Accor hints at acquisitions to fight off OTA dominance

Paris-based Accor, has posted record results for 2014 following cost cutting measures and increased demand from outside its base in France.

As also the largest hotel group in Europe, Accor reported a 77% increase in net profits to 223 million euros, up from 126 million euros posted in 2013.

The group reported an 11.7% increase of earnings before interest and taxes to 602 million euros, up from 521 million euros posted in 2013.

“The in-depth transformation being carried out by Accor started to pay off in 2014, with the Group posting excellent results in both its businesses – HotelServices and HotelInvest – and strengthening its leadership position,” Accor chief executive officer, Sebastien Bazin said.

The hotel group changes strategies in late 2013 to focus on owning and managing properties while reducing costs by up to 63 million euros, following up from a 37 million euro savings in the year prior.

Closer to home, the group announced this week it will sign two new Sebel properties to grow its network in Victoria and Queensland – The Sebel South Brisbane and upcoming $35 million waterfront project, The Sebel Yarrawonga.

Bazin said the economic environment in 2015 is expected to continue to “vary significantly from one region to another,” suggesting a need to evaluate strategies to meet new challenges.

“Along with the rest of the industry, we must meet the challenges created by the digital transition, which is spurring us to rethink our businesses, strengthen our ties with our customers whose needs and habits are changing, and adjust our corporate culture and operating procedures,” Bazin said.

As per a report in the WSJ, Bazin said the group was ready to pursue acquisitions to bolster its “digital know-how” to fight back against “growing dominance of online booking portals”.

“The big ones will just get bigger, I don’t want to depend on them,” Bazin told the paper.

“I want Accor to be an actor and fight back.”

Accor last year put aside 225 million euros to spend between 2014 and 2018 to ensure the company is in a position to remain competitive in an increasingly consolidated OTA marketplace led by giants Expedia and Priceline. Expedia last week announced it would purchase Orbitz Worldwide to increase its footprint in the US.

“I am not bitter about [such moves] but I am saying we need to watch out that they are not getting the upper hand,” Bazin said, the paper reported.

According to the paper, Bazin said it will look at regaining some of the revenue paid in commissions to OTA’s by looking for potential targets to ramp up its digital expertise.

“I told my bankers: If there are opportunities, we need to look at them,” he said the paper reported, adding that the group’s main priority remains on the success of its three-year turnaround plan.

The statement comes after Accor bought Wipolo last year, a start-up based in France that offers mobile travel solutions. The paper reported Accor will continue to look into the startup area but is also “open to something bigger,” according to Bazin.

“Accor is a robust company with strong brands, dedicated teams and clearly defined objectives. This year, we will demonstrate once again our capacity to deliver on our objectives with determination and discipline – driving further progress in our strategy and our operating and financial performance and becoming the best performing and most highly valued hotel group,” Bazin said.

Image: resofrance.eu

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