At a glance
- AccorHotels quickly recognized the threat that digital disruptors, in particular Airbnb, pose to its industry and business.
- Its biggest challenge was to transform an asset-heavy, hierarchical company into a dynamic, agile and fast-moving organization.
- In addition to transforming its corporate culture, organizational structure, value proposition and overall business model, the group implemented an aggressive acquisition strategy.
- AccorHotels’ successful digital transformation offers lessons for incumbents competing with digital disruptors in various industries.
The hotel business is being disrupted by new digital players, with the sharing economy start-up Airbnb taking the lead in changing the shape of the industry. Although these disruptors are challenging the conventional hospitality approach, many traditional hotel groups initially showed little reaction to the newcomers since they had little impact on bookings.
AccorHotels, Europe’s leading hotel group, however, quickly realized that the new sharing economy players represented a significant threat to existing hotel chains. The group’s CEO, Sébastien Bazin, a relative newcomer in the hospitality industry, set out to radically change the 50-year-old hotel chain with the aim of transforming it into an active player in the new hospitality economy.
Has AccorHotels reacted quickly enough to the industry changes and will the business transformation initiated by Sébastien Bazin be enough to compete with the new sharing economy giant Airbnb? Can a large, asset-heavy company become a dynamic and agile organization?
The broader issue
Few industries have been unaffected by new digital competitors – also called digital disruptors – entering their markets and challenging established players. Disruption is not limited to the technology sector: Uber, for example, has revolutionized the taxi market without owning a single taxi; Airbnb is threatening hotel chains without owning a single property; and Alibaba has become the world’s most valuable retailer without owning any stock.
Industry incumbents should take the threat seriously: Digital disruptors are innovative, agile, customer-centric, and fast in execution and roll out. They go beyond being active in the digital market and use technology as an enabler to enhance the customer proposition. In doing so, these new players are able to provide a better experience for their customers, in particular millennials, the tech-savvy generation emerging as the biggest consumer segment.
Yet, more often than not, established companies are slow to recognize the threat to their business model and market position, disregarding new digital players as being too small to represent any risk. With the proliferation of digital disruptors, it will become increasingly difficult for players that don’t recognize the need to respond to the changing market and transform their business model to keep up with the new entrants and the evolution of customers’ preferences.
Sébastien Bazin was appointed CEO of the AccorHotels Group with the objective of driving the company’s stock price up. The start of his role at the helm coincided with a rupture in the group’s strategy. Bazin strongly believed that to compete with the new hospitality players, AccorHotels had to reinvent hospitality by becoming much more technology-oriented and by focusing more on the customer.