The success of the Lifestyle segment has been rewriting the rules in the hospitality sector for several years now. The health crisis has not diminished the attractiveness of this segment: it is actually seeing the most stable growth rate in this sector on the entire planet. We discussed this, strategy, and views with Gaurav Bhushan—CEO of Accor Lifestyle and co-CEO of Ennismore—while talks with Ennismore about creating the world’s largest Lifestyle operator were underway.
You are the head of Accor’s Lifestyle division. How did this Lifestyle journey begin, for you personally and for the Group?
Gaurav Bhushan: I have been with Accor for a long time, for 20 years. Prior to my current role I was Global Head of Development. The group moved to Lifestyle 10 years ago, when we opened SO/ Bangkok. People are shocked. It’s a bit non-traditional. But this hotel has become one of the most successful hotels because the ambiance, service, style and delivery is very unique. At that point, we realized that the customer was starting to grow and we had to keep up with the customer. The lifestyle has taken on a whole new meaning: it was a ‘toy’ back then, but it has grown into a serious business with tremendous potential. At this time, 25% of our pipeline by value is in this segment.
Lifestyle concepts are not always clearly defined and can be a bit outdated at times. What are the main pillars underlying the Lifestyle concept at Accor?
GB.: Lifestyle hotels typically derive the bulk of their income from F&B and entertainment—between 40 and 50%. This is because they tend to be closely tied to their local communities, and F&B is a very local business, so F&B revenues at these hotels make up a very significant share of the overall total. It does not apply to our other brands. This local element is a differentiating factor—again, Lifestyle hotels are deeply connected to their community. And they have a way of blending a distinctive design, which often has the hallmark of a designer, and a more intangible ethos that stems from background music, fragrances, etc. Their look and feel, as well as the stories they tell, are heartwarming. about what makes a Lifestyle hotel. And they are Accor’s fastest growing segment today.
One of the highlights of 2020 will be the start of talks between Accor and Ennismore with the aim of creating a shared Lifestyle platform. Tell us more about Ennismore—its hotel, brand, geographic wingspan and revenue.
GB: First of all, Ennismore is not a BtoC brand or a hotel brand: it is a BtoB brand. And we will use this brand with our hotel owners, for our business and in our sector. Ennismore is part of the Accor ecosystem, but operates as an autonomous platform within Accor with its own group of people.
We will start with 12 brands and more than 70 hotels, and we will look for opportunities to grow and develop more brands. We already have 110 hotels in the pipeline, so the sector is seeing steady growth going forward.
What exactly puts this platform and its brand in a class of its own?
GB: We bring together all our Lifestyle brands. So of course you have sbe (Mondrian, Delano, SLS, Hyde), Mama Shelter, 25 hours and existing Lifestyle platforms, which include SO/, ETHNIC GROUP and JO & JOE. And we added the iconic Ennismore brand, so Hoxton and Gleneagles. One of the most important factors here is that we started this journey with our partners, the people who founded Mama Shelter (Serge Trigano), 25hours (Christoph Hoffman), sbe (Sam Nazarian), Hotel Museum 21c (Laura Lee Brown and Steve Wilson) and TRIBE (Melissa and Mark Peters). It’s interesting that none of them decided to back down when their company merged with Ennismore: they all wanted to stick around and be the face of the brand they had created. So they are still with us to help us develop our brand, products and so on. That, to me, is the strong voice of confidence from these people. This shows that they believe in what we do with Ennismore.
As CEO of a new entity, what are your views on complementary skills and strengths? Will it succeed in retaining what makes each brand unique?
GB: The biggest danger in doing this is growing too fast, and losing the essence of what you’re developing, losing touch with the fact that people love Lifestyle hotels because they are real. The decision to merge Accor and The Hoxton is a good example to follow. At Accor, we have an outstanding brand portfolio, we know how to quickly scale this brand around the world, and our distribution and tools are among the best in the industry.. Then, The Hoxton founder, Sharan Pasricha, who will be co-CEO of Ennismore with me, is a fantastic entrepreneur who built a business from scratch. So The Hoxton will give us what I call the ‘magic touch’ to come up with a unique concept around F&B, digital innovation and customer approach. The experience Ennismore has in its brand is at the heart of what we’re trying to build—and therein lies the value. That’s why the strategy we honed with Sébastien Bazin was not to agree on a one-size-fits-all model and stream it to hundreds of hotels: it was to expand our portfolio with authentic brands carefully curated and developed in the right locations and markets.
As vaccination campaigns are underway around the world and travel prospects are back on the horizon, what do you expect to happen in the hospitality sector in general and in the Lifestyle segment in particular?
GB: I truly believe that the sector will bounce back, and bounce back with a bang. We see that, every time a restaurant or bar reopens somewhere, people are rushing back. Basically, humans are built to interact with other humans, and that is the essence of socializing and traveling. This also applies to F&B and entertainment. However, we don’t know how quickly it will recover. But we believe it Convenience business, especially F&B business, will return before corporate business.
Despite the bright prospects, why should Accor invest heavily in its Lifestyle portfolio when customers aren’t really returning?
GB: We continue to invest because we know that the Lifestyle segment is a very strong and growing business for Accor. And this will be an even more important segment in the post-COVID world because, as I said, the Leisure and F&B segments will be the most resilient: 45% of revenue at these hotels comes from F&B and 50 to 60% of the Ennismore brand room business is Leisure.
So I would say it was a smart move for Accor to strengthen its position in this segment, which is able to bounce back faster than other segments. And working on concepts that integrate entertainment ideas and adapt our products beyond traditional room-based travel, to address the many new emerging trends and reach a hybrid customer base, who may not necessarily be traveling but may want to use a business venue or F&B facility because they value the environment. or a typical atmosphere, for example. On that front, we mainly compete with independent bars and hotels. So we are stepping beyond traditional hotel management and entering an ecosystem that touches every aspect of our customers’ professional and recreational lives. That’s why Lifestyle is growing. It will continue to grow in the next five years, so we need to look to the past of the pandemic to build on their future.
Accor is a world-leading hospitality Group consisting of more than 5,100 properties and 10,000 dining and drinking establishments in 110 countries. The Group has one of the most diverse and fully integrated hospitality ecosystems in the industry that includes luxury and premium brands, mid-range and economy offerings, unique Lifestyle concepts, entertainment and nightlife venues, restaurants and bars, branded private residences, accommodation properties shared services, concierge services, co-working spaces, and more. Accor also boasts an unrivaled portfolio of distinctive brands and approximately 260,000 team members worldwide. Over 68 million members benefit from the company’s comprehensive loyalty program ALL – Accor Live Unlimited – a daily Lifestyle companion that provides access to a wide range of rewards, services and experiences. Through its Planet 21 – Acting Here, Accor Solidarity, RiiSE, and ALL Heartist Fund initiatives, the group focuses on driving positive action through business ethics, responsible tourism, environmental sustainability, community engagement, diversity and inclusivity. Founded in 1967, Accor SA is headquartered in France and publicly listed on the Euronext Paris Stock Exchange (ISIN code: FR0000120404) and on the OTC Market (Ticker: ACCYY) in the United States. For more information visit group.accor.com or follow Accor on Indonesia, Facebook, LinkedIn and Instagram.