Bazin calls for unity, patience as industry recovers
GLOBAL REPORT—The questions facing Accor President and CEO Sébastien Bazin are the same many hoteliers are seeking answers to.
Speaking at the “In Sync” virtual conference hosted by Questex Hospitality Group, the organizers of the International Hotel Investment Forum, Bazin said half of his daily to-do list is comprised of guest-related challenges, the other 50% is financial challenges.
“How much longer it will take to clean rooms, and what is the cost of these new operations?” Bazin said were two points raised by owners.
He added some owners have sought to defer fees, but that has not yet become a torrent.
Bazin said Accor is not a bank but the company has not needed to help as many owners as he initially thought it might have to.
“In most cases, owners received help from local authorities. We have been helping if we can in deferring fee payments, and of course we’re not making money from revenues,” he said.
Bazin said the French hotel chain has secured its future.
On 18 May, Accor signed an agreement with a consortium of five banks to secure a new €560-million ($606 million) revolving credit facility that together with cash reserves and other credit lines has reinforced its liquidity position to more than €4 billion ($4.33 billion).
That injection, in current market conditions, equates to liquidity of more than 40 months and includes a €1.2-billion ($1.3-billion) undrawn, revolving credit facility signed in July 2018.
Bazin said Accor’s relationship with owners is stronger now that it has ever been.
“I have spent a lot of time with individual owners. It is time to be shoulder to shoulder with them, to share information and help them with employees and furloughs. They need someone to talk to in order to learn from and advise, and we have learned from them,” Bazin said.
“If you do not know (the answers), say you do not know,” he added.
With both sets of Bazin’s investors—his shareholders and Accor hotels’ owners—it’s important to be transparent and honest, he said.
He said that while first-quarter 2020 numbers were not good, a generally healthy January and February helped offset an awful March, but everyone knows April, listed for most hotel firms in second-quarter numbers, will be much worse.
“I do think we have reached the bottom, and May and June might look a little better. There is light at the end of the tunnel in Asia, especially China. It still is not good, though,” Bazin said. “Plan for the worst and hope for the best. It is a time to be cautious, prudent, to stand still and look after your own business.”
He added that furloughs of Accor staff really hurt and he would be spending as much time as he could in rehiring.
“I need all of them back as soon as possible,” he said.
He also said that AccorInvest, the privately run asset owner that spun off from Accor and of which it is the largest partner, is in good shape.
“It is strong and is backed by large, sophisticated investors. Do not worry about AccorInvest,” he said.
All for one, one for all
Bazin said he was asked by the French government to coordinate a French hotels’ task force looking at how recovery will progress.
That task force has three goals, he said: A countrywide plan for sanitary protocols, a timeline for recovery and defining the rebound.
“I have spent one-third of my time (during lockdown) with government officials,” Bazin said, noting he has been working largely alone in Accor’s Paris headquarters.
He said the French government is tentatively looking at June to open some hotels and areas, although undoubtedly opening will be later in Paris and the larger French cities.
“We are also working on a consensus with European countries regarding borders and allowing European guests to travel internationally, which will be a huge benefit if we can get it in place by mid-June,” Bazin said.
He also said there has been good dialogue with the European Union.
“Twelve percent of European (gross domestic product) is tourism-related. We are part of what should be done, and the more orchestrated it is the better,” he said.
Bazin said he is not looking to invest at the moment.
“Anything that is M&A on the Top 10 list is not part of the current thinking,” he said.
What is current thinking is how Accor and the industry will make hotels fun again.
“We’re being more thoughtful as to what clients want. They still are looking for more than a bed, as they have one of those at home, but they are not looking for video opportunities. They have been on video constantly for the last 60 days, and they are sick of it. They still want emotion,” he said.
One probable lesson, Bazin said, is that health and safety is a tool, not an objective.
“Those who will come will have assessed the risk. If they want to travel, it is because they want to meet someone. Otherwise, stay at home,” he said.
“It is a blessed sector. Be patient over the next 18 months,” he added.