Accor switches its focus to franchise in Thailand and Asia-Pacific

Jens O. Reichert, Accor’s vice president of development for Thailand, Cambodia, Laos, Myanmar, and Vietnam, recently shared his insights in an exclusive interview with The Nation.

Highlighting the resurgence of Chinese middle-class travellers and the expanding Indian middle class in Asia, he stated that demand for diverse accommodation options will undoubtedly rise, bolstering the growth of mid-scale hotel businesses not only in major cities but also in second- and third-tier cities across Asia, particularly Thailand.

“Methods change, people change. And as a company, we have to adapt to the modern environment, as do many others,” he said, noting that the growing middle class in countries such as China and India is driving up outbound travel and the demand for affordable accommodations.

To meet the rising demand from this economy and mid-scale segments, Accor is focusing on a franchise model. This strategy enables the company to quickly expand its footprint while optimising resource allocation.

He pointed out that this strategy is appropriate at this time for several reasons.

First, franchising enables Accor to grow its presence more quickly and efficiently, particularly in second- and third-tier cities. The company sees significant growth potential in these markets, which aligns with Thailand’s government initiatives to expand tourism beyond traditional hotspots.

By focusing on secondary and tertiary cities, Accor is aligning its growth plans with the broader trend of travellers seeking off-the-beaten-path destinations.

Furthermore, the franchise model is favoured due to its operational efficiency and lower costs for hotel owners, promoting their brands in a competitive landscape.

“A franchise is where we step away from operating the hotel. It is the owner who operates the hotel with his own team. What we provide in a franchise is the very important component of distribution,” Reichert said.

He emphasised that Accor's franchise focus will primarily be on its economy and midscale brands, such as Ibis, Ibis Styles, Mercure, and potentially Novotel. These brands are deemed more suitable for franchising due to their standardised operations and limited services, making them easier for independent owners to manage.

“When you look at our Ibis family, for example, there is nobody that competes with that brand’s strengths. When you say Ibis, everybody knows it's an economy brand,” he noted.

To support this growth, Accor has relocated its global IT headquarters to Bangkok, bringing in over 200 staff. This move underscores the importance of the Asia-Pacific region to Accor’s global strategy and positions the company to better serve its expanding network of franchisees with cutting-edge distribution and loyalty systems.

He reiterated that the upcoming IT hub in Bangkok is expected to enhance resource efficiency, reflecting Accor’s commitment to maintaining its top market position while navigating regulatory challenges in each country.

“Asia is a key growth market for Accor, and we are committed to strengthening our presence in the region. By prioritising franchising and investing in technology, we are well-positioned to capitalise on the region’s immense potential,” Reichert said.

The company is also introducing innovative concepts like the “manchise” model, where Accor initially manages a property for three years before transitioning it to a franchise. 

This approach aims to transfer knowledge and expertise to owners who may be new to the hospitality industry.

While the company is optimistic about its growth prospects, it acknowledges the challenges posed by labour shortages, complex franchise regulations, and intense competition. However, Accor’s strong brand recognition, extensive distribution network, and loyal customer base provide a solid foundation for overcoming these hurdles.

As part of its growth strategy, Accor plans to expand its franchise model to additional countries in the region, strengthen partnerships with local businesses, and develop innovative loyalty programs. By focusing on these key areas, the company aims to solidify its position as a leading hospitality player in Asia.

The company's franchise push comes at an ideal time, as Thailand and other countries in the region invest heavily in tourism infrastructure and streamline visa processes to attract more visitors.

Reichert believes that as the market leader in Asia-Pacific with approximately 1,500 hotels in its portfolio, Accor's strong brand recognition, extensive distribution network, loyalty programme, local market expertise and significant investments in technology and talent give it an edge in the competitive landscape.

“Today, our managed versus franchised portfolio is roughly 30-70 out here. So 30 franchised, and 70 managed. We want to get it to at least 50-50, if not reverse it,” he said, anticipating that in the coming years, Accor's portfolio could be 70% franchise and 30% management.