Patrick Mendes
Ranging from the luxury segment with the Sofitel collection to budget brand Motel 6, Accor Hospitality Group spans more than 4,000 properties and 500,000 rooms. About 65 percent of its business is generated by corporate travel, meetings, incentives, conferences and exhibitions, according to senior vice president of global sales Patrick Mendes. Mendes recently spoke with The Transnationalabout the 2010 hotel negotiation season, plans to open 200 to 250 new properties by next year, a continued focus on Sofitel in North America to maintain the brand's global relevance to corporate clients and other Accor initiatives.
What was the result of 2010 rate negotiations?
We had a very tough year in 2009 where we had to renegotiate some corporate rates up to 10 times. We finalized the 2009 RFP process only in June for rates available for 2009. It has an impact on the 2010 negotiations. The first trend is since the renegotiation process was very long in 2009, clients are accepting two year deals--they are keeping the rates that they had in 2009 for 2010. The second trend is that we are seeing stabilization in business travel since November. In places where there is an increase in business travel, we are able to keep the rates flat or slightly increase rates for 2010. In Europe, there are some countries where we are quite strong and where the market is recovering, but it's not in other markets where it is quite difficult. Where we are very strong and where the market is recovering, we are expecting [rate increases up to] 5 percent. When a client is asking for a decrease, in order to stabilize our rates, we keep the same rate and we also give them either free Wi-Fi or all other [value-adds] in order to keep the rate at the same level. We cannot say that we have a plan to increase rates in a year and a half because we don't know if the market is going to recover--it is much more reactive pricing. We are not playing with yield management like we played before. Instead of increasing or decreasing rates on a daily basis, it is more of a contracting process; we need to have a rate that is acceptable for a client. When the market recovers, we will not have the ability to increase rates by 15 percent or 20 percent because the client will not accept it.
Are you anticipating rate renegotiations later in 2010, similar to 2009?
We are all fed up with renegotiations--2009 was a nightmare. For the clients, the U.S. market especially, we are asking for one-time bids: Either you take it or you leave it. The renegotiations in 2009 were time consuming [plus] the time to load rates in the global distribution system each time after we renegotiated rates. It wasn't easy for us or the clients, so I am not expecting such events in 2010.
Do you anticipate corporate demand for luxury will return in 2010?
Sofitel's position as a luxury brand is acceptable for many corporate travelers. We are not in the top luxury brands, which has been highly impacted. Yes, we have seen an impact, but it wasn't as bad as what we expected. And yes, we are seeing an increase [in demand] for 2010, but we haven't seen such a big increase. For the contracts we are doing now for 2010, we are seeing some good trends. We have some contracts with many big corporate clients for luxury brands like Sofitel, and we think it will come back in 2010. However, it is not only a question of a luxury brand, but it is a question of pricing. When you have a Sofitel with a rate that is acceptable for corporate clients, they will book it.
Has the new star rating structure in France impacted Accor?
It had a positive impact for international business because we had a discrepancy between what we were doing in France and what the international market was doing. We are going to a one- to five-star structure as opposed to zero- to four-star. Some of the properties that were considered four-star on the previous system are now considered five-star, which is a good positioning normally for the U.K. and U.S. markets. There is a much more standardized worldwide approach in the French market now. However, we are also experiencing a negative impact in mainly the corporate market where some corporates are now not authorizing any travel in five-star properties. When you had a property rated at a four-star, but now it is a five-star, it has a negative impact. But I would say it has a positive impact for us at the international level to position our hotels in a better way.
Could you describe the e-learning tool?
It is an Accor Web site specifically for travel agencies. The object of this Web site is to make sure that agents know our brands, our hotels, our properties and our destinations--also our pricing strategy on commission payments, etc.--so they can contact us anywhere. The site can adapt to individual customers in order to make sure they are promoting key features of the Accor brands. That is for the mega travel agencies, like Carlson Wagonlit Travel, Hogg Robinson Group, etc. The power of the travel agent is real so we needed this innovation. Accor is suffering from lack of awareness in certain markets, like the United States. A lot of agencies, bookers and corporates don't know Accor. You know Hilton or Hyatt, but you don't know Novotel or Sofitel. Also, we want to make sure that all these bookers know the specificity of Accor, which is that we are everywhere in all of the key countries and in all of the key cities. Our brands go from one-star properties to five-star, and if you compare all of the chains, we are one of the only few groups that has that kind of spread in either destinations or brand diversity.