In a previous post I discussed the myths and realities of uberization. One of my conclusions was that there was no inevitability there and that it wasn’t the preserve of tech companies.
A few weeks ago I got the perfect evidence of this with an important announcement by Accorhotels (formely Accor). Along with a few digital specialists I had the chance have a long discussion with Sebastien Bazin (Accorhotels CEO) and Vivek Badrinath, the boss of marketing and digital for the hotelier.
I won’t elaborate much on a change that, although major, is not my point here. But, all the same, it’s significant. Accor changes its name to become Accorhotels, in order to bring more consistency to a global brand that used to beÂ more known as a stock name than an hotel company. But it’s important to notice that that’s the digital brand of the groupe, already known by the public, that swallowed the legacy one. That’s surely not by accident and that tells a lot.
The main point of the announcement was the opening of the Accorhotels.com booking site to independent hotels. To understand what’s at stake and how big is the news, let me share some background information about the hotel industry.
The uberization of the hotel industry started in 2006
The industry is made of a few large groups (Accorhotels, Starwood, IHG, Hilton…) and a lot of independent hotels, most of all out of the US where independents account for the largest part of the market. Historically, each player used to sell its rooms on his own website. Then came OTAs (Online Travel Agencies) and price comparators that captured a growing part of the bookings, making hotels pay fees on any booking made through their site.
If large players were able to cope with this change since most of their business is B2B and they have the means to buy visibility, it’s been dramatic for independents that got less and less visits on their websites and saw their margin declining because of the fees imposed by the OTAs. In the end their margin is now close to zero. But, either for large or small players, the situation was quite uncomfortable and risky.
By the way let’s admit that the uberization of the hotel industry did not start with AirBnb but with OTAs, more than 10 years ago ! OTAs took a place between hoteliers and customers, which had a double impact :
– declining margins for hoteliers
– confiscation of the data by the OTAs
Let’s also mention a major economical risk : knowing what the sector weights in terms of job in our economies and in nations GDP, the difficulties faced by independent hoteliers have a major impact at the macro-economic level.
Will 2015 be the beginning of unuberization ?
Then comes Accorhotels who offers independent hoteliers (under some conditions) to sell their rooms on accorhotels.com with two major changes :
– Accorhotels want the fees to be lowest on the market
– data will be shared with the independent hotelier
The benefit for Accorhotels is easy to get : offer more hotels (10 000 vs 4 000 today), so it will increase the traffic on their website, so revenue will grow directly (nights at Accorhotels hotels) and indirectly (fees). According to Sebastien Bazin, by helping independents to survive, Accorhotels will help the global offering to grow what will be beneficial to all players in the industry.
For the independent, it’s about becoming more visible, have a better margin and be able to use the data. (NB : Accorhotels recently acquired Fastbooking.com, a e-commerce solution for hotels which help hoteliers to manage their digital presence and the digital part of their business).
So Accohotels makes one step higher in the value chain and their site won’t be a channel which the unique purpose of selling their rooms and feeding OTAs. Instead they’re placing themselves at the same level as OTAs, will distribute the products of independent hoteliers in what seems to be the first marketplace of the industry, made by an hotelier, for other hoteliers and their customers.
Accorhotels and the uberization laws
So we can see that
– a traditional business can uberize a market and unuberize itself
– that it requires a move in the value chain
– that it can imply an ecosystem and even coopetition approach. Not only because of the partnership with independants but most of all because it does not means the end of their relationship with OTAs. Independants will be able to offer their rooms to who they want, and even to Accorhotels and OTAs at the same time and Accorhotels will continue to sell via OTAs. What’s at stake is mostly to react to monopolistic position of OTAs.
Loyalty and data : the next battle
It’s easy to understand the importance of data in this business. Data allow customer understanding and, through this, individualized experiences, optimized marketing and informed business management.
Nicolas Bazin also highlighted the importance of loyalty programs. A loyalty card holder uses the hotels websites and not OTAs to receive the benefits of the loyalty programs. By the way, loyalty programs don’t make customers loyal (most people have cards from different programs) but make customers avoid OTAs.
What leads to my last point : such an initiative must logically lead to an expansion of the Accorhotels loyalty program to independents to be able to leverage the loyalty/data/experience factor at scale. I asked to question to Sebastien Bazin who answered me that nothing was off the table.
And it makes so much sense from an economic and business perspective…