Accor: 20 Percent Decline in Int'l Biz Travel "Could Probably Last Forever"

Procurement

CEO Sebastien Bazin set sights on domestic business travel and meetings—as well as leisure—to fill the gap expected to be left by terminally reduced international business travel.

After a nearly €2 billion net loss in 2020, the Accor Group recovered for an €85 million net profit for 2021. “We never showed fear,” said chairman and CEO Sebastien Bazin, “but we were in a very challenging environment.” 

That challenge very much included business travel, the drastic decline of which Bazin detailed with data from Oxford Tourism Economics. The numbers showed domestic and international business travel, which accounted for 60 percent of Accor's business in 2019, remained approximately 25 percent and 75 percent below pre-pandemic volumes in 2021, respectively. And while Oxford projected domestic business travel to rebound—and surpass—2019 levels by 2023 the firm predicted international business travel would remain nearly 40 percent off of pre-pandemic volumes in 2023 and 20 percent shy even in 2024. 

"That could probably last forever," Bazin said, "because of our capacity via Zoom, WebEx and Teams to be able to connect yourself without going onto a very long journey." Compared with what Bazin called "the agony of crossing the frontiers with all the paperwork you will have to do," domestic business travelers, which prior to the pandemic made up 40 percent of the company's business mix, will have to account for more volume in the Accor system to fill the gap.                 

Group events obviously trended downward in size and volume during the pandemic, but Bazin predicted reduced group sizes would linger past Covid-19 recovery, given ongoing travel complexities and the increasing prevalence of technology to create decentralized hybrid meetings. 

“We've seen many different large companies doing, [in] 10 different cities, groups of 50 people for the same organization, as opposed to gathering everybody together in one large city," Bazin said. "You see a lot of hybrid meetings of people, mixing together with physical meetings of 1,500 people and having different satellite offices connected through digital to the same event.” 

Bazin pointed to a future in bleisure, especially in the domestic business travel market. And he's counting on it to make up for lost volume on international travel overall. 

“Bleisure will outpace by far in terms of volume, maybe not in pricing, but in terms of RevPAR, what you stand to miss on international travelers,” he said. He added that in major cities where Accor properties once focused on serving international business travelers, the focus will have to change. "You have millions of people living in the city where you never offered them anything to enter your hotel. This is the time to do it,” he said, noting hoteliers should leverage the Accor loyalty program and the Accor app to bring in local business. 

Key Performance Metrics for Q4 and Full Year 2021

Accor’s systemwide revenue per available room in fourth quarter 2021 declined 27.2 percent compared to the fourth quarter of 2019. Systemwide RevPAR in full year 2021 was down 45.7 percent against that of 2019. Accor’s financial statement attributes the decline to “an environment disrupted by the resurgence of the Covid-19 pandemic, despite a marked improvement in global business levels from April 2021.”  

Average daily rate for fourth quarter 2021 declined 3.1 percent from the same period in 2019. For full year 2021, ADR decreased 9.9 percent compared to 2019. Occupancy in the fourth quarter 2021 declined 17.4 percentage points from the same period in 2019. Occupancy for full year 2021 declined 27.9 percentage points from full year 2019.   

During 2021, Accor opened 288 hotels, representing 41,000 rooms and resulting in a 3 percent net growth in the network of 3 percent in 2020. At the end of December 2021, Accor had a hotel portfolio of 777,714 rooms in 5,298 hotels. There is a pipeline of 214,000 rooms in 1,218 hotels.