Introduction - Competing with Airbnb: A Case Study Analysis
The report is made on the digital transformation initiatives of AccorHotels and how it deals with disruptor like Airbnb. Both companies are operating their businesses in the hospitality industry. Accor hotel is in this business since 1967 and Airbnb is a newcomer which is founded in 2007. According to Statista, 2017 Airbnb, the private equity investor, a relatively new player in the hospitality sector, was going ahead of Accor hotel’s established strategy and overturning its business model. Accor hotel changing its strategies according to the modern era's requirements but new companies like Air BnB have created many challenges for the company. The report discussed various measures taken by Accor Hotels to deal with these challenges.
A critical evaluation is done on AccorHotel’s digital strategy and its competency in dealing with Airbnb market strategies. A value proposition is a document that states services and products provided by the company with their potential benefits for the customers. The report highlighted the difference between the value propositions of AccorHotels and Airbnb. The report discussed the business model of AccorHotels and Airbnb with their strengths and weaknesses.
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The hotel management business Accor operates upmarket, midscale, luxury, and budget hotels as well as facchni. The business runs hotels under a number of different brand names, including Sofitel, Raffles, Fairmont, Swissotel, Pullman, Adagio, Mgallery, Grand Mercure, Novotel Suites, Ibis, Ibis Styles, Hotelf1, Ibis Budgets, and many more as cited by BBCnews, 2015. The group is active in building, hotel design, maintenance tasks, and renovations in addition to asset portfolio management activity. Around 5298 locations across 110 countries, including Europe, the Middle East, America, and Asia-Pacific, are serviced by the organization. There are 26,000 employees of the organization operating in different branches of the business worldwide. The business has operations in several nations, and its main office is in Issy-Les-Moulineaux.
Airbnb
Airbnb is an accommodation rental organization based in san Francisco. It operates businesses all over the world by renting out properties. This company offers various options for stay such as rooms, apartments, and a villa. The co-founder of the company, Nathan Blecharczyk explained the basic concept of Airbnb, the company allows visitors to stay in other person's homes. The company started its business in 2007 and now it has spread to more than 220 countries. The Company has a presence in more than 10000 cities with a listing of 6 million.
Evaluation of Accor Hotel’s digital strategy and its effectiveness for competing against Airbnb
According to Forbes 2016, AccorHotel had seen many digital transformations since 2005, in the year of 2013 Bazin was appointed as the CEO of the company. The CEO recognizes the risk of disruption from the new companies in the industry. The need for fundamental change in the industry is recognized to deal with digital disruption. Accor hotel developed a new strategy with major two pillars. These two pillars are hotel service and hotel investment. The company introduces a new brand name with a new promise to compete with the new player in the hospitality industry. The new strategy of the company is based on one principle which is to prioritize consumers’ needs. This new strategy uses most of the digital transformation actions with a focus on expansion (Nga, 2020). The company has expanded its business with the help of acquisitions and internal innovations, some of the criteria’s of innovations are as follows:
Feel welcome: The Company used a new brand name with a new customer promise to increase visibility on digital platforms. The company used the slogan feel welcome to promote the brand on various social media platforms of the company especially its website of the company. According to the Hospitalitynet.org, (2015) Accorhotels launched a 5-year digital plan in 2014 to bring digital transformation to the company. This plan was named “leading digital hospitality” and it included a big investment of 225 million Euros. The plan was made from 2014 to 2018, it consists of major three parts. These three parts are:
One mobile app for all the divisions of AccorHotels.
Major focus on the clients
Different tools to increase consumers' experience
Mobile bookings: The company’s website is well established and it is visited by 329 million people in a year. This online booking platform shows the content in 28 different languages. In the year of 2015, the company launched a mobile application for all Accor hotels named Mobile First. The main objective of it was to increase bookings through mobile phones by 35% in the upcoming 5 years as cited by Nozdreva and Churakova, (2021). The mobile app of the company has shown tremendous growth in the year 2016, the user base increased by 40%.
Consumer-focused: This was the second objective of the digital transformation strategy of Accor hotels. The company was following the belief that product and brand name is the key to the success, but now the company has understood that consumers are the key. According to the Baculard, Caimi, Senior, and Spaulding, (2016) the CEO of the company introduced a feedback policy, the company will listen to the needs of the customers and why they are going to Airbnb. Mr.Bazin, the CEO of the company understands the importance of consumer’s retentions and the main factor of consumer retention is the experiences customers retained regarding their hotel stay. The experience of the consumer mainly affected the interaction in the hotel. The company has formed a consumer experience model which improves the overall experience of the consumer on a trip; this model includes a total of seven steps which are given below:
Sharing the experience: The company also leverages its consumer database to be more consumers centric. This project's name is "voice of the guests". Mr. Bazin said that all the Accor hotels had consumer data but they are not able to use this data as cited by Almeida, Ramires, and Marinho, (2022). The mission of the project is to enable Accor hotels to get information from the provided database and use it to provide personal services to every customer.
