Post-Merger: AccorHotels' Growth in North America & How It's Leveraging FRHI's Legacy

AccorHotels' Kevin Frid talks:

• Growing AccorHotels brands in North & Central America
• Strong performance in Canada
• Merging technology systems
• Leveraging FRHI's personalization expertise

This summer will mark two years since AccorHotels acquired the FRHI brand. The deal immediately gave Accor presence in North America, which had been a relative white space in Accor's portfolio. But, as with many M&A transactions, early days have been filled with lessons and surprises, and where the companies expected to find overlaps, they've actually found mutually beneficial strengths. But how to leverage that? BTN lodging editor Julie Sickel spoke with Accor COO for North & Central America Kevin Frid, who had worked for FRHI until the merger.

BTN: Is the strength of the Fairmont family of brands helping some of Accor's other brands get an even better footing in North America?

Frid: We've suddenly got this whole new menu of options to offer, and so we're just starting to really see the momentum build in that area. The phone certainly rings a lot more than it used to, and it gives owners and developers and potential brand opportunities—even with our existing brands we had in the luxury and upper-upscale—that confidence that they're working with a large operator with a large distribution channel, a large customer base of people to talk to. It's been a lot of fun and so far so good.

BTN: Are you building out particular Accor native brands in North America then?

Frid: We continue to see significant growth in Mexico and the Caribbean, building upon the strength of the economy and midscale brands that Accor already has there and our resources. We've had great success announcing and growing at that level in Mexico, including with our own traditional brands, as well.

In the U.S., we're staying focused on the luxury and upscale. That's still where the greatest opportunities lie with us. Of course, we're now slipping the luxury and upscale brands of Accor [which don't have a big presence in the U.S.] into that strategy with Sofitel, M Gallery, etc. We're talking about a lot of projects today with those brands, in addition to ours.

We own Canada, the Fairmont brand. It's the only country we own in my portfolio, so the question there becomes: How do we leverage that strength to become stronger in the midscale? Canada is one of the hottest markets in the world. Our [revenue per available room] growth last year across the whole country was 15 percent, which is a number you get to brag about. That includes an oil-challenged economy. It's very, very strong. So how do you leverage that? How do you ride that? We're sort of working on that right now, and hopefully in the not too distant future, we'll announce something relative to growing in that arena.

BTN: Is the strength you're seeing there coming more from leisure or corporate?

Frid: When you've got that kind of brand strength, it's never one area. We're seeing tremendous growth in international travel, which of course, includes the U.S. coming into Canada. You have a very favorable exchange environment; the U.S. dollar goes a long way in Canada. Without wanting to sound political, you have a country that welcomes people from around the world without qualification; that sense of welcome, which goes hand-in-hand with a sense of safeness—it's clearly one of the safest travel destinations in the world. Combine that with the natural beauty of Canada, and its cities have really grown up, as well; Montreal, Toronto, Vancouver, are all doing very, very well.

BTN: Where do you stand in terms of technology with the legacy FRHI systems joining with Accor's systems?

Frid: When Accor acquired us, we created an entirely new division of Accor for luxury and upscale brands, which has about 450 hotels in it. Accor acquired a company that was very strong, both the technology of it and the delivery of personalized and customized guest experiences. Then you've got this huge platform of distribution [on Accor's side], and so our challenge has been: How do you take the best of both of those worlds and put it together? … Which is really easy on paper. We've got a plan together now. We launch that in July.

BTN: Is that the customer relationship management system specifically?

Frid: It's all the systems side you have to integrate together. It's the guest data warehouse, which is where all the personalizing, customizing happens—where Fairmont was very strong, of course—connecting with the Le Club reward system, and into [Accor's] central reservations system. You've got to bolt the two together and integrate into the property management system at the hotel level so that when [Traveler X] comes in the door, make sure she gets her rewards, make sure I know all about [Traveler X] and what she wants, where she wants to stay, what are the things about her that we need to know in order to enhance her guest experience.

BTN: That sounds like a pretty big undertaking.

Frid: It was, and bigger than we anticipated, to be honest, which is why it's launching this July, two years later. In a perfect world, it would've been six months later.

BTN: To actually make that happen, have you had to bring in new people or change the organizational structure?

Frid: What it did was make Accor reevaluate its acquisition strategy. When you do these acquisitions, no different than others, you've got a whole plan together and ultimately, it's a financial outcome. Within that financial outcome are synergies and savings and additional opportunities and revenue streams, and what it forced us to do was reevaluate the synergies within the technology world. Quite frankly, the whole Fairmont, Raffles, Swissotel team is essentially still there. [During mergers], you often think about ... "We don't need two people doing the same thing." Of course, the discovery was: They weren't doing the same thing. As a matter of fact, there's this whole, rich knowledge [with FRHI] about personalization and customization combined with the knowledge on the AccorHotels side of Big Data, big distribution, etc. So the two sides are working together to ultimately bring everything together. The guest doesn't see it, but certainly it was a big deal with us internally.

BTN: Will the loyalty systems also be merged in July?

Frid: Yes, at the same time. It also means we're bringing all of the luxe brands—Sofitels, M Galleries, etc.—onto the personalization and customization side, as well.

BTN: What's that going to allow those brands to do better?

Frid: It's mostly about systems talking to each other. It's a lot of training around making sure our colleagues put information [into the system] that will be valuable for future stays in our company [so someone] doesn't have to pick up the phone and call somebody and say, "Mr. Smith's coming in and he really needs to get to a meeting as soon as he gets there, so can you make sure ..." You don't have to make that phone call; it's all automated. It could be [Traveler X] is coming in and she hates high floors. It can be as simple as that—or likes feather pillows, likes foam pillows, has an allergy, etc. Every time someone's arriving, we have all that information at our fingertips and you're not learning as you go, nor is it complex communications. It's just there. That's where Fairmont, Raffles, Swissotels was very strong.

BTN: How much does Onefinestay fall under your purview?

Frid: We've continued to operate that as an independent organization. It tends to be overseas and out of my purview, but from a strategic standpoint, we all are senior people in the company and understand that the more and more we can ... offer a depth of brands from hostels to uberluxury, [Accor] becomes more and more a total travel solution to guests. This gets back to customization: Your needs can change so much based on the purpose of your trip. If you go to Paris and stay at the Sofitel all the time because you like it [and] it's convenient to where you do business and then you're coming back and bringing your family, then maybe Onefinestay has got the offering that meets those needs because you've got a family of five and staying in three different hotel rooms doesn't work and want a luxury homestay in France. As we widen that breadth of offering, that more and more becomes the place that you know you can find your travel solution, rather than jumping off onto other solutions.