Industry Update
Press Release12 June 2019

Services Provider - The Hotel Groups' Credo To Develop Their Income

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The core business of Hotel Groups like Accor, Hilton, Marriott and IHG is to provide services to property owners who either want to join their brand system under a franchise agreement or entrust them with the day-to-day operation of their hotel under a management contract. In either case, it's as much the Group's brand awareness as it is the quality of its services that will drive hotel performance and convince the owner to choose its flag.

Service fees (distribution, marketing, IT, etc.) and brand trademark royalties make up the bulk of a Hotel Group's revenue. This means that revenue growth is fueled by two key factors: the Hotel Group's ability to expand its network through new franchise and management wins (hunting) and its ability to sell more services (farming).

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More brands, more expansion opportunities

A Group's potential to expand its hotel network worldwide is directly related to the size of its brand portfolio. The larger its repertoire, the easier it is to offer a solution - economy, midrange, luxury & upscale, short stay, extended stay residences, standardized or lifestyle - in line with the property's location and the owner's objectives. With this in mind, Accor expanded its portfolio from 17 brands in 2015 (ibis, Novotel, Mercure, Sofitel, etc.) to 33 in 2019, thanks to acquisitions, equity investments and brand creations across all market segments (Raffles, Orient Express, Fairmont, Rixos, 25 Hours, Swissötel, Mövenpick, Mantra, Mama Shelter, Tribe and Joe&Joe).

Needless to say, brand awareness and reputation are critical factors of development.

Hotel expertise through services

All Hotel Group contracts impose an obligation on the owner to purchase certain basic services (distribution, marketing, loyalty programs, etc.). Other than that, the range of complementary services varies from one operator and geography to another. Some Hotel Groups include a large number of mandatory services in their contracts (renovation, revenue management, employee training, etc.) in order to secure a certain level of revenue, but also to ensure the hotel's performance and alignement with brand standards. Other groups adopt a more flexible approach, focused on providing adequate services on an as-need basis throughout the hotel's life cycle (marketing support, energy expense management, quality improvement, etc.).

Whatever the Hotel Group's strategy - required or optional services - the endgame is always to drive profit to the owner.

Services Provider driving profit to the owners

Hotel Groups offer service catalogs of varying sizes but, as a general rule, the services can be divided into eight main sources of profit for the owner. Below are some concrete examples.

  1. Mastering Brand Development
  2. Powering Hotels
  3. Optimizing Visibility
  4. Maximizing Revenue
  5. Magnifying Customer Experience
  6. Easying Operations
  7. Empowering Hotel Talent
  8. Committing to Society

Discover the full article here.

About Accor

Accor is a world-leading augmented hospitality group offering unique experiences in 5,000 hotels and residences across 110 destinations. The Group has been acquiring hospitality expertise for more than 50 years, resulting in an unrivaled portfolio of brands, from luxury to economy, supported by one of the most attractive loyalty programs in the world. Beyond accommodation, Accor enables new ways to live, work, and play, by blending food and beverage with nightlife, wellbeing, and co-working. It also offers digital solutions that maximize distribution, optimize hotel operations and enhance the customer experience. Accor is deeply committed to sustainable value creation and plays an active role in giving back to planet and community via its Planet 21 - Acting Here program and the Accor Solidarity endowment fund, which gives disadvantaged groups access to employment through professional training. Accor SA is publicly listed on the Euronext Paris Stock Exchange (ISIN code: FR0000120404) and on the OTC Market (Ticker: ACRFY) in the United States. For more information visit accor.com, or become a fan and follow us on Twitter and Facebook.

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