Abel Castro, director of brand development for the French multinational in the Americas, highlighted the need for disruptive hotel brands and more flexible rules to boost the sector across the continent.
With 450 hotels in the Americas and the ambitious goal to exceed 800 branches by 2028, French multinational Accor participated in the 18th edition of SAHIC 2024, last March 11-12 in Lima. Accor executives thus arrived in Peru, an important place for their operations, where they operate well-positioned brands such as Swissotel, Novotel, Pullman, among others.
Today, the situation in the country is difficult, due to political instability and economic recession that hinder the normalization of tourists and tourism investments. Though it must be said that the region in general is not immune to citizen insecurity and recurring economic crises.
AméricaEconomía had the opportunity to speak with Abel Castro, director of Development for the Americas for premium, medium-scale and ecological brands at Accor, about the strategies that the multinational has followed to stay afloat in the tough post-pandemic period.
A few weeks ago, Accor published its 2023 financial report. It reflects encouraging figures such as an EBITDA of US$ 1.09 billion and net profits of US$ 692 million. For its part, Latin America contributed a notable share by achieving an EBITDA in excess of US$65 million, a result that is no coincidence for Castro.
“We achieved these record numbers last year thanks to average tariffs, which increased significantly, much more than occupancy. The profits of a hotel come from two areas: the higher the occupancy or tariffs, the greater the revenue or profits. That was our recipe around the world in 2023 and South America was no exception,” says Castro.
Another notable event for Accor occurred at the beginning of the month, when the company returned to the CAC 40, the list of the most traded companies at the Paris Stock Exchange. It turns out that the hotel multinational was absent for four years due to the reduction in tariffs and hotel closures due to the COVID-19 pandemic. “Now, with the rebound in EBITDA and the return to previous figures, we imagine that we will have a considerable increase in share prices at the stock market in the coming months,” says the director.
However, recovery not only involves relaunching branches, but also devising service models. Last week, Jean Jacques Morin, the CEO of Accor, highlighted that the company is focusing on simplifying the rules of its hotel brands worldwide. It is not only a return to brand standards, but it also includes flexibility and adaptive capacity that is manifested even in seemingly minor details.
“This year, we decided that we are not going to use more plastic in our hotels. And so, you no longer find bottles of this type in any Accor chain or branch. Of course, we should have implemented this much sooner, but it took more time because we were just coming out of the pandemic. So, it is an example that we were flexible, waiting a little more,” Castro says.
In parallel, the company promotes training programs for hospitality graduates such as the Academy, a corporate university open to internal and external candidates. Recently, Accor launched “Tamayyaz”, a collaboration with the Ministry of Tourism of Saudi Arabia that seeks to launch 256 talented Saudis into the tourism market and thus promote the “nationalization” of staff in Accor hotels operating in the Persian Gulf country. Castro does not rule out similar initiatives being introduced in Peru and other Latin American nations.
“We invest heavily in human resources, because at the end of the day, what is important to us is the guest experience and customer well-being. To achieve this, we need motivated, well-trained people who know how to solve problems on a daily basis. That is why we have a very strong talent and culture department,” Castro clarifies.
Regarding the tourism crisis that Peru is still facing, the Accor representative maintains that the most damaging thing for the Andean country's industry has been the increase in hotel supply, driven by the end of pandemic restrictions, accompanied by a drop in demand, motivated by political and social factors. However, Castro highlights that in general terms, Peru remains a relatively safe country, unlike other countries in the region.
“This allows occupancy and tariffs to grow again. Today we have 13 hotels and we want to reach 25 in the following years. We have more cities to develop like Arequipa or Piura, where we do not have a presence yet. They are places where we can open branches of Ibis Budget, one of our economic brands,” Castro says.
Along the same lines, Accor plans the opening of new branches of Ibis, a mid-scale hotel brand, in strategic cities such as Lima and Cusco, following the successful experience of Trujillo. Likewise, in the medium term, the arrival of the Handwritten Collection line to Peru is projected. With hotels in metropolises such as Shanghai, Madrid and Sydney, this proposal is characterized by offering a personalized service from hosts who interact with the guest in a warm way. The aim is to achieve a feeling of “traditional hospitality” with hosts who talk to tourists and give them freshly prepared dishes.
“Handwritten is a collection of independent hotels that we have the obligation to open in Lima through the conversion of branches. It is a brand that reflects the passion, the characteristics of the hotel owner. We already have 15 hotels around the world, plus 50 planned to open in the coming years,” Castro adds.
At the end of 2022, Thomas Zuber, the CEO of Accor Americas, revealed that the company wanted to use the acquisition of independent hotels as the main weapon to gain ground in South America. According to Castro, for the multinational sealing operation agreements does not imply a cost issue, because Accor does not own the buildings, but rather focuses on managing them. As an immediate expectation, the company expects that 19 contracts will be signed in Latin America in 2024, which will translate into new hotels for the remainder of the decade.
Given the doubt about whether luxury hotels recovered their occupancy more quickly than budget hotels, Castro clarifies that the real difference was perceived between conference hotels and those specialized in leisure. The latter rebounded quickly, especially in cities such as Rio de Janeiro, Cartagena de Indias and Buenos Aires.
In fact, the Argentine capital represents a peculiar case: daily life has been marked by inflation and capital flight in recent years, but hotel investments do not stop. One factor to take into account is the marked devaluation of the Argentine peso, which lowers the average expenses of foreign tourists, regardless of purchasing power. Thus, Accor signed four new contracts to open budget hotels in Argentina. “Our strategy in the country is very focused on launching premium and mid-scale hotels in large cities and economical ones for secondary cities,” Castro clarifies.
Other future plans include the opening of a Swissotel in Buenos Aires, as well as an Ibis in Ushuaia, the Argentine city closest to the South Pole. However, perhaps the most ambitious project at the regional level is the launch of Tribe, a lifestyle brand that presents sophisticated accommodations at fair prices. In other words, it is about offering “affordable luxury,” an aspiration of many tourists, regardless of nationality.
“In a luxury hotel, we find five types of croissant , while at Tribe you only get one, but it is one of proven quality. There are not 10 types of coffee either: you only find three, but they are all very good,” Castro summarizes. It seems that this decade will be marked by proposals such as Tribe and Handwritten: hotel services that aim to satisfy business travelers by covering market niches. But they also do not leave aside the average tourist, who wants to disconnect from routine, without incurring in reckless expenses.
