Simon McGrath
Inside Franchise Business put two hoteliers on the spot with a Q&A – AccorHotels COO Pacific, Simon McGrath, and Choice Hotels Asia-Pacific CEO Trent Fraser.
Q: IbisWorld reports that a declining wages spend and streamlined processes are boosting profits. How does this equate to the Accor experience?
SM: Increased automation of systems has produced greater efficiencies, while the growth of the AccorHotels network in Australia has enabled us to benefit from economies of scale. However, with a large pipeline of hotels coming on stream over the next five years, AccorHotels' workforce will grow substantially. The key is investment in staff development and training, and AccorHotels is a leader in this area. Our investment in growing the skills of our workforce will continue to rise, but this will be offset through productivity gains from scale and technology efficiencies.
Q: While domestic tourists are 55 per cent of the market, 20 per cent of tourists are from Asia Pacific, particularly China. How does this resonate with the various Accor brands, and where will the greatest growth occur?
SM: The domestic travel market remains a strong driver of business across the group. The business, meetings and leisure sectors are all performing strongly, and Sydney is benefiting from the new International Convention Centre. The opening of the Sofitel Sydney Darling Harbour, the first new-build five-star hotel to open in the city since the Olympics, heralds a new era of substantial development in the Sydney hotel market, and this in turn will enable the city to attract larger events, conferences and exhibitions.
In cities such as Brisbane and Perth, the downturn in mining-related business has been replaced in part by major investment in new tourism infrastructure, such as the Perth stadium, and the market is readjusting.
Across Australia, massive growth in airline capacity to key gateway cities continues to see international travel set records on a monthly basis, and we are confident our hotels will continue to benefit from our strong presence in Asia Pacific, particularly China.
We finalised a strategic alliance with Huazhu Hotels Group (also known as China Lodging Group) in 2016, which has created a huge opportunity for our two businesses to combine our distribution systems and loyalty programs, which together boast more than 75 million members worldwide. This partnership enables us to accelerate the development of the Grand Mercure, Novotel, Mercure, ibis and ibis Styles brands in China, Taiwan and Mongolia, with 350 to 400 hotels set to open over the next five years. With this comes an increase in brand awareness for our hotels, and as China’s outbound travellers grow exponentially, these brands are well positioned to capitalise on the influx of Chinese travellers to Australia.
AccorHotels was the first to launch Chinese Optimum Standards (Hao Ke Ya Gao) for our properties in Australia, which gives them an added advantage in catering for the market. With the largest-ever increase in hotels across Australia, our industry is well-prepared to grow the market even further.
Q: Growth is predicted at a fairly low 2.9 per cent for the next five years. What is the strategy to stay competitive within the Accor brands?
SM: Australia’s tourism industry has never been stronger, and pleasingly we are seeing more supportive investment from state and federal governments, including the building of convention centres, tourism precincts and new and upgraded airports.
With AccorHotels’ $1.2 billion acquisition of the Mantra Group we are now in an even stronger position to develop our business and play a role in growing the tourism sector. The Mantra Group brands will enhance our brand portfolio and create opportunities for our people, partners and guests.
We are also launching a wide range of new-build hotels, with strong lifestyle elements, to cater for changing market trends. We have adapted our product offer – including restaurants – to anticipate these market trends, and we have invested heavily in areas such as distribution and loyalty to ensure our hotels continue to achieve above-market returns.
Q: What challenges are facing the hotel sector over the next five years?
SM: Updating the physical product to meet changing traveller demands will always be a major priority, as tourism is an intensely competitive industry. Our brands and hotels must stay relevant to the market and exceed expectations.
As the hotel industry experiences unprecedented levels of development, the key issue over the coming years is around people: how we attract and retain the best talent to serve our millions of guests each year. We have always put a lot back into the industry and have always been focused on training and developing our people. Our industry is all about people and we are focused on delivering heartfelt service that creates a genuine human connection and memorable moments for our guests.