Just south off the Grand Central Parkway, a New York minute from the tarmac at LaGuardia Airport, stood a peculiarity even for Queens. A green-ringed-pearly cylinder that looked like a beer can ready for a giant to pop the lid and guzzle down. It, however, was not something to imbibe; rather, it was a hotel, and beyond its grog-like distinction had another uniqueness: it was the only ibis Suites hotel in the United States. Moreover, it was the only economy-segment hotel from the vast stable of Accor brands in the entirety of the U.S. and Canada.
Another curiosity: Accor is and was fine with it that way.
The ibis Styles New York LaGuardia Airport opened in 2017, but has since closed. At the time, the since-retired COO of North & Central America, AccorHotels, Kevin Frid, said, "As the Accor portfolio grows in North America, I am very proud to announce the first ibis Styles hotel in the United States. ibis Styles has already seen much success in Europe and South America, and we anticipate the brand to be a standout in New York as well."
The 93-room hotel even took its design cues from the New York City Subway, with guestrooms inspired by different lines and walls decorated with subway maps. The F&B venue was called the Metrocard Lounge.
Though Accor, primarily through its luxury brands Fairmont, Sofitel and SLS, has a presence in the U.S., it's paltry compared to the rest of the world. Accor has always been the acquisitive kind, picking up brands and adjacent businesses at breakneck speed. Its foray into the U.S. and Canada was kick-started with the $2.7-billion acquisition of FRHI in 2016, which netted the company the Fairmont, Raffles and Swissôtel brands. That blockbuster deal has been followed up by several others, including the 21C Museum brand in 2018 (nine currently are open in the U.S.) and, more recently, the 2020 acquisition of the sbe Group (brands including SLS, Delano, Mondrian, Hyde) and last year's merger with Ennismore that created Accor's lifestyle division of hotels.
Accor has all but conceded that there is no path to extend its downscale brands in the U.S.—the ibis Styles New York LaGuardia Airport a one-time penny toss into a vast wishing well of other alloys. Accor CEO Sébastien Bazin told me as much during the NYU Hospitality Investment Conference in New York this year, when I cornered him at the escalator. Maybe he was taken off guard by my brash advance when I asked him why brands such as ibis, Mercure, adagio and even Novotel, which had a location in Times Square, but closed in 2021 after the hotel's owner, Millennium + Copthorne Hotels, canceled its management contract, were not being franchised and developed in the U.S. His response was as curt as it was defeatist, telling me it couldn't compete with the likes of Marriott and Hilton and other U.S. franchisors in the midscale and economy spaces. It was a staggering admission, one that brought to mind when Boston Red Sox superstar pitcher Pedro Martinez, after a rather pedestrian performance against the New York Yankees, referred to the team as "his daddy."
As Bazin stepped onto the escalator, I stepped into a conversation with Agnès Roquefort, Accor's global chief development officer, a position she was promoted to in November 2020. Like Bazin, she acknowledged that Accor's strategy for its midscale and economy brands was not the U.S. "This is a choice," she said.
Roquefort went on to explain what she called Accor's two-legged approach to brand development. Little did I know that she was presaging an announcement that Accor would make two months later, shaking up the organizational structure by bifurcating its brands into two separate entities: an “Economy, Midscale and Premium" unit comprised of the Ibis, Novotel, Mercure, Swissôtel, Mövenpick and Pullman brands, covering 4,816 hotels worldwide and 948 new properties in development; the other “Luxury and Lifestyle," which will include the Ennismore joint venture as well as three other subgroups: Raffles and Orient Express, Fairmont, plus Sofitel and MGallery. In total, it will feature 488 hotels with 266 new properties in development.
The “Economy, Midscale & Premium Division” will focus on four regions: Europe, Latin America, Asia-Pacific and the Middle East.
Absent is North America, where Accor will focus its efforts and attention on the "Luxury and Lifestyle" division. "We've decided to be more focused in North America than trying to cover everything and fight the very installed brands," Roquefort said. This includes its all-inclusive Rixos brand, which Roquefort is extremely bullish on. It currently has locations mainly in Turkey and Eastern Europe, but, along with Swissôtel, Mövenpick and Pullman, Roquefort is confident that these brands have expansion opportunity in North America.
