Market Presence and Segmentation

Introduction

Accor Hotel is a multinational hospitality company that owns and also franchise a large number of hotels, resorts, and also vacation properties. The company is having a total of 4800 hotels, resorts as well as residences in 109 different countries. The company exists is in this hospitality sector for more than 50 years and thus having high market shares and reputation. It is the single largest hotel that is located in Europe and ranks sixth in the hospitality sector all over the world. The company divides or classified the hotel into a number of segments like Luxury, Premium, Midscale, Economy, and many others. Banyan Tree Hotels and resorts come under the luxury section of the company which is located in 11 different countries and has a total of 3090 rooms. It has achieved 1877 awards for the excellent infrastructure and the green location that rejuvenate the mind of visitors. For those who are seeking business dissertation help, Accor Hotel's extensive experience and global presence make it the most compelling case study in the evolution and success of the hospitality sector.

The CEO of company Accor Hotel is Jean-Jacques Morin and it had a total of £3,610 million of revenue accounted in the year 2018. The top competitors for the Accor Hotel are Marriott, IHG, Hyatt, Hilton, Choice Hotels, and many others. The company is having a total of 2, 80,000 employees working all over the world with a total capacity of 704,000 rooms. The company also offers a wide range of brands like Raffles, Orient-Express, Delano, Sofitel Legend, and many others. Accor Hotel is having a total outstanding share of 270,932,350 with a market capitalization of 11.3 EUR Billion. The company Accor Hotel is on track to open its 10,000th room in India in the year 2020 and hence it shows high growth in the market. Even in the first quarter of 2018, the Accor group has achieved the growth of a 9.5% increase in the actual revenue of the company. The first quarter 2018 revenue which was noted by the company is about £633 Millions.

Discussion

Analysis of Strategic position of the company

The primary strategy of the company in order to compete better with rivals is to increase or accelerate the number of hotels or hotel development all over the world. Thus the company opens 1 hotel every 29 hours. Thus this helps the company to reinforce the position in the market and also in emerging markets mostly in the Middle East, South East Asia, and many others. The segmentation of the hotel helps to increase the consolidated revenue in the first half of 2019 which is amounted to £4,049 million and having 3.8% (LFL) as compared to that of the year 2018. The company Accor hotels receive most of the revenue which is 21% from the Asia-pacific region followed by 13% from North America, Central America, and the Caribbean. In the year 2019, the company is having a total Net cash of 769 million Euros from that of the operating activities and has received total funds of 782 million Euros from that of the ordinary activities.

The total development expenditure for the company Accor Hotels is about 200 million in the year 2019. The company Accor Hotels shows a high increase in the net cash from the financial activities from 373 million Euros in 2018 to that of 1,123 million Euros in the year 2019. The key performance indicator analysis of the company can be done through the following points which are defined as below

Occupancy Rate: In India the company Accor Hotels recorded about 80 percent occupancy and 75 percent occupancy in Delhi during the first half of the year 2019. It is much better than that of other competitors like Marriott and others in India. In the final year of 2018, the actual average occupancy rate that is accounted for in Europe is about 71.7%. In the Asia-pacific region the hotel is having 69.6% of occupancy rate in the year 2018. For the South America region the total occupancy rate is about 56.7% for the final year of 2018. Thus the occupancy rate of Accor hotel helps the company perform better and also to compete in the market.

However, the occupancy rate of one of the toughest competitor which is Marriott in the year 2018 for the Asia-Pacific region is about 73.5% which is higher than that of Accor Hotels. The occupancy rate in the year 2018 for Europe is about 74% which is also greater than that of Accor Hotels. Thus the company Accor Hotels faced tough strategic competition with that of Marriott Hotels in terms of room occupancy (statista.com, 2020).

Revenue per Available Room (RevPar): In the financial year 2018, the company Accor Hotels is having £61 RevPar recorded for Europe region and at the same time Marriott Hotels which is one of the toughest competitors for the company has $151.86 RevPar recorded for Europe in the same financial year. For the Asia-Pacific region it is about £56 which is again at the same time lesser than that of Marriott’s total RevPar of $107.43. Both the Marriott and Accor Hotels RevPar are lesser than that of Hilton's RevPar which is about $111.61 in the year 2018. Thus the RevPar of Accor is less competitive as compared to other competitors in the market (myplaceconnect.com, 2020).

