Accor’s Digital Strategy – The Unanswered Questions
An interview with Vivek Badrinath, Deputy Chief Executive Officer in charge of marketing, digital solutions, distribution, and information systems
By Peter O’Connor, Director of the MBA in Hospitality Management at ESSEC Business School
On 30th October 2014 global hotel operator Accor held its first digital day, launching its ambitious digital transformation project "Leading Digital Hospitality" and highlighting the importance of digital for the hotel company of tomorrow. This ambitious plan focuses on reinventing both the customer experience and hotel operations through digital technology, with the company committing €225 million to eight clearly defined projects over a five year period.
The plan stresses "reinventing the customer experience through digital technology". What exactly do you mean by this?
Today's world has become increasingly digital, which has a massive effect on how customers behave. In particular they are better connected and better informed, with the explosion in information available over digital channels giving them access to a wider variety of options. Switching between brands is now also easier than ever, because they can get the feel of a brand just by surfing the web. Lastly they place a lot of trust in other people opinions, in particular their personal and professional networks, a process that has been simplified by the growth in social networks.
These behaviours have had a huge impact on how customers interact with and book hotels, prompting us to relook at how we manage every stage of the customer journey - from dreaming and selecting the ideal property through the pre-stay and stay, and ultimately to how we facilitate post stay interactions. Our objective is to rethink the way in which we work with the customer and incorporate digital technology where appropriate to give them a better experience where ever possible.
Concretely we will do this by improving our knowledge of the customer to enhance the welcome they are given and the services they receive. For example our "Mobile First" initiative features a single mobile app incorporating all of Accor's services before, during and after the stay, and will act as the customer's primary point of contact with both the property and the chain. The "Seamless Journey" initiative takes this idea a step further by enhancing customer convenience, for example with electronic payment, one-click booking, and online check-in. Lastly our "Customer Centric" initiative focuses on leveraging customer data to ensure highly personalized service and follow-up, as well as centralizing feedback into a single platform called "Voice of the Guests".
I joined Accor in March 2014 on the invitation of Sebastien Bazin who had placed digital at the heart of his overall strategy and wanted to make Accor one of the key actor of the digital revolution. Under this umbrella he gave me great freedom and a large portfolio of responsibilities: from marketing and distribution to information systems and digital infrastructure. When I arrived I shared with the team the conviction that to disrupt the hotel experience we needed to be totally focused on the customer. Six months later, with "Leading Digital Hospitality" we plan to build on that principle and accelerate our development into the hotel company of tomorrow.
When looked at globally, isn't the plan simply a consolidation of existing actions already in progress within Accor?
Accor has never been slow to work with technology-based solutions. Digital is already on the move within Accor. The key difference between our current plan and previous actions is that "Leading Digital Hospitality" puts digital transformation at the center of the organization and acts as a philosophy that guides everything we do. What is truly innovative in that its takes into account all our stakeholders: customers, employees and partners, giving a real 360 degree vision that balances our actions to insure a win-win for all concerned. , The plan has very clear top management support and commitment; outlines a real roadmap with very clear quantifiable objectives to be achieved within a specific timeframe; and also has clear governance with named individuals responsible for making it all happen.
With "Leading Digital Hospitality" you are clearly focused on the future. Concretely what changes are we likely to see in the short run?
I disagree. For example "Mobile First" is not about the future. It will go live in 2015 and is thus firmly in the present!
Everyone acknowledges how mobile is impacting our business. Accor is already at 12% mobile contribution to web sales, a figure that is increasing very quickly. Most of this is happening through apps rather than through mobile websites. While the latter are still relevant and need to be part of our overall distribution system, it is the app that opens up the possibility of deepening our relationship with the customer. In contrast to providing just booking services, an app can act as a comprehensive companion for the customer - before, during and after their stay - allowing them to browse and dream about our properties; to book efficiently; enjoy digital services within the hotel; as well as give meaningful feedback and manage their loyalty programme. In short our "Mobile First" app will become the central point of contact for interactions with Accor, both at the company and at the property level.
Although it is not the sole reason, this partly explains our acquisition of ecommerce company Wipolo. This currently runs an app that manages travel bookings in such a way that when you are travelling you get information about what's the next step of your trip. The company's small team brings talent as well as a solid understanding of the complexities of travel technology to Accor, will help us to enhance and strengthen the performance of our "Mobile First" app so that it is highly relevant for the customer from the moment they leave home to the moment they return. Wipolo also has strength in social, having been a Facebook partner for many years. That's very good technology for us to be able to use to strengthen our sharing dimension.
A lot of emphasis has been placed on the "Welcome by Le Club Accorhotels" initiative. What has been the reaction from customers?
"Welcome by le Club Accorhotels" is a broad ranging program, starting with from online check-in and ending with a fast checkout for participants. Its purpose is to remove paperwork, reduce formalities, and make sure that the customer gets a personalized welcome. Such actions are really at the heart of what we want to do to enrich our customer experience.