On the flip side, Roquefort commented that Accor's choice not to expand its downscale brands in the U.S. was similar to "the same issue with the American players in Europe." It's a curious remark given, for example, there are 135 Hampton by Hilton hotels and 45 Days Inn by Wyndham hotels across Europe, to name just two U.S.-based brands.
Strength in Numbers
Accor is a brand powerhouse to be sure, with more names in its stable by count than even Marriott. It's brands, Roquefort said, that fuel development. "When you're in front of an owner, you're starting with your brands, to make them dream and give them inspiration," she said, estimating that 60 percent of Accor's development is made by and generated by existing partners.
It's Accor's economy, midscale and premium brands it hopes to take the world by storm. "Everywhere," Roquefort called. "Well, a bit less in North America," she admitted.
There's no shame in that. Too often, hotel companies are more focused on quantity rather than quality, a gambit to keep their stock price juiced up. In the hotel franchise game, net unit growth supersedes all—so be it if it dilutes the brand.
From a development standpoint, conversions are a big source for Accor growth. The company has adapted designs to fit the conversion strategy. According to Roquefort, 40 percent of Accor's total development last year was conversion driven. That should continue, especially since Roquefort says there is an ESG component to repurposing existing hotels or buildings.
"This is something we are proud of," Roquefort said. "We prefer to convert some buildings when it is possible to improve their impact on the environment. So we are really pushing conversions and consider it part of our DNA. For these conversions, we're targeting a lot of our existing partners."
On the higher end—Fairmont and Raffles—Accor is working with private equity funds and family offices to grow that network. "Those that want a strong brand to value their asset on a long-term or short-term basis," Roquefort said.
Investment: Now and Tomorrow
Roquefort notes a quasi-paradox in markets right now that is having an impact on investment now and in the future. On the one side, there is a business recovery in both corporate and group, and pent-up demand, especially on the leisure travel side. "There is a trust again," Roquefort said, "which is an impetus for reinvestment within the hospitality space."
At the same time, clouds still exist that are not going away any time soon and, in fact, are gathering, including ongoing inflationary pressure. In the U.S., June's consumer price index rate is expected to be upwards of 9 percent. The impact of that will certainly be another round of interest rate hikes to try and tamp it down.
Roquefort said private equity remains confident and is pushing hard to buy new assets and invest again. "There's a lot of dry powder," she said.
Sustainable Development
Doubling down on ESG is part of Accor's future development efforts because it's expected by not only guests, but also corporate clients. According to Roquefort, 80 percent of corporate RFPs now contain sustainability questions. "Before it was one page. Now it's 10," she said.
It's strong pressure from guests, from corporate partners and, what is now becoming a trend, from local municipalities and government, who are pressuring businesses. "We have no choice and want it to be at the core of what we do," Roquefort said.
In order to make this a reality, Accor has taken the stance of imbuing ESG factors in all its core brands, by focusing on sustainable design, energy consumption and food waste, to name three initiatives. Roquefort cites recent Sofitel projects in Colombia and Peru that adhere to these standards. "We worked with the owner to make these hotels green and sustainable, having a positive impact on the environment," she said.
In April of this year, Accor hired a new chief sustainability officer to spearhead these efforts. Brune Poirson, France’s former Secretary of State for the Ecological Transition, will report directly to Bazin, with her charge to "define, drive and monitor the commitments, the strategy and the roll-out of its action plans for sustainable development."
At the International Hospitality Investment Forum, in May, in Berlin, Bazin was vocal about his company's adherence to ESG efforts as core to its ethos, stating that planet-friendly priorities should be dictating the decisions of tomorrow.
Accor has committed to being net zero by 2050, with initiatives that include electrifying its hotel energy systems, installing low energy consumption LED lighting at sites and eliminating guest-facing, single-use plastic by the end of this year.