by Loren G. Edelstein | June 01, 2018
For a traditional business like hospitality to succeed, "You have to totally demolish the organization," Sebastien Bazin, chairman and CEO of Accor Hotels, told some 5,000 attendees of C2 Montreal last week. "You have to go from vertical to horizontal."
 
Hospitality was the first industry disrupted by the new economy, said Bazin, citing booking services like Expedia and Travelocity as early influencers. "All those companies in the new economy have four things in common. One: 80 percent of all new economy companies have been created and funded by someone under 35 years old. Two: All started with a blank sheet of paper; they were completely uncharted ideas. Three: 90 percent have been built on new technology that is better than had been used in that industry. Four: They decided they were going to conquer the world."
 
By contrast, he said, "All the 'old economy' companies are run by people over 55 years old. All have years of legacy, and are burdened by standards and habits. Ninety percent did not invest in technology when they should have. All they have in common is global reach.
 
"Those old-economy companies have been immensely successful because of one thing: We invented the product. We pushed that product to people by using heavy, mass-market advertising. We pushed it hard, and it worked for two centuries. So, we felt we had done well. What happened in 1990 was that the entire new economy shifted 360 degrees in mindset. We went from product-minded to client-minded. It happened so fast because of social networks, because of Google.
 
"The worst thing is the so-called corner office. The corner office means you're the boss. Have you ever seen any corner office at Facebook, Google or Alibaba? Never. You need to have the older generation realize that somebody new is much smarter than them. You have to destroy the culture. Transform the way you think, the way you act. You have people who like to say, 'No, we cannot,' or 'No, that won't work.' Kill those guys!"
 
Transformation is an ongoing process, Bazin added. "Accor employs 300,000 people. The company hires 8,000 new people every year. I have promised those people it will be tough, it will be fun, and it's going to take four to five years to transform the company. I was wrong: That transformation will never end. Every time there is a new mutation in business I have to adapt, I have to transform. If you want the old economy to compete in the new economy, you need a vision, you need a leader, you need to know where you want to be in three to five years, and you need to accept that you have severe doubts about how to get there."
 
The topic was a fitting opening for the seventh annual C2 Montreal, a groundbreaking conference conceptualized by creative agency Sid Lee in collaboration with founding partner Cirque du Soleil. C2 - named for commerce and creativity - was designed to question the status quo, challenge biases and explore completely new ways of doing business. 
 
MAKING WAVES
 
Sebastien Bazin relishes disruption. Prior to taking the helm of Accor, he was with real-estate investment firm Colony Capital and served on the company's board of directors. Bazin had strong opinions about how the business was run - and how it should be run. In August 2013, he became Accor's chairman and CEO, and was anxious to put his ideas into action.
 
"When I took job for Accor, I showed up at the board meeting barefoot in a T-shirt to talk about how to disrupt the hospitality community," he told Jean Raby, a global investment expert and CEO of Natixis Investment Managers, who conducted an on-stage interview following Bazin's remarks. Following are highlights from that discussion.
 
Accor has 26 brands. What's your strategy? Do you have too many brands? 
In five years, Accor is probably going to have 40 brands. I'm looking at brands exactly like a portfolio of friends. For every occasion, you have in your mind a different friend you want to have that experience with. Some of my brands are local; some are global. Brand is the shortcut to a decision-making process in a crowded place. 
 
Airbnb has been a disruptor in hospitality. How do you explain it?
It's easy, it's successful and I wish I invented it. Its properties are price sensitive and well located. If you want to spend less on the space and more in the bars and in the city, it will suit your needs. To serve guests with those priorities, we invented a brand called Jo&Joe. It's an open-house concept; there is no partitioning in the rooms. The beds, furniture, everything but the toilets are on wheels, so you can set up the room the way you want. It's more spacious and more fun, with a price that competes with hostels. 
 
In what other ways is Accor positioning itself as a disruptor?
We have an Innovation Lab run by 28 people. They develop our new products, conceptualize new furniture. We will soon have a new announcement about mobility. I want the hotels to be on wheels. I should have the hotels coming to the location you want the hotel to be in.
 
There's a degree of uncertainty in the geopolitical environment today. Are you worried?
I am, but Accor has been in many countries for 50 years. Accor has never left a country for any geopolitical situation. Any country where there is risk, I want to be the big guy protecting the employees and staying put until the situation gets better.
 
THE FUTURE IS LOCAL
  
Later in the program, Bazin tapped the brainpower of about 200 participants in a workshop-style session called "Reimagine the Hotel: Serving Locals and Outsiders."
 
"I'll tell you what I want to achieve, and I have no idea if I'll be able to achieve it," he told the group. "I'm going to be like a sponge, and I'm going to be taking everything from you." The biggest challenge of all old-economy companies, he said, "is to enlarge the net and multiply the interactions they have with the same guests - what you and I call touchpoints. That's why Google, Facebook, etc., are so successful - because of the level of interaction they have with the customer. I need to bridge that gap."
 
Bazin would like Accor hotels to serve people when they're at home. Basic services hotels provide to guests, such as dry-cleaning and meals, could also benefit local communities. Of the 7.6 billion people in the world, about 6.1 billion do not travel, according to Bazin. "In the biggest cities in the world, many people don't travel. They know the hotel brands because they've been in the neighborhood for 50 years. But they've never entered the building, because they don't belong."
 
Meanwhile, he said, "The sharing economy is successful because it helps your everyday life. Why can't we use an existing asset to benefit the people who live there? That is called AccorLocal. There is no other asset class that operates 24 hours a day, 7 days a week. What is it that we should be doing on behalf of a billion people who may be traveling but may be back home? I have so many facilities that are only used between 6:30 a.m. and 9:30 p.m. I have 270,000 people working in 4,300 hotels in 100 countries."
 
AccorLocal began as a pilot program in France in 2017. Users can request hotel services via the free AccorLocal app, available for iOS devices. The company plans to eventually expand the services to other markets, confirmed a spokesperson.
 
The potential for incremental revenue is huge, in Bazin's estimation: "I believe AccorLocal could be a third of the business of Accor. And nobody can disrupt me, because they don't have the services I have." 
 
Even master disruptor Airbnb could be a client. "What is the one thing an Airbnb host needs to do? Give you the keys to the apartment. They could drop the keys in any of my 4,300 hotels. We're open 24 hours a day and we are always staffed."
 
Suggestions gleaned from the participatory workshop included game-style apps that offer incentives to locals who use hotel services, and other ways to maximize the potential of the properties to serve the diverse needs of their communities.