HOS801 Operational Strategy of Accor Hotels Assessment 3 Answer
STRATEGIC MANAGEMENT IN TOURISM AND HOSPITALITY
Strategic planning is a crucial part of organizations in all sectors irrespective of its size, aim and objectives. Similarly, in hospitality industry, there is massive importance of strategic planning for producing strategic facilities and competitive advantage for the organizations. This report has taken into consideration wide range of aspects of operations of the Accor Hotels, the French multinational organization operating in hospitality industry. The focus of the report has been on existing operational strategy of Accor Hotels, followed by development of strategic recommendations for overall development of the business. The entire report has been framed considering the aspects from the viewpoints of the CEO in Accor Hotels and the recommendations have been made for next 12 months mainly. The report has recommended strategic policies in connection to operational environment, competitive advantage, corporate governance, international strategy and organizational structure of the business.
Brief history of Accor and strategic development of the company
Accor is a multinational company that operates more than 4800 hotels throughout the world. It is a French hospitality organization also that manages several numbers of hotels, holiday places and resorts. The company is in 6th position across the world and top in Europe. The company operates almost hundred countries and it has near about two lacs eighty thousand employees throughout the world (Accor Hotels, 2019).The head-quarter of the company is in France and it operates multiple brands which cover every part of hospitality, economy, and luxury. Accor’s plan and well-developed strategies are to enhance the hotel business through different types of modern technologies and acquisition.
The expansion of the network of the Company has reached a peak point with a record almost one lacs room had opened in the previous year (Group. accor,2019). From the geographic point of view the company has always tried to start market where they have already leaders in some countries namely America, Europe, and Asia Pacific. Besides they are trying to expand its market in South –East Asia, Middle East and Sub-Saharan Africa.
Internal and external environments of the organization
This has been observed that in spite of having the advantage of financial stability, strong corporate culture and potential reputation of the business, lack of effective strategy and decision-making has been one significant issue in Accor’s internal environment of operations. Specifically this is leading to high fixed cost, operational expenses and pressure on its revenue stream. Lack of strategy also is affecting its service quality. In case of external environment, Accor is leveraging advantage in areas of political, social and technological factors, especially in its home market in France. However, Accor faces adverse impacts of economic, legal and environmental factors in hospitality operations.
Thus, considering the factors affecting Accor in terms of its external and internal environment, this is clear that the organization has to adopt effective leadership application and efficient management for leveraging strategic decision-making. The overall operational and fixed cost of Accor has increased considerably, leading to high cost of its hotel rooms and thereby decreased customers in the hotel. For avoiding this issue, the business has to adopt and implement some effective policies for training and critical strategic skill development of its managers and employees (Kumar & Sharma, 2014).Arranging training and skill development programmes would develop capability of the managers for taking strategic decisions based on effective analysis of the situations and main reasons for increased cost of the business.
For controlling its rising cost of operations, the management might take strategic measures like increasing its product portfolio by varieties of packages for customers from different social and economic status. Accor might develop separate hospitality package for foreign tourists and guests (Miteva & Ackovska, 2017). Introduction of customer loyalty programmes will be effective for attracting customers from much different economic section in society. These new service strategies will help in increasing revenue of Accor. For the next 12 months, Accor would focus on analysing booking offers and facilities provided by its competitors in national and global market and it will develop its strategies accordingly (Rao, 2014).
Moreover, for cost controlling is operations, Accor will emphasise on implementing specific labour management system, application of infrastructure consuming less energy and power, switching to LED lights and develop special team for taking care of the aspects of preventive maintenance and risk management (Moraru & Stanciulescu, 2015).On the other hand, the business will concentrate on establishing a wing for consistent research and information gathering on change and evolvement of its external environmental factors in national and global hospitality industry. This will help it in continuous strategic management of its operational policies according to change in external environment factors. In its international operation, Accor would adopt the strategy of merger and acquisition and business alliance development with other organizations from different fields (Langvinienė &Daunoravičiūtė, 2015). This will be beneficial in its marketing operations and thereby brand image development.