Different tools to increase consumer experiences
The company introduced many tools to improve the experience of the consumers and provide them seamless journey. Some of the tools are one-click booking, online payments, and the online check-in. The company also introduced a loyalty program named “le club accor hotels”, an electronic membership card issued in the loyalty program (Sooksatit, 2016). This card has covered every brand of the company in all countries; in 2017 it had 25 million members across the world. In 2014 the company has takeover a company named Wipolo to increase the rate of digital transformation, Wipolo is a mobile and web platform used to manage trip schedules and manage on social media like Twitter and Facebook. The company also acquired fast bookings which help companies, especially hotels in digital marketing. Fastbookings is the leader in France; it provided services to 3500 hotels. Its services include website building, digital marketing campaigns, and software related to business intelligence.
Cultural transformation
AccorHotels was challenging with incline digital disruptors that were quick, elastic, and extremely dynamic. It consequently had to turn flatter, quicker in execution, and more responsive. This means fundamentally shifting the mindset of every manager and employee. To bring innovation to the company, first, it has to accept its failure. The whole company accepted the changes to transform the culture at the workplace. The middle management of the company was very strict and it turned out to be the biggest challenge in the digital transformation of the company. The company is now focused on the training and development of its human resource and helps them to perform at their best.
Corporate transformation
The company is now dedicating its major resources to the research and development department. So that new and innovative things come into the workings of the company. The company is dependent on traditional approaches, so Mr. Bazin created a strategy to include 30% new practices and 70% traditional practices in the upcoming 5 years.
Critical evaluation
The digital strategy of the company brings much advantage and helped in dealing with the disruptor Airbnb. The Company used a new brand name with a new customer which helped in increasing visibility on digital platforms. The five year plan of the company bring many benefits for the company such as it has improve the consumer experience and helping in facing the competition. Digital strategies are the only reason company is back in the hospitality industry. The main challenges were related to the change in the culture of the organization.
Difference between AccorHotels and Airbnb’s value propositions
The value propositions of Accor and Airbnb are very diverse from one another. However, Accor has made some significant model adjustments that provide outcomes that are fairly comparable to Airbnb. Both businesses have broadened their service offerings within the same hospitality market even while expanding their service offerings. Airbnb is a firm that specializes in giving travelers the opportunity to have a local travel experience (Guttentag, 2019). On the other hand, AccorHotels is mainly engaged in the usual business of a hotel chain, the company does not have its own real estate facilities and instead operates as a broker. The company operates its hotels directly, as opposed to using a middleman, and owns and maintains properties throughout the world.
The hospitality industry involving two types of companies the traditional ones and new disruptors. Traditional one is including Hilton, Hyatt, and Marriott, and the new ones include Airbnb. In this case, Airbnb chose to shift its entire operation and opted to concentrate on innovation in order to compete with digitalization as cited by Dann, Teubner, and Weinhardt, (2018). As a result, the company is opening a hotel every 29 hours. They have altered their business strategy, which has affected the holdings, and they have changed the course of digitalization in great detail. The business has produced a wave of digitalization and innovation using Bain's 360 methodologies.
The strengths and weaknesses of each company’s business models
Strengths of Accor and Airbnb According to the Sans and Quaglieri, (2016) Accor has a very interesting variety of high-end, low-cost, and mid-range accommodations for every type of consumer. The business is well-known in many countries throughout the world and has a strong, recognizable brand name. The company owns all of the properties and they have a physical presence. On the other hand, Airbnb has the benefit of being the first one that introduced a shared acclimation facility in the industry. Airbnb offers consumers a dependable local living experience or an experience that feels like home. The company does not own any real estate or property, the business has inexpensive operating costs and generates substantial profits. The business has a strong online presence, which restructures the process for both the consumer and the business. The company also has a very effective feedback and review system to ensure customer satisfaction as cited by Zervas, Proserpio, and Byers, (2021).
Weaknesses of Accor and Airbnb In the beginning, Accor used a very conventional business hotel chain model. As a result, the company made significant capital investments in assets, which raised operating expenses relative to rivals using internet marketplaces like Airbnb. It quickly adapted to the economic changes, updated to the digital age by embracing technical development, and worked to keep costs and earnings under control. However, Airbnb was having problems with inadequate host accommodations (Dolnicar and Zare, 2020). Due to violations of housing-related laws and regulations, Airbnb is having legal issues. In contrast to a hotel, where there is no control or regulation, the guests at the house were expected to abide by the owner's laws and restrictions. The main disadvantage of Airbnb is that people dislike these types of rules and restrictions.
Conclusion
The analysis concluded that AccorHotels faced in a market that was rapidly evolving and moving toward digitalization. The business is aware of the potential risks that the hotel industry may face as a result of the economy's shift. Accore hotel felt that it did not respond to the adjustments that were necessary to stay competitive, so in the present time it has transformed by using digital tools. Airbnb, a fully digitalized business operating on an online platform that is very convenient for its consumers, is the greatest online rival of AccorHotels. However, the business has begun to concentrate on its areas of weakness and has adopted a customer-centric business model. The strategy emphasizes elevating client pleasure while prioritizing their wants, requirements, and convenience. It also incorporates the use of mobile applications to increase the business reach and creating brand awareness.
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