Q&A: Inside Accor’s Bespoke Growth Strategy for Greater China

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With the easing of Beijing’s zero-Covid policy, mobile-savvy Chinese tourists are driving a resurgence in domestic hospitality bookings. According to STR, the gold standard for hotel performance benchmarking, China’s hotel average daily rate surpassed 2019 levels during the seven-day Lunar New Year holiday period earlier this year.

Already a leading player among non-Chinese global hospitality companies in the region, Accor has been gearing up for this domestic tourism boom by accelerating its growth strategy, ramping up development, and striking a balance between expanding at scale by extending new master franchise agreements to Chinese partners and growing organically across other Accor brands and segments, particularly at a luxury level.

SkiftX spoke with Gary Rosen, CEO of Accor Greater China, to learn how Accor is positioning its diverse portfolio within Greater China to meet increased demand for a broad range of high-quality hospitality experiences.

SkiftX: What does it take to grow a global hospitality brand and network within a vast and complex market like China?

Gary Rosen: It starts with people. We won’t grow if we don’t have the right people in place. From there, we can build trust and nurture relationships with new and existing owners. We have the most diverse portfolio of brands that owners and travelers can easily understand, differentiate, and embrace. Many of our brands have so much history and heritage, and people in China can connect with them, especially within our luxury portfolio. For example, it’s amazing how many people understand and connect with Raffles as a brand, even if they haven’t been to a Raffles hotel before, because they know about the mystique and legendary service of Raffles Singapore.

With Fairmont, there’s a connection point between China, Canada, and the U.S. People understand the story of Fairmont in terms of it starting with two female entrepreneurs — two sisters — in San Francisco at the start of the 20th century, and every Fairmont hotel is bespoke.

The other thing is that we’re an asset-light company, which is incredibly important when you think about organic growth across such an enormous market, especially within the luxury, lifestyle, and premium segments. We set a benchmark and established the growth potential for economy and midscale hotels through our strategic partnerships and master franchises.

SkiftX: How do you view the region’s competitive landscape, and how will Accor continue to attain a stronger position within the market?

Rosen: In terms of overall hotel numbers, we already have a strong footprint in China, but there is work to be done to get to a level of scale enjoyed by domestic Chinese players like Jin Jiang and Huazhu. Even so, Accor is about to hit the 600 hotel milestone in Greater China, which is an exciting milestone to achieve.

In addition to that, we’ve decided to embrace these big Chinese players, so Jin Jiang is actually one of our partners. We operate hotels together and also work together to advance important initiatives such as procurement and sustainability. Huazhu is a long term and important partner for Accor as well. They helped us pioneer China’s first successful master franchise program on behalf of our Ibis, Ibis Styles, and Mercure brands. They understand and respect our brands and have helped us drive remarkable growth within China.

And last year, we announced two new master franchise partnerships. The first was with Country Garden’s Funyard division, one of the top hotel and property developers in China. They wanted to enter into the lifestyle space and approached us on the Jo&Joe brand, and have committed to opening and operating more than a thousand Jo&Joe hotels in mainland China. The second master franchise we completed last year was with Sunmei, a technology company that also owns and operates more than 5,000 midscale and economy hotels in China. They wanted to venture into the premium space, so they’re taking on Mövenpick, a brand that has strong recognition in Europe, Southeast Asia, and the Middle East. They’ve also committed to opening more than 400 Mövenpick by Accor “smart technology” hotels domestically.

For volume growth, these trusted partnerships allow us to grow across the very large geographic area that is China.

SkiftX: Which brand divisions — luxury, lifestyle, premium, midscale, or economy — will account for the largest growth in the coming years?

Rosen: This is what I love about China — it’s not one or the other. It’s all of the above. There’s volume growth potential in the economy and midscale spaces, which is where we have these master franchises that allow us to scale. And for luxury and lifestyle, and in most cases the premium segment, this is where we’ve committed to growing organically on our own. High-end luxury brands such as Raffles, Fairmont, Sofitel, and MGallery represent significant value to Accor, and we need to manage their intricacies and deliver on guest and owner expectations.

SkiftX: With tourism returning to China, how is Accor thinking about its current position within the region?

Rosen: We’re always thinking and acting like leaders and entrepreneurs — that’s the mindset required for this fast-moving market. We’ve always been very focused on the future, even at the onset of the pandemic. We’ve been preparing for the return of international visitors, but we’ve certainly been more focused on the domestic market over the last three years. To that end, we’ve made a dynamic shift in the way we operate.

We want to continue to master the domestic market, but we also want to own a much greater share of the outbound market. To do that, we’re focusing on two areas: technology and consumer loyalty.