Development of strategy at a business, functional and corporate level
The business development strategy of the Accor Group is concerned with accelerating the hotel development with the aid of organic growth and acquisition. The mission of the organization has been set to open 1 hotel in every 29 hours. Rapid pace expansion strategy is the major concern of the hotel and thus the problem with the management and operations have been developed for the organization. Certain strategic recommendations are vital for the organization to cope with the competition and strategic vision. The following aspects are important for the Accor Group of Hotel-
Business Level: Design of overall business decisions are important for the organization. The winning path distribution is important along with the robust development. The management has to ensure the separation of the functional units so that the target for better business model performance can be generated (Resource, 2019). Decisions regarding the Cash-Flow statement and balance sheet are important. High margin and cash generative business for the Accor Group of Hotels are possible with the following initiatives-
- Maximization of the fee generation is essential so that the demand of the partners and their expectations can be meet. It is possible with the wining over the contract and optimization of the results (Resource, 2019).
- Acceleration in CRM, Loyalty and digital services are vital and for this priority to program & system development are vital for Accor group. In this regard, fostering the Revenue Management agility will be essential to maximize the top-line of the organization.
Functional Level: Appointment of experts is essential for controlling the operations of the business. These business experts are committed towards the development of the future of the Accor Group. The success can be ensured from their end with the generation of long-run relationship. Accor Group has ensured the concern with the generation of 30 development offices worldwide and 110 developers for functional improvement ("Accor Hotel Management Expertise", 2019).
Local development team support generation is essential so that the investment can be maximized and thus other benefits can be assured, the local development team must have the abilities to provide well-researched site location, fully-accredited brand selection, fact-based project feasibility and metrics-targeted performance ("Accor Hotel Management Expertise", 2019).
Corporate Level: The design technical vision of the organization must be included in the corporate level strategy. The decision of the top management plays an important role for the implementation of the programs. The Global Chief Design & Technical Services Officer of the Accor Group need to concentrate on the outstanding hotel products and brand market alignment so that the growth in consumer base can be ensured. Influences towards the investors are essential so that the expertise can ensure the highly sought-after professionals in the world ("Accor Hotel Management Expertise", 2019).
Another important concern is associated with the training and development of the employees. Services of the organization need to be improved with the pace of its hotel opening. Thus, proper concentrations towards the induction training for efficient service towards the selected employees are essential.
Competitive advantages and sustainability
The report on “Accor Hotels: sustainability commitment, a guarantee for business performance” released from the end of the hotel group on 2015 has ensured the fact that the organization is concentrated towards the sustainable operation generation. Competitive advantage generation in the market for the hotel group is possible with focus on the three major areas as follows-
- Increased guest satisfaction
- Improved business performance
- Increased loyalty of key B2B customers
These have been taken into the consideration of the Accor Group of hotels. The survey performed in the year 2015 has shown the fact that sustainable operation and initiatives are associated with the guest satisfactions. It is vital for the organization to justify the ISO 14001 certification in each of its operational decision (AccorHotels, 2015). The following graph has ensured better guest satisfaction generation to take lead over the competitors-
(Source: AccorHotels, 2015)
Proper concentrations towards the CSR activities are important for the organization that helps in the generation of better B2C relations. Sustainable operations are in turn enhancing the commitment of the organization to the competition. New CSR commitments need to be developed from the end of management so that it can facilitate the organization (Accor Group., 2019).
The impacts of mergers and acquisitions, international strategy and alliances
Accor Group needs to concentrate on the international strategy development based on certain aspects such as economic growth, rising popularity of the hotel group and growth in the expenditure patterns of that country. The hotel group is fascinated towards the acquisition and merger considerations. These alliance formations need to consider the possibilities in the target country and the facilities that the group can acquire form that strategy ("Mergers, acquisitions and partnerships drove Accor Hotels' growth in 2016", 2016).
With the acquisition of the FRHI Hotels & Resorts this hotel group has ensured opening fo 230 new hotels and acquired 120 new locations. Considering the success rate of the organization it is evident that the formation of strategic partnership with the Banyan Tree and Rixos is concerned with its presence in the resort segment. Furthermore, Accor Group can concentrate on the lifestyle division to enhance the brand image of the group and can buy the stake of Germany's 25hours Hotels. Considering the finalization of the alliance with the China’s Huazhu Group in Asia it can be better for Accor Group to concentrate on the GrandMercure, Novotel, Mercure, ibis and ibis Styles hotels to capture the market share of the South-East Asian countries such as Taiwan, Mongolia and China ("Mergers, acquisitions and partnerships drove Accor Hotels' growth in 2016", 2016).
