AccorHotels’ Digital Transformation

A Strategic Response to Hospitality Disruptor Airbnb

Case analysis
What do you expect from an accommodation as a

Leisure Traveler: Business Traveler:

• Affordable accomodation • Luxury
• Multiple features for accommodation: • Convenience
Adventurous accommodation options • Loyalty programs
cool neighbourhood • 24/7 access to property
bigger rooms / more space • Entire place / home / apartment
kitchen availability) • High speed Wi-fi/connectivity
• Experience: Local-like, locally inspired ambience • Laptop-friendly workspace
• Accurate portrayal of amenities and experience • Conference rooms with projector & stationery
• Hassle free booking and cancellation • Knowledgeable and well-groomed staff
• Multiple payment methods • Quick grievance redressal
• Easy refunds • Pick up and drop off services
• High quality amenities • Proximity to the workplace and city center
• Smart technology • High quality amenities and hassle free service
• Smart technology
How does Airbnb and Accor meet the expectations of these travellers respectively

AIRBNB
Leisure Travelers Business Travelers
• Cheaper alternative to budget travelers • Central billing system, dashboard for HR
• Meeting requirements of consumer by providing representative as well as billing and reporting
a particular kind of ambience, neighborhood, tools
bigger space and kitchen facilities • Ensured all lodgings met various criteria -high
• Provision of authentic local-like experience customer ratings, 24x7 access to property,
• Full transparency at the time of booking (high entire home or apartment, wi-fi and laptop
quality pictures, listing complete details - friendly workspace
advantages and negative aspects)
• Comprehensive feedback mechanism (review
and social media connections, online reputation
system)
• Mapping and destination pictures
• Mobile presence to aid mapping
How does Airbnb and Accor meet the expectations of these travellers respectively

ACCOR HOTELS
Leisure Travelers Business Travelers
• Customer experience model = Dream -> • Central billing system, dashboard for HR
Selection -> Booking -> Planning and Trip -> representative as well as billing and reporting
Travelling and Staying -> Sharing the experience tools
-> Loyalty • Ensured all lodgings met various criteria -high
• Being present through the whole journey customer ratings, 24x7 access to property,
• “Voice of the Guests” project to offer tailor-made entire home or apartment, wi-fi and laptop
services for each customer friendly workspace
• Seamless journey - MobileFirst, one click
booking, online check-in, paperless payment etc.
• Electronic membership card to loyalty program
"Le Club AccorHotels"
• Diversifying and increasing the range of
accommodation options - Mama Shelter (urban
retreats), Jo&Joe’s (open house culture)
• New food and beverage strategy
Value Propositions: Airbnb and AccorHotels

AIRBNB ACCORHOTELS
Shared accommodation
A platform to facilitate transactions between Traditional Hotel Operator
hosts and travelers

Accommodation at economical price Meaningful hospitality services

Authentic experience- live like a local Service excellence to Luxury, Mid and
economy segment
Value Propositions: Airbnb and AccorHotels

AIRBNB ACCORHOTELS
Strengths Strengths
• Technology nascency
• 50 years of hospitality experience
• Competition in the traditional hospitality business
• Global presence • Sub-brands are more recognized
• Multiple brand portfolio • Not attractive to millennials
• High revenue and profits • Heavy top-down hierarchy - Vertical organization
• Employees mindset is resistant to change

Weakness
• Customer Trust
• Affordable pricing
• Experience - local-like
• Tax benefits
• Two way revenue stream
• Technology expertise
• High customer satisfaction
• Customer centric
Weakness
• Regulatory compliances relating to rentals
• Brand reputation is dependent on the hosts
• New entrant in the hospitality space
 Airbnb: Critical success factors and their sustainability
Airbnb focused on consumer experience. They made guests feel welcome and at home by forge an emotional attachment for the customer

POSITIONING
First in the category to provide shared accommodation through an online platform where hosts can put up their spaces and travelers can book
TARGET SEGMENT
• The millennials, a niche segment whose needs were unmet by the other existing hotel businesses
• Millennials wanted a greater sense of adventure and affordability
• They were also an ideal segment to attract on the web platform
VALUE PROPOSITIONS We need to look/think from a customer’s point of view
• Affordability —a budget to escape the pricey hotel rooms
• Experience — localized and authentic experience at an affordable cost.
SELL EXPERIENCES, NOT PRODUCTS
• Airbnb’s motto was to sell experiences
• They provided personalized experience to their customers
THE VISUAL EXPERIENCE
• Professional photographs of listing
• Simplified the uploading process
BUILDING TRUST
• Defined itself a trusted community marketplace for people to list, discover and book unique accommodation around the world.
• Use of revies and social media connections to build trust while being fully transparent with its customers
Strategy of AccorHotels

