Accor's Duncan O'Rourke on staffing, aggressive growth in the UK hotel market and bleisure

04 August 2021 by

The chief executive for Accor Northern Europe talks to Katherine Price about seeing staffing shortages across Europe, tapping into the ‘bleisure' market and growing its lifestyle division.

What has been your focus at Accor over the past nine months?

We went through a restructuring in Northern Europe, where we combined the Northern, Central, East and New East Europe hubs into one. It has been challenging restructuring during a pandemic. During this time everything has fluctuated. I kept this year's budget flat, assuming that October, November and December would be January, February and March. In fact, it was worse; it really took a lot of us by surprise. The recovery has taken much longer, especially in this region.

Accor is doing very well in North America; in China it's recovered; and Asia Pacific's picking up. Australia wasn't doing badly, but Sydney has just locked down again: it shows how volatile everything is. In the resort destinations in the US the rates are astronomical, so that gives us a lot of positivity.

Southern Europe is doing well because of the leisure destinations. What will struggle is the meetings, incentives, conferences and exhibitions (MICE) corporate market, that's where the concern is. In my region, 90% of my portfolio is this type of hotel. It's challenging. I think you will never get back 10%-15% of corporate business, just because business has changed – not because people do not want to travel, but because the financial controllers see the bottom line. They won't cut it all, but I imagine 10%-15% will not travel like they used to. It means we have to get new revenue streams.

Despite the pandemic, at the end of May I decided to bring the entire sales, marketing, distribution and loyalty team in Northern Europe back. This has been questioned; we could have kept them on the government subsidies. In an asset-light structure, that's a lot of people. It's a gamble I'm willing to take, because I honestly believe business will come back and I want to be ahead of the curve and ready to go. Let's not forget, there are people who haven't worked for a year. You don't just bounce back immediately after a year's time. After Boris Johnson's announcement of the reopening roadmap in February, we saw a 45% surge in bookings. That tells you people are excited and want to move and travel.

Is the combination of business and leisure – or ‘bleisure' – something you are thinking about a lot?

It is – we have the Wojo co-working structure that has already launched in France and we're now launching it in Germany, Austria and Switzerland, and then we'll come into the UK. Not everybody wants to go back into the office, but they want a space to work. You can sign up to Wojo and walk into any Accor hotel and get your coffee and internet for free, and if you want a room, you can get a bedroom or a meeting room. We think there's a big gap there – if corporate [business] doesn't come back, what do you do? How do you optimise and find a new stream to come in there?

If corporate business doesn't come back, what do you do? How do you optimise and find a new stream to come in there?

The Ennismore merger sees another co-working brand come under your umbrella – Working From. Will you be looking to expand that across your hotels as well?

Yes, with the Wojo structure, absolutely. We have put a lot of resources into that, but it comes back to staff shortages and how to tackle those.

Don't you have a fully digital hotel in London?

It's an Ibis on Gloucester Road and you can have a fully digital customer experience – you can check in online, order online. It's up to the guest to choose: do they want the interaction somewhere else, or are they on a business trip where they don't feel like interacting at all?

We did a pilot there and we're excited about it. I'm a traditionalist: I believe human interaction is absolutely imperative to our success, and creating local experiences and communication are the way to go forward. Going keyless – that's not to eliminate a position, that's not what it's about. It's about giving that person who was checking someone in more time to spend time talking, anticipating needs and communicating. Whoever gets this right will win.

MGallery Plovdiv
MGallery Plovdiv

What do you think the hotel market will look like in the immediate future?

I don't think there will be any major mergers coming, like Starwood and Marriott. There are a lot of independent hotels in Europe and in the UK. It's a big market, and they need help and assistance, but they also want to keep their independence. You don't want to tell a leading hotel how to do breakfast and serve the guest – they don't need that. What they probably need is the distribution and the loyalty scheme.

The online travel agencies (OTAs) are driving loyalty as much as they can. We got caught with our pants down with the OTAs. You're never going to make the Accor website 25 seconds quicker to book the room than Booking.com does. You can put millions into it, but you're never going to win.

The OTAs have to be careful, because when Amazon and Google get their act together and say ‘you can start booking rooms with us' – they are tech companies at their very best, you'll never beat them.

One thing that got me was the Airbnb valuation – how did they get that money? Venture capitalists and private equity, billions! It means there's a belief in the industry.

Accor recently announced a partnership with the International LGBTQ+ Travel Association (IGLTA) – is the focus of this guests or staff?

Both, it's to value diversity in our company and for the guests.

Is there a push for more diversity at board and management level within the company?

I think Accor is very strong compared to others already. We have the Riise organisation and there are targets set for general managers and at board level. In my team, 38% of the executives are female – soon to become 43%. That process is ongoing. We have Maud [Bailly] and Heather [McCrory], our chief executives of Southern Europe and North and Central America, and we just hired Brune Poirson to head sustainability.

Accor set itself environmental targets for 2020 – have you revisited those now, in light of Covid?

Yes, we are. [We have to] keep CSR going forward – we're very set on having zero single-use plastics in all our hotels and driving that across the entire group, as well as meeting expectations. Corporate clients are expecting it now – ‘what is your CSR, do you have plastic?' – before they sign with you. They are really drilling down now: ‘what is your philosophy, can you prove it?'

The Allsafe [cleanliness] label that we started with Bureau Veritas – that's a typical Accor trait, we didn't just keep that for ourselves. We put a huge amount of resources into that, we got it checked by Veritas, and then we offered that to independents. That is our philosophy, supporting the local communities.

We even look at, for example, if a hotel has four restaurants, maybe we don't open four when business comes back; we open two in the beginning and let the local restaurants open and push them forward before we open all our outlets. Why? Because we want the local communities to thrive as well.

ibis Styles Sarajevo
ibis Styles Sarajevo

Is your loyalty programme part of that?

Our ALL – Accor Live Limitless – loyalty programme is very, very important to us, because it ticks all those values. We were behind the big American groups, who had all this for years and years. Accor was maybe 15 years behind when we launched ALL and then Covid came. It's just par for the course, but we weather the storm. Accor is a very solid company in terms of cash.

We're the number one hotel brand for development in Northern Europe and the number one for signings in the UK. The only places we're not number one are North America and in China. Everywhere else Accor is the biggest and the strongest and we want to protect that.

I'm really happy with the number of hotels we've signed in the UK, including high-end luxury – the Old War Office, the Fairmont in Windsor – it's not only volume, it's upper-upscale, midscale and high-end luxury.

Fairmont St Andrews
Fairmont St Andrews

Villas and residences are also a focus for the group aren't they?

We have Onefinestay, which is like Airbnb but at a high level. Adagio, the residential aparthotel side, is doing very well. We're looking at expanding on the residential side as well with branded residences. That will also come into the lifestyle division.

Can you go into any further detail on your plans for the UK?

We're really concentrating on expansion. This year we'll open 20 UK hotels, despite the pandemic, including the Fairmont in Windsor, the Mondrian in London's Shoreditch and the Ennismore project. Overnight [following the Ennismore merger] we became the largest lifestyle operator. [That division has] a fundamentally different philosophy: it's food and beverage and entertainment – ‘F&B&E' with rooms.

What are your observations on the UK market?

I believe that the hospitality industry is undervalued in terms of representation at government level, not only in the UK but specifically in the UK. We have a lot to learn from other industries and lobbying where we can. This is probably the second-largest employer in the world and yet it doesn't have any serious representation at a government or ministerial level. We support the minister for hospitality initiative tremendously.

The hospitality industry is undervalued in terms of representation at government level

In the UK what we find a little bit of a challenge is employment. We did an open day at the Savoy and we hired around 60 people there. That was successful, but we're still looking for around 300 positions. It's not small and it's not easy with this combination of Brexit, the pandemic and the uncertainty in the industry.