Strategic implementation and the importance of leadership and entrepreneurship
Leadership plays an important role in this regard. The Accor Group has a bureaucratic structure and certain changes with the implementation of the transformational leadership can improve the situation for the organization. It is important for the leaders and entrepreneurial views to concentrate on the branding of the Accor Group rather than its expansion. Target consumer base generation is vital for the brand recognition development. The following strategic implementations are essential from the end of the Accor leaders-
- Accor distribution channels and online marketing: Concentration on the social media marketing is essential. Website based marketing is essential for the Accor Group. The leadership implementation must improve the TARS (the reservation system) of the Accor Group which can be considered its USP for the target market. It can assure sale from online reservations and payment to sales optimization management. Accor Group needs to ensure its presence over the TripAdvisor sites so that the price comparison can be performed to attract new clients (Demirçiftçi & Kızılırmak, 2016).
- Accor loyalty program: Le Club Accor Hotels: The leaders need to concentrate on the generation of the loyalty program for the client and for the guests who are very important for the organization. Attractiveness generation is important as it has been found that among 10 consumers 2-3 guests are like to book the same hotel due to ambience and facilities (Camelia et al., 2019). Le Club Accor-Hotels members program needs to be generated towards the client groups for proper appeal development. B2B database can be improved and the premium consumers can be drawn into the direct channel of the organization. The preference generation to book the hotel can be included as the choice of the guests for genuine care and facilities (Demirçiftçi Kızılırmak, 2016).
- Recruitment and training initiatives: It has been found that the consumers are more attracted towards the hotel groups in which the employees are not just a member but a part of it. Thus, efficient recruitment is important from the end of Accor Group leaders to ensure the extraction of major and effective talent pool (Elbanna, 2016). The induction and training is important for skills generation to facilitate the service. Accor has training schools in Germany, China, Brazil and Dubai, which needs to be more proficient (Demirçiftçi Kızılırmak, 2016).
Organizational structure, controls and corporate governance
In Accor, exists a vertical structure of the organization, with strong hierarchy system. However, the chain of command is strict with designated tasks of employees and strong authority of management. However, as the management in the company has lack of capability of appropriate strategic decision-making, the vertical system is not producing desired outcomes. Moreover, the entire control of operations and decision-making is in hands of the management, leading to no scope of decision-making by the employees in Accor (Kandampully et al., 2018). Therefore, considering urgency of the situation, Accor would adopt certain functionalities of Horizontal organizational structure for next 12 months. For introducing flexible control on operational level, Accor would implement a combined approach of vertical and horizontal structure. In the post-training period (for managers and employees), implementation of such organizational structure will ensure flexible participation of the staffs in decision-making (Moraru &Stanciulescu, 2015). This will provide Accor the scope of leveraging employee morale in customer service delivery. Hence, there will be the opportunity of enhancing quality of customer service in the hotel.
In terms of corporate governance by Accor, the Board of Directors will adopt specific guidelines and practices for exercising its responsibilities. For next 12 months, its officers and employees under direct guidance by the CEO will conduct the business of the hotel. Under such corporate policy, the board will be elected by stakeholders of Accor for ensuring inclusion of the most capable bodies in the management. Apart from this, as integral part of the corporate governance, Accor will provide emphasis on maintaining CSR approach in most effective ways. Though the organization already has adopted required guidelines for running and monitoring its corporate social responsibility approaches, however, there is scope of being more specific with regard to adopt and implement its CSR initiatives more strategically (Altin et al., 2016). This will help Accor in earning significant level of competitive edge in the market.
The above discussion leads to the conclusion that in spite of success of Accor Hotel in its operations in the market; there is significant lack of strategies in its overall operational areas. However, clearly, the organization has to adopt all the above strategic recommendations both in its national and international operations. Simultaneous application of these recommendations will assist the organization in achieving desired competitive edge in the market along with development of its brand image from overall perspective. However, most importantly, Accor Hotels have to focus on efficiency development of the management and application of strategic leadership in overall structure of the organization as this will help in developing strategic decision-making capability of the organization.