We localized our technology in China. Most companies plug into their home base of technology, but we did the reverse. We’ve now localized our technology base, and now our HQ plugs into us because we have the speed and readiness to interact with Chinese consumers through technology and customized content for the China market, whether it’s on social media or other local technology platforms.

Understanding the Chinese consumer behavior is key, so we created a bespoke loyalty program that leverages all the wonderful dynamics of our global loyalty program, ALL – Accor Live Limitless, and tailors them for the Chinese market.

SkiftX: How is Accor tailoring digital solutions and loyalty programs for the Chinese consumer?

Rosen: When it comes to digital marketing, most of the world still thinks in terms of websites and emails, but that’s not how we operate. People here don’t tend to use email or laptops outside of work, so we built our platform around WeChat and everything is accessed via mobile technology. People spend so much time on their phones and live every aspect of their lives using WeChat, so we built a localized digital ecosystem within the platform.

Many companies buck the intricacies of these systems, but we wanted to embrace the way the domestic Chinese market consumes content and uses technology. We wanted to carve out a presence for our loyalty program, our booking system, and all of our customer relationship management (CRM) efforts on the platforms that people in China use every day.

SkiftX: Subscription-based loyalty is very popular in China. Is that how Accor’s loyalty program works?

Rosen: Yes, it’s not about collecting points. People in China are very accustomed to having a membership that provides them with everyday access to exclusive experiences — so we built a subscription-based loyalty program called ALL Plus that builds on the foundation of our global loyalty program and provides immediate access to special privileges at our hotels, restaurants, and spas.

Instead of thinking like a traditional hotel company, we listened to our consumers and developed a program for the way they live their lives. We are on the front end of where people are today.

SkiftX: What new developments, hotel openings, and brand launches are you most excited about?

Rosen: I’m very excited about Jo&Joe and Mövenpick, as I mentioned. I’m also proud that we signed our first global Emblems Collection property at the Guiyang Art Centre, which is such a spectacular building. We’re converting it into a large-suite hotel with 70 to 80 luxury suites. In addition, we signed our second Emblems property in Hangzhou, about a two-hour train ride outside of Shanghai, where we have a traditional guest house that’s being completely refurbished into the most luxurious hotel destination in the beautiful Westlake area.

We’re also gearing up to open our third Raffles this year in Greater China, in Macau. Raffles has such an interesting take on heritage and modernity that resonates with this market. This Macau property, a very luxurious all-suite hotel, will be the most existing and luxurious hotel in all of Macau and will soft open in the next few months. The demand for high-end luxury continues, and this is especially true for Raffles as it performs at the top of every market.

I also have high expectations for Orient Express. Locally, the brand is known simply as O.E. Accor is reimagining and relaunching Orient Express globally across hotels, trains, and yachts. The interest here in China has been incredible already, especially since the announcement of the Orient Express La Dolce Vita train in Italy.

In addition, Fairmont continues its glorious reign in China. In the last two months alone, we have signed Fairmont projects in Dalian, Shenzhen, and Hainan Island. After major renovations, these existing properties will reopen as part of the Fairmont Hotels & Resorts global network.

I’m equally excited that Greater China continues to be the world’s largest market for Sofitel, which is where we started. We have 21 Sofitels in the region today, and we’re not stopping — we have that same number of Sofitel properties in our pipeline.

SkiftX: How does Accor approach environmental, social, and corporate governance (ESG) efforts in China?

Rosen: We have taken a leadership approach to many aspects of ESG, including reducing food waste and eliminating single-use plastics in our hotels. As an industry leader, we understand that we have a responsibility to help educate the public, our partners, and our owners about the importance of ESG and the impact of carbon neutrality. With that in mind, we recently published a new report with Trip.com Group and McKinsey that examines the environmental impact of China’s tourism sector and identifies actions key stakeholders in China’s tourism sector need to take to foster sustainable travel.

In this market, you have to take the time to demonstrate the positive impact of embracing ESG requirements. You have to make it relatable, to bring it back to how helping the environment positively impacts their families and their future.

SkiftX: How do you feel about Accor’s future in the region?

Rosen: I am more optimistic about people discovering and rediscovering China than ever before. I’m also optimistic about the hospitality industry in general, and about Accor’s leadership role within this market. As we grow, we have a responsibility to create unique brand stories that develop over time and that people can connect with today, tomorrow, and well into the future.

For more information about Accor Group’s growing footprint in Greater China, click here.

This content was created collaboratively by Accor Group and Skift’s branded content studio, SkiftX.