Accor is once again making changes to its organisational structure in a move that may make it easier for an eventual breakup of the company.
From October, the company will be split into two distinct business division. The “Economy, Midscale and Premium" unit will comprise of the Ibis, Novotel, Mercure, Swissôtel, Mövenpick and Pullman brands, covering 4,816 hotels worldwide and 948 new properties in development.
The other will be “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.
Accor is known in the industry for tinkering with its model and its last big reorganisation was only in 2020 when it reorientated the business around eight geographic hubs.
This will be partially undone with the latest change.
The “Economy, Midscale & Premium Division” will focus on four regions: Europe, Latin America, Asia-Pacific and the Middle East, and will be structured around four regional headquarters: Paris, Sao Paulo, Singapore and Shanghai. The “Luxury and Lifestyle" unit however will be organised around the aforementioned brand groups.
In effect, the 8 hubs will be divided into four regions and four luxury and lifestyle markets
Speaking earlier this year at IHIF in Berlin, CEO Sébastien Bazin hinted that a change in the company’s structure was to be expected.
What does this mean?
Reading between the lines the thinking seems to be around simplifying the offering for owners. The “Economy, Midscale and Premium" unit will focus on franchising while the “Luxury and Lifestyle” grouping targets management agreements with large investors.
“No company has required us to re-engineer our model more often than Accor, with countries jumping between segments and ‘new businesses’ created then consumed as a segment,” said analysts at Bernstein in a note to investors.
And while Bernstein still has Accor stock down as “outperform” its analysts weren’t afraid to criticise the company’s latest move.
“What investors have long disliked about Accor is the regular attempts to reinvent the wheel and not focussing on simply becoming a Hilton-esque long term compounding hotel name. Phrases in today's release like ‘by evolving from a generalist to a multi - specialist model’ have long been off-putting to investors in Accor,” they said.
Interestingly, the announcement doesn't mention Accor's collection of non-hotel entities. A spokesperson has since confirmed to Hospitality Insights that the reporting structure for these businesses had yet to be defined.
Could this herald a break-up?
Accor has been the subject of M&A speculation in the past, with rumours of a merger with IHG back in 2020. On the surface this moves makes a split easier as there is a clear difference between the set up and aims of the two divisions.
It’s easy to forget that Accor was once best known as a budget midscale brand thanks to the success of Ibis, Novotel and Mercure. These days the company and leadership team seem to have much more interest in the luxury and lifestyle side of hospitality. Could one of the big US-based hotel groups be interested in making an offer for the “Economy, Midscale and Premium" part of the business?
Bazin stays on
As part of the announcement Accor also said that its board had unanimously decided to propose the renewal of Bazin’s tenure at the next annual general meeting.
What they said
Bazin said: “Changing our organizational structure is a natural step in the transformation initiated several years ago, which turned Accor into an asset-light group that is more agile and efficient, with a global profile and which has become a key player in Luxury and Lifestyle.
“By evolving from a generalist to a multi-specialist model, our aim is to further improve Accor’s appeal in the eyes of talents, owners, partners and investors. We capitalize on our leadership positions to accelerate our development, better focus talents and expertise, and improve our performance.”.