Two distinct fields of expertise (core competencies):

1. HotelServices - operator and franchisor of hotels under the group’s brands.
2. HotelInvest - property owner and investor - to streamline and manage the existing assets through disposals and acquisitions.

Targets:

1. Digital Transformation - Leading Digital Hospitality:

a. Launched 5 year digital transformation plan for 225 million Euros. (2014-2018)
i. Common mobile app for all hotels
ii. Strong focus on customer
iii. Various tools to streamline customer experience
b. New Customer experience model:
i. Entire travel exp in 7 steps: The dream, selection, booking, planning, the trip, traveling and staying, sharing the experience,
loyalty.
c. “Voice of guests” project to leverage its customer database.
d. One click booking, online check-in, paperless payment
e. Acquired Fastbooking, for digital marketing of hotels
2. Cultural Transformation:
a. From asset heavy, hierarchical company to agile, fast, flat, and flexible.
3. Corporate Transformation - Driving Innovation:
a. Challenging and disrupting codes
b. Dedicate resources to innovation and R&D.
c. Try out new activities: 30% of activities should be new
4. Disruptive Ideas: to meet the demands and preferences of millenials
5. Expansion - Growth through New Activities via Acquisitions: aim to become a key player in the hotel luxury segment and the world’s leading
luxury private rental provider.
Strategy of AccorHotels: Assessment

AccorHotels wants to
• Fundamentally change business model to compete with industry disrupter like Airbnb
• Reinvent Hospitality Profession
• Offer Unique Experience To Its Guests, Employees Partners
• Reinvent Digital Hospitality by becoming more technology oriented

Digital Matrix Experimentati Collision at the Reinvention

Framework on at the edge core of the root • Accors staretgy is to accelerate hotel
dveelopment throughorganic growth and
Industry AccorHotels acquisition
Incumbents • Accor Hotel is at the junction of being an
industry incumbent and collision at core with
Tech 50 years of experience in the hospitality
Entrepreneurs space and now colliding with Airbnb’s new
business select range
Digital Giants
Going forward: How should AccorHotels compete with Airbnb?
In order to come out of the ecosystem trap, Accor must adopt a strategy to make its business more dynamic and agile.

Accor realised that Digitization is the key

Following are the key steps Accor has decided to adopt:

Use Customer Database:

● Use the large database of customers that AccorHotels has, to its advantage.
● Use data analytics to identify booking and buying patterns, preferences, and personalize experiences
● Seal deals by making the first move - going to the customer rather than waiting for customer to come to them.

Smart technology:
● Continue to upgrade rooms and amenities with latest technological features

App Design:
● Compete with Airbnb on the user friendliness and ease of navigation on the web / mobile application. Hire UI/UX designers for
designing a superior experience than Airbnb

Diversify offerings:
● Continue to innovate and include a wide variety of offerings to cater to all kinds of travelers, and all under a one stop shop mobile
application and loyalty program.
● Acquire more variety of adventurous accommodation options with different brand names
● Customer Centricity: Accor wants to work very hard to become part of the dream and beyond. To achieve this, it must stop focusing on
the commercial aspect and instead build an emotional relationship with its prospective and existing clients.

Digital Marketing Communication

Going forward: How should AccorHotels compete with Airbnb?

Key elements for success of business models

Customer value proposition Key resources

How that value
Define value
w ill be delivered
for customer

Profits Key processes

• Focus on a core competency which is difficult to imitate by Airbnb to create a competitive

differentiation

• Airbnb has only started its Airbnb for Business venture, in which Accor Hotels has
competence

• Airbnb is a technology focused company, and not an incumbent in the hospitality space

• Thus Accor Hotels should leverage this to develop product and process innovation that cater
to the changing consumer needs and establish itself as a leader in the hotel business by
focusing on customer centricity, agility and partnerships/acquisitions.