Europe’s Largest Hotel Group Takes on Digital Rivals

Accor, Europe’s largest hotel group, seeks to spend $283.5 million in an effort to beat online travel agency competition.

Although Accor is Europe’s largest hotel group, the company is lagging behind in online reservations; online travel agents like Expedia and Orbitz are taking an increasingly large portion of the pie. But Accor is hoping to change all that over the next 5 years by spending roughly $283.5 million dollars on improvements to its digital business.

Every time a guest books a room with an online travel agent (OTA), that company receives a percentage of the profits — sometimes up to 20 percent — instead of the income staying with the hotel itself. It’s a tricky situation because although the OTAs take profit away, they also provide it in the form of paying guests. As a result, hotels often have a diverse income stream.

In Accor’s case, 14 percent of the group’s gross revenue comes from OTAs and 35 percent comes from its own marketing efforts. According to Accor’s CEO Sebastien Bazin, the group needs to raise its income by limiting OTA reservations.

Accor has already begun to make changes by buying Wipolo, a French travel company offering mobile organization of trip itineraries. In addition, Bazin has split the group into two divisions—HotelServices for operating and franchising, and HotelInvest for real estate activity. Next, Accor will work to improve its IT systems and existing online booking services. The hotel group is also planning to make enhancements to its loyalty program.

Bazin says the ultimate goal is to increase the group’s own business volume of online reservations from 35 percent to 50 percent.

[Photo: Accor]