Accor’s New Chief to Accelerate Predecessor’s Franchising Plan

Accor SA’s new chief executive officer plans to accelerate his predecessor’s work in reducing hotel ownership in favor of management contracts and franchises.

Europe’s largest lodging company needs to “unleash capital” by selling hotels and retaining the contracts to manage them, Denis Hennequin said in Vienna. Hennequin joins Accor from McDonald’s Corp. next month after former CEO Gilles Pelisson left because of differences with the board.

“I will succeed building on what my predecessors have done already,” Hennequin told reporters at Accor’s new Sofitel hotel in the Austrian capital. “What we need to do now is increase penetration in all markets, especially in developing markets.”

During five years as McDonald’s European chief, Hennequin implemented a strategy based on development of franchising. Accor, based in Evry, France, aims to sell properties to cut debt and become Europe’s biggest hotel franchiser by 2015.

Accor’s brands won’t be diluted by the acceleration of the franchise model because many properties will still be managed by the hotelier, Hennequin said. The repositioning of Sofitel started in 2007 is a good example of what Accor can do with its other brands, he said.

Sofitel has boosted revenue per available room on average by 30 percent after Accor reduced the brand’s hotels to 130 from 202 in 2006, said Yann Calliere, Accor’s general manager for Europe, the Middle East and Africa. The repositioning also involved extra training for 25,000 employees and the addition of two “sister” brands, Sofitel Legend and SO Sofitel. Seventy- five percent of Sofitel hotels are under management contracts.

4 Meter-Wide Bed

“We are in the middle of our recovery” after the Sofitel renovation, Caillere said. The luxury end of the market is the first to be affected by a crisis and the first to rebound because of its link to international business travel, he said.

The 182-room Sofitel Vienna Stephansdom, designed by Jean Nouvel, opens tomorrow. Its biggest suite boasts a 4 meter-wide (13 feet) bed and a 12-seater dining room for 3,200 euros ($4,225) a night.

China is Sofitel’s biggest market in terms of growth, said Caillere. “The Chinese are starting to travel and we want them to stay with us when they go abroad.”

Sofitel will also open hotels in Mauritius and Phnom Penh Phokeethra in Cambodia this week.

To contact the reporter on this story: Armorel Kenna in Milan at akenna@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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