What's ahead for Europe's hotels: Three questions for Accor CEO Sebastien Bazin

Hotel Management spoke with Accor Chairman and CEO Sebastien Bazin to get his insights on Europe’s hotel scene, and what’s in store for the brand in 2015.

1.    Is the pickup seen in the U.S. hotel industry occurring simultaneously in Europe? How do you see it all playing out for 2015?
Europe is a combination of different markets. From an operating standpoint, the vast majority of the Group's European markets reported solid growth in 2014, which is remarkable in light of the mixed economic environment during the year and the fact that a major transformation was underway within Accor. 

The hotel real estate market is very dynamic in Europe. This is notably due to the low level of construction, with supply being stable for many years. There are limited opportunities to actually build hotels, and the wide majority of our expansion in Europe goes through conversions.

At the same time, we definitely see momentum on the real estate side, as interest rates are low. This obviously supported our strategy of buying assets last year, as we acquired portfolios on yields ranging around 6.5 percent, with liquidities that we were able to borrow at below 3 percent interest. Volumes for hotel transactions have been high at the industry level, with many investors showing interest for hotel assets, that tend to become a specific and identified asset class. 

We expect these trends to carry on going forward.

2.    What particular regions of Europe do you expect to be most active in regard to transaction pace and which regions will perform the best? 
Businesswise, RevPAR should keep growing across a wide majority of European markets. UK has been the fastest growing country in the region for some time. We now see sharp recovery in Southern Europe. Germany and central Europe are very solid. The only area of concern at this point remains France, where the tax pressure remains an issue, but broadly speaking 2015 should be another strong year.

Regarding transactions, there is a lot of emphasis in the UK, but other countries are also quite dynamic. Specifically on Accor, we will definitely focus our efforts on the restructuring of our assets, which are primarily located in France, Germany, Italy, Spain and the UK.

3.    Can you highlight some of Accor's strategies and growth in Europe for this year?
Accor‘s strategy in 2015 will be all about executing the plan we presented at the end of 2013. This means tackling the situation of non-performing owned and leased hotels, and growing at fast pace, mostly through franchise and management contracts. 

There is no priority so to speak from a geographical standpoint, even though I firmly believe that we will generate better returns from countries where we already have scale.

Last, our development is mainly focused outside Europe. The Asia-Pacific region represents 50 percent of our 156,000-room pipeline, Middle-East & Africa is about 10 percent, and so is Latin America. 

So that means about 30 percent in Europe, where we can capitalize on our leadership to attract more and more independent hoteliers, who struggle on the back of the new distribution environment. I believe there are huge opportunities to seize on that ground going forward.