By the end of the year the program we will be deployed in more than 1000 hotels all over the world, and we plan to have 2700 hotels on board by the end of 2015. Customer reactions so far has been very enthusiastic as 93% of guests who have tried the welcome service want to use it again
Accor has already made tremendous progress in growing online distribution. "Leading Digital Hospitality" again stresses the importance of distribution. Realistically how high do you think you can go?
The foundation of Accor's distribution is TARS (The Accor Reservation System), which drove 59% of total sales in 2014. This system is constantly being enhanced, and our plan is that it will represent 70% of our total sales in the medium term. In terms of pure web distribution, over 35% of our sales were made online during 2014, and we plan to increase this to over 50% in the medium term. This will be driven not only by the general trend towards digitalization in the market, but also by our investment in our own state of the art tools, in particular our multi-brand portal Accorhotels.com.
Currently this is already available in 32 local versions and 16 languages (18 planned by 2015), in effect localizing the experience in every market in which it operates, resulting in an average of 45,000 reservations per day. But even with this level of success, we never stand still. For example one of its recent enhancements has been the incorporation of a new trip planning service (My Trip Planner) that enables customers to prepare their stays in 70 destinations around the world, enriching the preparation step of the customer journey
Mr Bazin has been quoted as saying "OTAs are our friends". Many of your planned actions could be interpreted as anti-OTA. What's Accor's latest take on supplier – OTA relationships?
We have a special and privileged relationship with the OTAs, with all hotels in TARS benefiting from this partnership. They help us to tap into new customer bases in certain parts of the world where we do not have such a prominent presence. The cost of their services is quite high and we tend to use them for new customer acquisition, after which we then try to keep them within the Accor ecosystem for subsequent bookings. As you can imagine, many of the initiatives that we have discussed help achieve this goal.
The volume of business that some OTAs deliver sometimes allows them to put pressure on hotels to cooperate, especially independent hotels. We are promoting the idea that the it is the hotelier that mandates the OTAs to sell on their behalf, and that the hotelier must keep control of both the price and the volume of rooms that they make available for sale on each channel.
Given such ambitious plans, is a budget of Euro 225 million enough?
We spent a lot already over the last 20 years. For example, as mentioned earlier TARS has been designed in such a way as to be both flexible and highly scalable. It has already supported huge growth in terms of information requests, transactions and web visits, and has lots of spare capacity left. So in terms of size, in terms of efficiency, we don't have to reinvent the wheel. However we do need to strengthen our infrastructure and to develop new features in order to improve our distribution performance, our qualified guest database and the customer value that we drive.
When necessary Accor will dedicate additional resources to innovation, through open innovation platforms and tactical acquisitions that strengthen our expertise and technology exactly as we have done with Wipolo. Having an opportunist strategy, we are constantly scanning for new opportunities and new sources of knowledge. For example, we are partners with the Paris-based Innovation Factory, a platform that brings together students and professionals. Here we do hackathons on weekends, focusing on a business problem that we are trying to solve and getting smart people in the room to think out of the box and get things done. Such initiatives confront us with a young, digital native, population which is also a source of insights.
What will be the quick wins?
Our "Mobile First" initiative – a single app gathering all Accor services before, during and after the stay - will be launched in 2015 and is expected to have a very rapid effect. In the initial versions we plan to incorporate payment, with a virtual wallet that safely stores payment information relevant to the customer; book and check-in in one-click, as well as virtualizing the Le ClubAccorhotels card and using it as a key to open up services in the Seamless Journey program.
Similarly we are already rolling out our "Voice of the Guest" initiative, which will aggregate all the flows from guest satisfaction surveys, online reputation and user review sites which will allow our properties to get a comprehensive view of what customers think about their experience in their hotel. This will be linked into the CRM database and will help us to deliver the kind of personalized service that we need to achieve quickly.
About Vivek Badrinath
Deputy Chief Executive Officer (Marketing, Digital Solutions, Distribution and Information Systems) at ACCOR. Vivek Badrinath, 44, graduate of École Polytechnique and École Nationale Supérieure des Télécommunications (ENST), started his career in 1992 at the French Ministry of Industry. In 1996, he joined Orange, working in various technical positions with the Long Distance Networks Department before moving to be CEO of Thomson India in 2000. He returned to Orange in 2004 as Technical Director in charge of mobile activities and then joined the group's Executive Committee in 2009, heading up the Networks and Operators Division. He was then named Executive Director of Orange Business Services from April 2010 to April 2012 before being appointed Deputy Chief Executive Officer in charge of Innovation, Marketing and Technologies on May 1, 2013. Vivek Badrinath joined the Executive Committee on March 1st as Deputy Chief Executive Officer in charge of Marketing, Digital Solutions, Distribution and Information Systems.
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Peter O'Connor, Ph.D. is Professor of Information Systems at Essec Business School, where he also serves as Director of the MBA in Hospitality Management (IMHI). His research, teaching and consulting interests focus on technology, distribution, e-commerce and e-marketing particularly applied to the hospitality sector.More from Peter O’Connor