Accor says it expects to see a doubling of revenue derived from partnerships every year between now and 2022, as it works towards a target in that area of €100 million.
The hospitality giant unveiled a partnership with Visa this week, which it says will bring “enhanced payment experiences” to members of the Accor Live Limitless (ALL) loyalty program.
The partnership sees the launch of an ALL Visa card for members that can be used to pay for everyday items; it also offers tailored rewards and the ability to earn more points.
Announcing its full-year 2019 financial results, Accor's chief financial officer, Jean-Jacques Morin, says the Visa agreement is just a first step and brings the company into “a world where we were not.”
He adds that it is now shortlisting banks and other companies for additional partnerships.
Morin says that further travel partnerships, such its agreement with Air France for miles and points, and ride-hailing brand Grab, will go live in 2020.
The contribution to revenue from ALL’s 64 million members in 2019 stood at about 31% and is expected to grow to more than 40% in 2022.
The ALL service was unveiled a year ago.
Finding new homes
The company has a number of business segments it is keen on highlighting from the last reporting year, especially its John Paul concierge services business and private accommodation provider Onefinestay, which was acquired for €148 million in 2016.
While the two companies contributed a €15 million loss to EBITDA in 2018, against a total loss of €20 million, Accor senior management promised an improvement in 2019.
EBITDA for new businesses, which also includes Resdiary, Adoria and VeryChic, came in at a loss of €2 million, which Accor attributes to the “strategy to restructure and streamline John Paul and Onefinestay."
Sebastien Bazin, CEO of Accor, says the company is thinking about the businesses in terms of three buckets and deciding what is strategic, where investment is needed and who will make the investment.
For example, companies such as hotel booking platform Gekko, restaurant booking engine ResDiary and flash sales service VeryChic are seen as strategic and are being incorporated into the Accor core business.
The second bucket includes companies such as D-Edge (created though the merger of Availpro and Fastbooking), which are seen as performing well but needing “muscle and fresh capital” in a need to grow faster.
Bazin says D-Edge will require investment, likely from private equity, with Accor letting go of about 40% but remaining as its “big industrial strategic partner.” Accor does not consider itself as the best sole partner for growth of the brand.
The third bucket, Bazin says, is companies that Accor does not see itself as needing to “remain in the capital - they should have their own life, be autonomous and probably should be merging with other operators.”
He says that for John Paul, Accor is already discussing “bringing forces together” with a similar company in the field.
Bazin believes each business would have a home and that he is confident Accor will get back the amounts invested in acquiring the companies but in a “different mix” to his initial expectations.
He also touches on a deal with Sabre to combine a property management system and computer reservation system into a single platform in the cloud, describing it as “audacious.”
Bazin claims that a minimum viable product is expected within 18 months, with Accor providing the capital expenditure needed to fund the project over the next four years.
Finally, on the COVID-19 virus, Bazin says the company is doing everything it can to support its 25,000 employees in the affected region.
He says that the company had only seen an impact of €5 million so far from China but that the wider impact is unknown.
He also points to the minimal impact of “macro events” such as the Iraq war, SARS and the financial crisis on 2008 on the travel and tourism industry.
Commenting on overall results, Bazin says Accor is in an “incredibly solid position” and can “weather a lot of tempests.”
The company, which includes brands Fairmont, Novotel and Raffles, reported a 16% increase to revenue of €4 billion and EBITDA up 15% to €825 million.