It’s been a busy 2017 for the development team within AccorHotels in the Middle East. Having signed more than 7,000 keys across 22 hotels and 13 brands, the operator has plugged in an almost equal roster of 53% luxury and 47% mid-scale properties. What’s also telling is that 20% of its management contracts are with existing owners.
Three of the people hiding behind the limelight of all these projects are: Francois Baudin, senior vice president development, AccorHotels Europe, Middle East & Africa; Louis Abboud, development director, AccorHotels Middle East; and Jean-Baptiste Recher, development director, AccorHotels Middle East. When you meet the three of them, it’s clear they work very closely together — the camaraderie is apparent.
Baudin says that, after the acquisition of FRHI in 2016, while the portfolio and responsibilities have increased, the size of the team has stayed tight — two developers, one developer dedicated to residences, an analyst, along with a support team in the UK which also has a developer and an analyst. Abboud comments: “Compared to other development teams we are considered to be lean.” Baudin counters: “It’s better to have developers who are extremely experienced, and quick analysts. This is not about how many projects we can deal with — we probably have about 15-20 projects between each of us at one time. The materialisation of these projects, the conversion of these projects, is probably 25%-30%, sometimes 50% depending on the quality of the project.
“It’s about having experienced developers, who know the industry very well, who can talk with the owner and give confidence to the owner, understand development of the hotel, understand the market, read the feasibility, understand the competition and the environment in which we operate, choose a brand that relates to this project and develop this relationship with the owner.”
Abboud adds: “Another important requirement for a good developer is soft skills, i.e. being able to deal with the owners and knowing how to handle difficult topics, but also how to deal with people internally.”
It’s clear AccorHotels has a good relationship with its owners, considering the amount of repeat business with existing partners over the years. Recher comments: “We have recurring business because we have been in the market for the last 55 years, and have a track record of performing as well as or outperforming our competitors. So owners come back to us a lot of the time. I would say 50%-60% of the deals we sign on average is with existing partners.”
A marked change in the operator’s work with owners has also been seen since the acquisition of FRHI Hotels & Resorts, with Abboud pointing out that owners now realise that AccorHotels can work with a range of projects, not just economy and mid-scale. He added: “If an owner used to work with us on an eco project now he knows he can trust us with a luxury project. We are the only operator that offers brands from economy like the one-star Ibis Budget all the way up to an ultra-luxury brand like Raffles, and also tap into lifestyle brands like Mama Shelter and 25hours — and we also offer residential!”
The brands are clearly demarcated, asserts Baudin, which means investors are not confused about which option makes sense for their property. Another advantage, Recher believes, is the fact that a third of AccorHotels’ overall portfolio is fully owned by the operator. This means, he says, that the operators looks at everything from the point of view of the owner. “Everything we do is looked at from a return-on-investment perspective. It’s not just about putting a brand on a building. It’s about relationships, it’s about our position to deliver financial returns at the end. This is why we have been so successful in the region.”
Recher says what also stands AccorHotels in good stead is its reputation in the market, where from a financing point of view, banks are now increasingly requiring owners to secure an operator before they sign off a project. “As you see pressure on the markets, on the rates and on the occupancy, this help us as well — lenders trust the bigger guys who can deliver,” adds Recher.
The operator has done particularly well in the last year, Abboud enthuses. “AccorHotels has been the leader in terms of signings in the region, but last year the interesting thing is that we have signed more than double what any close competitors’ of ours managed to sign, in terms of number of rooms.”
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