure sector has also inspired huge growth in resort development – which includes new build projects and conversions. We are particularly interested in leisure destinations that are less populated and can offer a pristine and positive hospitality environment.
Here in New Zealand, the Pacific and Australia, we are leveraging our strengths and extraordinary assets – our powerful brands, our unrivalled loyalty program, our strategic partnership with Qantas, our incredible talent – creating many opportunities to attract and engage with clients and driving performance and value for our owners and business partners.