The competitive analysis of Accor hotels with other hotels can be done through the following points which are listed below

Analysis of organization strategic discussion

The Ansoff Matrix is one of the useful tools that are used to understand or analyze the strategy for the growth of the company. The matrix basically shows the four different strategies that can be used to help a firm grow and also in analyzing the risk associated with each of the strategies. The four different strategies which can be used to define the Ansoff Matrix is defined as below

Market Penetration: The market penetration strategy is useful for the company to increase the market shares and also to get a better competitive advantage. The company Accor Hotels increases the promotion through social media or other media of communication to the customers related to the latest offers of hotels or about fall in the price of hotels which will be in the budget for the customer (Camelia et al. 2019).

Product Development: The Company Accor Hotels is planning to work with more projects like Tribe Glasgow with 290 rooms in the United Kingdom, Mercure Beijing CBD in China with 297 rooms. Thus the company had already invested in this project and the projects have been started with an aim to expand the business more all over the world and gain competitive advantage. The group had also extended the partnership with that of AEG which is the world-leading sports and entertainment company to include premium venues for loyalty members in Asia, Europe. The company has also developed some of the new brands like Mama Shelter, MGallery, and others. The company Accor Hotels has also signed a partnership with IMG, through which the members or group of customers will enjoy the Taste festivals in London, Paris, Toronto, and others from 2020 over the next three years. Thus it will help the company to meet the existing needs of the market and compete well with other rivals (group.accor.com, 2020). [Referred to Appendix 1]

Market Development: The Company segments the hotels or its brands into different categories like Luxury, Premium and many others to attract more customers. The company is also planning into some of the new domestic markets other than where they are already located. The company planned to enter into more regions of the Asia-pacific region and also expanding its business in China also (Demirçiftçi and Kızılırmak, 2016).

Diversification: The Company Accor Hotels is planning to use 4,100 hotels in the group to provide a range of services to people living in the neighborhood surrounding. This will help to fill the gaps that exist between the local services such as dry cleaners, luggage storage, and many others. For example it can be said that when the local residents were unable to pick any cloth from dry cleaners so the dry cleaner leaves that to the hotel and send the text to her about it. [Referred to Appendix 2]

SAF Analysis

The SAF analysis of the company helps in the identification of the right strategy and also to identify whether that strategy will provide profit to the company or not. The SAF framework for the company Accor Hotels is summarized as below

Suitability: It is one of the essential factors of the SAF framework which identifies whether the strategy will do or not what actually is expected through it. It determines the capability of business as well as to check whether the strategy able to meet actual goals or not. The primary goal of the company Accor Hotels is to provide hospitality services all over the world. Thus the company is capable to do so and worldwide it has 4,800 hotels and operating in more than 100 countries. The company strategy to increase the number of occupancies all over the world and increase the profitability works really well and this results in an increase of net income and annual revenue (Khan et al. 2018). It also plans to increase 10,000 hotels in India in the year 2020. The greatest strength of company Accor hotels is a large number of employees and a strong presence in Europe. Thus just because of a strong presence in Europe and good customer rapport on the company it helps the strategy to expand brands in more places are making it successful. The strategy to implement the future project on China and the United Kingdom by company Accor Hotels will help it to overcome the challenges of no presence in the UK and China (Pop et al. 2018).

Feasibility: The Feasibility of the SAF framework checks or identifies whether the company is having the capability in a number of resources, mankind, and also technological ability to implement the strategy. The company Accor Hotel is found to have a sufficient number of mankind like 2, 80,000 employees are analyzed to be working in it. Thus it is also found that the company is having better human resource percentage as compared to the other hotels. The high percentage of employees makes the company more feasible to implement the strategy in market with enhanced productivity. The net cash from financing activities as mentioned in cash flow statement of company Accor Hotels for the year 2019 is about £1,123 million which is increased as compared to £373 million in the year 2018 and £54 million in the year 2017. Thus it shows that there is increase in the net cash from the different financial activities and which leads to better cash flow percentage. Accor Hotels also seems to have digital technologies to improve the experience of customers.

