The restructuring of Accor in what is being hailed as a new chapter
in its strategic roadmap marks the end of an era for the French hotel
group in Asia Pacific.
The plan to form eight geographical hubs basically dismantles the
tight-knit and coherent Asia Pacific team built up by CEO and executive
chairman Michael Issenberg over two decades and the growth it’s seen
from 10 hotels at the end of the 1980s to the current 1,200 hotels with
232,500 rooms across 22 countries.
The region now accounts for nearly half of Accor’s secured pipeline
and how that growth will be executed with the restructure which
basically breaks up the region into three hubs – Australia, Asia and
China – remains to be seen.
It was really in 2003 that Issenberg stepped up the charge in Asia
Pacific when he took on the reins of CEO of the combined region and he
sewed together the diverse and far-flung geographies of Australia/New
Zealand, Asia and China to deliver a juggernaut of growth for the
In a fragmented region such as Asia Pacific, it is no mean feat to
put the pieces together and for them to run in tandem with each other to
deliver on one mission. In 2008, Issenberg relocated from Sydney to
Singapore to better run the region from a more strategic location.
Today, Accor is the biggest hotel operator in Singapore where it
operates a range of brands including the Fairmont, Raffles and
Swissotel, in addition to its own staples of Sofitel, Sofitel So,
Novotel, Mercure and Ibis, with the Pullman due to come online in 2022.
In November 2018, when Accor Asia Pacific reached its 1,000-hotel
milestone, I asked Issenberg what it took to deliver that kind of growth
and he said, “We wouldn’t have had the success we’ve had if we had not
invested in people to back up our strategy.”
Anyone who has ever had a chance to speak to Issenberg knows that’s
where his strength is – his ability to form teams, build and sustain
loyalty, as well as nurture relationships with hotel owners.
And it was this team, that had minimal turnover and consistent leadership, that made Accor the company to watch in Asia Pacific.
The acquisitions of Fairmont Raffles in 2016 for US$2.7 billion,
Movenpick Hotels & Resorts in April 2018 for US$567 million, and the
month after, Mantra Group for US$1.2 billion fuelled the growth and for
a time, the Asia Pacific growth engine seemed unstoppable.
Until Covid-19 – although it could be argued that the region will deliver the first recovery, led by China.
Although the restructuring has not been directly attributed to the
crisis brought on by Covid-19 or to the US$235 million cost savings
plan, it is interesting it is happening at this time when stability in
maintaining teams as well as owner relations is critical.
In breaking up the regions of Asia Pacific as well as Europe, it
appears to be both a decoupling (which is in line with global trends)
but at the same time a centralisation to have central services and
functions in Paris.
It is understood the rationale to break the world into the eight
geographic hubs is to have proximity to both owners and guests. But it
could also be argued that by getting rid of the regional layers, it puts
more control back in the hands of Paris.
For example, by removing the Asia Pacific oversight under Issenberg,
the three hubs in the region will report directly back to central
functions in Paris. Simon McGrath will run Pacific, Gary Rosen Greater
China and Garth Simmons, South-east Asia, including Japan and South
Europe has also been broken up. Like Issenberg, Franck Gervais, CEO
Europe, will leave the organisation. Maud Bailly will run Southern
Europe, including France, and Duncan O’ Rourke, Northern Europe,
including Central and Eastern Europe and Russia.
These hubs will report to central functions including Patrick Mendes,
as chief commercial officer, Steven Taylor as chief marketing officer,
Gaurav Bhushan becomes head of lifestyle, Fabrice Carre oversees
strategy and Laurent Picheral, Solidarity Accor and the ALL Heartist
Issenberg will remain to execute on the breakup of his region and it
will be interesting to see how it all plays out. Owner relationships are
complex in the region and some are so intertwined across the various
brands Accor has rolled out over time.
Think of it like trying to unpack a house of cards built up over two decades.
In the interview in 2018, Issenberg said, “When I joined Accor 24
years ago, we had fewer than 50 hotels in the region. When I took on
Asia in 2003, we had roughly 200, 100 of which were in Australia. It’s
been a long road, the company’s changed remarkably and we’ve accelerated
the past five years through acquisitions.”
It will be interesting to see whether Asia Pacific, as a juggernaut
of growth for Accor, will be stronger divided, or united, as it was
under Issenberg’s watch, and how the Accor story will unfold in Asia
Pacific in the next chapter.
This story was first published in Web In Travel.