Photos by Les Mardis de l'ESSEC
The new trend of collaborative
consumption has rattled many businesses, particularly in the hospitality and
travel industries. With companies such as Bla Bla Car, Airbnb and Uber making
waves around the world, how are other existing players reacting to these new
competitors? On Tuesday the 24th of March, Les Mardis de l'ESSEC had
the privilege of hosting Sébastien Bazin, CEO of the ACCOR group and Olivier
Grémillon, Managing Director (EMEA) of Airbnb at ESSEC Business School to gain inside information on
what these companies actually think about each other.
Accor
and Airbnb target similar markets however differ substantially in terms of
service offerings. Are they truly
competitors? Both Bazin and Grémillon unmistakably agree that no, they are
not. In fact, they say that both companies complement each other as is evident
by the market situation in Paris. Airbnb has over 44,000 apartments in Paris
however Accor is also performing exceptionally well. Bazin states that as long
as Airbnb users remain true to the initial concept and don’t use the platform
for industrial or commercial use, Accor will adapt itself to the changing
landscape where the core experience is now the client and its emotional
response. Airbnb has even sometimes been an inspiration to Accor.
Bazin
comments further that Airbnb’s success can be explained by the 5% annual growth
of worldwide travels. Hotels grow at a more modest pace of 2%. One aspect that
is fundamentally different between these two companies is their cost of
capital. Capital markets seem to value Airbnb based on the volume of travelers
and clicks whereas Accor is valued on its earnings and income. Consequently,
Airbnb’s market cap is superior to Accor’s even though Airbnb doesn’t own any
real estate. This uneven playing field provides Accor with a tremendous
challenge as it tries to grow and move as quickly as Airbnb but is held back by
its weight.
Moving
deeper into the subject of just how different these two products and services
are: should they be bound by the same
regulation as they are offering virtually the same thing? Once again, Bazin
and Grémillon agree that no. As they are different products, they cannot be
regulated by the same policies. Airbnb hosts file income taxes whereas
hospitality firms pay corporate taxes. Bazin also mentions that he has no
interest in fighting Airbnb on taxation grounds as long as the company remains
true to its original spirit of providing a local stay at home experiences to
travelers. From his perspective Accor is a hospitality firm that is trying to
embrace a tech dimension whereas Airbnb is a tech firm trying to improve its
lodging experience.
Airbnb is a technology company at
its core, with its competencies firmly developed in the digital realm, can
Accor catch up? Historically,
hospitality firms have focused on product and brand building however since 2005
the sector has experienced rapid change with companies such as Expedia and
Orbitz entering the market, replacing distribution
channels and eroding profit
margins. Bazin agrees that the industry did not react quickly enough to this
change and now Airbnb, unlike Orbitz and Kayak, introduces a true threat to the
existing and prevailing model in the hospitality industry by taking advantage
of the share economy. There is nothing left for Accor to do but to stop being a
spectator and become an actor. Grémillon
mentions that Airbnb is a firm focused on design, for example, by spending a
lot of money and sending professional photographers to take pictures of upward
of 50% of locations in main cities. Airbnb is more reactive, dynamic and lighter
relative to companies like Accor and takes advantage of its ability to move
fast and create a buzz at any moment and very cost efficiently.
Accor
describes a 7 step process to describe the entire traveling experience
1. The dream
2. Selection
3. Booking
4. Planning the trip
5. Traveling/stay
6. Sharing the experience
7. Fidelity
Accor wants to work very hard to be present
beyond just step 5 and become part of the dream and beyond. To achieve this, it
must stop focusing on the commercial aspect and instead build an emotional
relationship with its prospective and existing clients.
So what does the future hold for both
companies? For
Airbnb, Grémillon says strong growth! He wants to see, for example, up to
900,000 apartments listed in Paris in the near future. The Chinese market is
also in sight however poses challenges as they have to rethink their
partnership with Google before entering that market. Airbnb also wishes to
expand their services to cover more aspects of the travel experience but of
course, no details were provided. Bazin sees the future of Accor based on its
adaptability.
(Photo from left to right Juliette Hebenstreit (E16), Louis Béal (E15), Alice Boucher (E17), Armand Peugeot (E17), Sébastien Bazin, Olivier Grémillon, Clara Vilarem (E15))
ESSEC Business School and Les Mardis de l'ESSEC would once again like to thank both companies for participating in the evening
and for the insightful information that was discussed. Thank you also to the organizers,
students, alumni and staff who attended.