We need to do a lot in terms of repositioning, but the industry has been through a lot in my career already and it will always come back. In hotel schools, we need to communicate the positive sides, because it does not have this sexy reputation as a place to work. It's renowned for weekends, nights and long hours. It's a fabulous industry, but we need to take ownership of that and attract people. Accor spends a huge amount of time on talent and culture, marketing and training.

ibis Styles London Gloucester Road
ibis Styles London Gloucester Road

Is it worth young hospitality professionals persevering?

It's an industry where it's challenging in the beginning. When I graduated 60% of my class after year four had walked out because they'd had enough. I went to work in Washington DC to become an assistant restaurant manager – there were people my age coming in and ordering wine who were making six times my salary. You get those offers, and then you wonder, ‘should I stand here getting clicked at to bring the water, or should I go sit down and have the filet mignon and do the same?' But if you stick to it and push through it, it's a fabulous industry.

Are you seeing staffing shortages elsewhere across your region?

Yes, it's not a UK problem. It's hitting the UK harder because of Brexit. But it's not contained there. I see it in Poland, Russia, Germany a little bit, Switzerland – generally all over. And in the US as well.

Are there plans to bring more brands to the UK?

We want to bring more of the brands there. There are still gaps: we don't have a Swissôtel in the UK. There used to be a Swissôtel in London before FRHI was acquired. There is huge potential there.

We're also working on the Travelodge deal – the pandemic slowed that down a little bit, but we have ongoing negotiations to convince people that joining us is the right thing to do. And we continue to be mindful of what properties we can take. We have an aggressive growth strategy in the UK.

Duncan O'Rourke on...

…his favourite (non-Accor) hotel

"I like the Plaza Athénée in Paris, it's a fabulous hotel."

…his favourite restaurant

"I like street food – in Singapore they have wonderful markets. And one of the best meals I've ever had was at the Tokyo fish market."

…his advice to young people in the industry

"Travel. Always push yourself to exceed. Give everything back and in the beginning of your career don't stay too long in one position. Use the opportunities to see the world and the wonderful cultures out there – you can always come back home.

"I moved around. I left Swiss hotel school, I went to Washington DC, then to Russia, to Moscow, then to Saudi Arabia, then Greece, in the space of six years."

…what keeps him up at night

"Right now, it's the staffing issue and how to tackle that. And you can't sit still – it is an industry that moves very quickly. Competition is fierce."

…what he does to relax

"I like sports, I play tennis, I ride motorbikes, but what actually relaxes me is my family and my kids and spending time with them."

Accor in the UK and northern Europe

Accor's Northern Europe portfolio spans 1,118 hotels, 21 of its 40 worldwide brands, including Ibis, MGallery, Sofitel, Adagio, Mercure, Novotel and Mama Shelter, and more than 40,000 employees, as well as 246 hotels in the pipeline. In line with the group's strategy to increase its footprint in the luxury, lifestyle and premium segments, one-third of its signings in 2020 were in these areas.

In 2016 Accor completed its acquisition of FRHI, the parent company of Fairmont, Raffles and Swissôtel, and included the Savoy in London. The group is due to open a third Fairmont in Windsor this year, as well as Raffles London at the OWO, opening next year. It recently relaunched the former Curtain hotel in Shoreditch as a Mondrian, marking the return of the brand to the UK after Sea Containers went independent in 2019.

Meanwhile, Gleneagles and Hoxton owner Ennismore also recently came on board, creating a new lifestyle division for the company. Discussions are also ongoing to tempt further Travelodge landlords into joining its Ibis budget brand.

CV

2020-present Chief executive officer, Northern Europe, Accor

2018-2020 Chief operating officer, central Europe, Accor

2016-2018 Chief operating officer, luxury division Europe, Accor

2015-2016 Group chief executive officer hospitality, Emerald Palace Group

2008-2015 Chief operating officer, Kempinski Hotels

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