End of an era as Accor Asia Pacific breaks up

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 company.

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 Korea.

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 Fund.

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.