The new Accor mobile application helps the customer to get bird’s-eye view of the options for hotel that will includes 6,000 different branded and independent locations. Guest can be able to select between luxury, Mainstream with guidance on city and it will be available on eight different languages. It will also advise the group of customer who install it about shopping and cultural preferences. The new smart feature called Smart Rooms also helps the company to get innovative in market. The connected tablet will allow the individual or customer to adjust light as well as music, closing the curtain and also LED lightning will be enable by the sensor to help any guest move in the dark. Thus this proves that Accor Hotels are capable in terms of technology, income as well as mankind to implement the strategy (digitaltraveleu.wbresearch.com, 2020).

Accor Hotel’s feasibility analysis

Acceptability: The acceptability of the company Accor hotels can be measured through the calculation of its financial condition like how much it is capable to generate revenue from the strategy. The company is having total liquidity ratio of 53.79 for the year 2018 and value of Return on Investment is about 4.32 which is also a better value for the company Accor Hotels. The company after expanding the brands all over the world in more places will get better return percentage.

Conclusion

Thus from the conclusion it can be said that the company Accor hotels is having better operational strategy which help it to gain more reputation and also enhancement of customer satisfaction in the market. It might be said that the most important threat for the success of company is the competition in market. The competitors like Marriott and Hilton is having more occupancy percentage and also better Revenue per Available room which impacts the growth of company. But the company at the same time has better employment rate and also has the technological capability to implement productive strategy which can provide strong competitive advantage in market. The company financial condition is favorable as there is gradual increase in net income value each year which can provide more support to implement the optimal strategy.

Recommendation

The company faced the most critical issues of competition in market which restricts the growth in market and also creates obstacles to implement any strategy for benefits of organization. This high competition affects the factors like occupancy percentage and revenue per available rooms for the company even company expands more hotels in different location. The company needs to identify that what actually the strategy is been followed by Marriott and Hilton to increase the occupancy percentage. This is analyzed that the company offers high price in some of the hotels which can be used as strength for the other competitors. As the customers always look for the hotel which provides them more services at cheaper rate and thus the company Accor Hotels needs to improve the pricing strategy for brands.

The marketing also plays a major role to enhance the strategy for any business. The online marketing is now one of the essential approaches that are used by most of the companies to perform mass marketing and also to build brand equity. If company Accor Hotels increase online marketing then it can improve continuous customer support and also the feedbacks which is generated through questionnaires can be helpful in market identification and segmentation process (RAJARAJAN and VETRIVEERAN, 2016). It is also necessary for the company that whatever they have promised from word to mouth communication or any other form of marketing must be fulfilled as per expectation. Even if any of the expectations are not filled then customer might gets frustrated and post bad reviews (smallbusiness.chron.com, 2020).

Reference List

Book

Chernev, A., 2018. Strategic marketing management. U.K: Cerebellum Press.

Journal

Camelia, G., Ioana-Valentina-Alexandra, M. and Larisa-Andreea, N., 2019.

Organizational Culture: A Case Study Of The Impact Of Ethical Organizational Culture On The Efficiency Of Accor Hotels. Romanian Economic and Business Review, 14(2), pp.86-96.

Demirçiftçi, T. and Kızılırmak, I., 2016. Strategic branding in hospitality: Case of Accor Hotels. Journal of Tourismology, 2(1), pp.50-64.

Khan, H., Yusuf, M.D., Hakeem, A., Md, S. and Naumov, N., 2018. The use of branding and market segmentation in hotel marketing: A Conceptual Review. Journal of Tourism Intelligence and Smartness, 1(2), pp.12-23.

Pop, C., Coros, M., Georgescu, M.A. and Bonea, M., 2018. Romanian branded hotels: are they worth the effort?. Theoretical and Applied Economics, 25(4), p.617.

RAJARAJAN, M. and VETRIVEERAN, R., 2016. International journal of world research, pp.72-78.

Website

craft.co, (2020), Competitors of Accor Hotels, Available at: https://craft.co/accor/competitors [Accessed on: 10.04.2020]

digitaltraveleu.wbresearch.com, (2020), Accor Hotels Digital transformation strategy, Available at: https://digitaltraveleu.wbresearch.com/blog/accor-hotels-digital-transformation-strategy [Accessed on: 10.04.2020]

smallbusiness.chron.com, (2020), Customer satisfaction in Hospitality industry, Available

statista.com, (2020), Occupancy rate of Marriott International hotel worldwide, Available at: