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Accor Hospitality: The New Business Model
Chapter III
Optimizing operating performance
The Right Approach
The RightServiceProviderCulture
The RightAsset
ManagementPolicy
The RightBrands
The RightNetwork
The Right
Operating
Performance
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Battle of revenueBattle of revenue
Yann Caillre
COO Hotels France, Southern Europe, Middle East & Africa and CEO Sofitel Worldwide
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The Battle of Revenue : 360
Marketing andCommunication
Sales andDistribution
Marketplacestrategy
RevenueManagement &Dynamic Pricing
Loyalty ProgramAMiles
Reservation(Accor Hub)
New team spirit
New tools
New market share
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The Battle of Revenue : 360
Marketing andcommunication
Sales andDistribution
Marketplacestrategy
RevenueManagement &Dynamic Pricing
Loyalty ProgramAMiles
Reservation(Accor Hub)
New team spirit
New tools
New market share
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Aligning marketing strategy with mature and emerging markets
ObjectivesObjectives LeversLevers ImpactImpact
+30M
Variation
07 vs 06
Variation
06 vs 05
+35M
Worldwide
MarketingSpending
Accor will adapt its marketing
strategy depending on whether
it is market
leader
or
challenger
in order to maximize the
Marketing spend
ALIGNING MARKETINGSTRATEGY WITH MARKET
PENETRATION
-------------------------------------------
When Accor is
market leader
Strengthen our positioning withpowerful advertising campaigns
When Accor is
market challenger
Become the leader and strengthen
the brand strategy
When Accor ispenetrating a market
Move up to the front ranks and
rapidly gain market share to boost
brand recognition
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When Accor is leader, poweful advertising to strengthen brand strategies
Print advertis ing campaign
in France, Germany, UK
Print advertising
campaign in France,
Germany
TV advertising in
France
Note: Marketing Plans - 2006 - 2007
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The Battle of Revenue : 360
Marketing andcommunication
Sales andDistribution
Marketplacestrategy
RevenueManagement &Dynamic Pricing
Loyalty ProgramAMiles
Reservation(Accor Hub)
New team spirit
New tools
New market share
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Reservation Accor Hub
ObjectivesObjectives LeversLevers ImpactImpact
Get connected to everybooking channel and
source
Make the bookingprocess as simple as
possible for the customer
Use all the channels tomaximize conversion
Get connected to everybooking channel and
source
Make the bookingprocess as simple as
possible for the customer
Use all the channels tomaximize conversion
Connectivity and
innovation: unique TARSreservation system
Availabi li ty and user-
friendliness
Connectivity and
innovation: unique TARSreservation system
Availabi li ty and user-
friendliness
30% of room nights
generated through central
systems 50% of conversion rate forcall centers Up to 50% in ARR vs.direct hotel with TARSreservation system (upscale
& luxury segments) 100 millions of visitors inAccor websites
30% of room nights
generated through central
systems 50% of conversion rate forcall centers Up to 50% in ARR vs.direct hotel with TARSreservation system (upscale
& luxury segments) 100 millions of visitors inAccor websites
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On Line hotels
Electronic Distribution
Travel Agencies
Brand web sites Accorhotels.com
Voice Booking TARS
OPENCLOSE
Rates
Infos,
photos
Room
typesSales
Conditions
Call Centers
Sales ForcesCommissions management
B to C Web SitesB to B Web SitesTour Operators Web SearchEngines
TARS, a HUB linking hotels to distribution
Intra-hotel &
inter-hotel
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TARS room nights
Room nights per year
1996 2006 2010
40 million
2 million
20 million
2006
>31% through central system2010
>40% through central system
CAGR19% in 4 years (2006 to 2010)
CAGR
26% in 10 years (1996 to 2006)
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Expedia : A worldwide agreement
+30%
+335%
Roomnights
0
50 000
200 000
YTD July 2005 YTD July 2006 YTD July 2007
New
Contract
Direct
connect
North America
55%
Rest of the Worl
12%
France
13%
United Kingdom
20%
A specific channel in order to target additional clientele
Driving an increase in total of room nights
75% of customers are from the US and UK
Origins
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The Battle of Revenue : 360
Marketing andCommunication
Sales andDistribution
Marketplacestrategy
RevenueManagement &Dynamic Pricing
Loyalty ProgramAMiles
Reservation(Accor Hub)
New team spirit
New tools
New market share
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Sales and Distribution
ObjectivesObjectives LeversLevers ImpactImpact
More revenue:Capture the demand fromall the existing channels
Better revenue:Set the right price for theright channel, enhancebusiness visibility
Optimized
distribution costs:Maximize cost-revenueratio: lower costs, higherimpact
More revenue:Capture the demand fromall the existing channels
Better revenue:Set the right price for theright channel, enhancebusiness visibility
Optimized
distribution costs:Maximize cost-revenueratio: lower costs, higherimpact
Effective sales force to
capture potential
wherever it is:- Hotel sales force- Global multi-brand sales force- Dedicated sales force for luxury
segment
Appropriate offers for
every channels:- Corporate/Leisure/MICE/Airlines- Distribution- Online / Offline
Effective sales force to
capture potential
wherever it is:- Hotel sales force- Global multi-brand sales force- Dedicated sales force for luxury
segment
Appropriate offers for
every channels:- Corporate/Leisure/MICE/Airlines- Distribution- Online / Offline
Access to more than65,000 large accounts
worldwide
Up to 80% of revenue
generated through salesand distributionprocesses (upscale andluxury segments)
+50% of increase in
sales by 2010 (2005 to2010)
Access to more than65,000 large accounts
worldwide
Up to 80% of revenue
generated through salesand distributionprocesses (upscale andluxury segments)
+50% of increase in
sales by 2010 (2005 to2010)
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Internet Distribution
Eric Lepleux
Chief Marketing Officer
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Accorhotels.com and brands.com: a major online player
300 000 visits per day
100 mill ion visitors per year
11 millions room nights
7 languages
30 000 room nights per day
1 room night every 3seconds
KEY FIGURES
2007
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2007: changing the business and running the business
Rebuild all brands websites in line with the new portfol io strategy
Support the arrival of All Seasons and Pullman
Improve content and functionalities
(ie new hotel presentation, Google search engine, interactive city guides )
Develop Chinese platforms for our future sites
Increase by 31% our volume of room nights
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Rebuilding all brands websites
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Rebuilding all brands websites
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Rebuilding all brands websites
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Rebuilding all brands websites
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Rebuilding all brands websites
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Our portal strategy
Brand
customization
PortalStrategyGeneric content
BrandStrategyCustomized content
Mutli brand
customization
2010
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Forrester 2006 In % of revenue
A strong opportunity to drive direct bookings
12%
19%
14%
19%23%
0%
5%
10%
15%
20%
25% WorldWide
USA
Price transparency
Interconnectivity
Brand loyalty
Booking experience
and simplicity
to increase our
internet penetration
KEY
INITIATIVES
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Penetration ratio by brand
6%9%
7%
20%
13%15%
17%4%
4%
4%
7%
3%
10%
14%
11%
27%
16%15%
17%
31% overall growth in2007
Double digit target growthuntil 2010
14% overall penetrationin 2007
Penetration ratio target25% by 2010
PERSPECTIVES
2007 - 2010
Direct on our site
Indirect from third party
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Third parties: a continued focus on other major online players
Accor Websites
76%
7,8 millions
room nights
Third PartyWeb site
24%
Other third
parties31%
Bookings
17%
Expedia16%
HRS14%
Hotel.de
10%
Wotif.com
10%
Ctrip.com
3%
Laterooms
2%
3,2 millions
room nights
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Accorhotels.com and Brand.com: better conversion ratios than thecompetition
5,80%4,70%
Accorhotels.com
& brands.com
Competitors
Bookings/Visits Competition Forrester 2006
Range of offer: full coverage of the market
High operational performance
Clear privacy and security policies
Logical flow and navigation
Graphics and maps adding value to the
booking experience
Home page provides clear answer to user
OUR STRENGTHS
Forrester Web Site Review
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Improving our internet reach
Capture additional traffic
- Travel Search Engines (Kayak, Kelkoo...)
- Parternships (Europcar, Club Med Air France)
- New 2.0 players (Tripadvisor, myspace.com)
Retain our customers
- Develop loyalty and customer knowledge (launch of loyalty program, pre arrival mail,conversional agent, e-mail campaigns)
- Offer a wide range of products and brands (Accor Brands and partners brands)
Develop direct connectivity
- Existing interfaces GDS/Pegasus (Orbitz, Lastminute, Travelocity)
- Direct Tars (Expedia, Booking, HRS, Hetel.de)
Enhance our BtoB solutions
- Specific portal and home page
- New functionalities for different segments (MICE, Travel Agents, Corporate)
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Revenue Management and Pricing
CLOSEOPEN
Revenue
Management
optimizes what
to open for saleand
when for when
+Rate is PRICED ()
For the room type,the date of stay
and number of persons
Pricing
Is to optimize
to always target the right pricefor the
right moment
Hotel Level OPEN for sale
Room type OPEN for sale
Rate OPEN for sale
Booking is possible only if
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REVPAR growth INDEX =1 in 2004
Trainings
for all
+ 8 pts
Implementation of a new tool: Revenue Management System
255 hotels
114 hotels
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AA new policy has been launched in 2005: Dynamic Pricing
A new policy has been launched in 2005: Dynamic Pricing
AFTER
3 public rates
Fully flexible Rate
Restr ictive Rate
Prepaid rate
AFTERAFTER
3 public rates3 public rates
Fully flexible RateFully flexible Rate
Restr ictive RateRestr ictive Rate
Prepaid ratePrepaid rate
Revenue Management System supports Dynamic Pricing
BEFORE
10 publ ic rates
without any logic
For the customer
BEFOREBEFORE
10 publ ic rates10 publ ic rates
without any logicwithout any logic
For the customerFor the customer
No control
over the
final result
No control
over the
final result
Easier
to manageEasier
to manage
With immediate
resultsWith immediate
results
+ 30 pts
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Example of results : 4 Sofitel in Germany
Public rates 2006
Average = 159
Public rates 2006
Average = 159
Public rates 2007
Average = 186 Without any lost room-nights
No increase of the full rate
Public rates 2007Average = 186
Without any lost room-nights
No increase of the full rate
Jan-Jul 06Jan-Jul 07
Sofitel network wor ldwide impact: +3M
gained with RA3 closed 15 days before
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Revenue Management Worldwide Map in 2006
Full Revenue Management System and Methods
Or Trained (REV chalenge and / or Revmaster)
200 hotels equiped in 2006(maximum target=1200)
200 hotels equiped in 2006(maximum target=1200)
R M t W ld id M i 2009
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Full Revenue Management System and Methods
Or Trained (REV chalenge and / or Revmaster)
Revenue Management Worldwide Map in 2009
800 hotels wil l be fully
equiped in 2009
(maximum target=1200)
800 hotels wil l be fully
equiped in 2009
(maximum target=1200)
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Revenue Management & Dynamic Pricing
Ex: Sofitel USA
Don Kelly
VP of Sales, Pricing, Distribution and Revenue Management for Sofitel Worldwide
S fit l USA ( bl ) C titi S t
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Sofitel USA (comparable) vs. Competitive Sets
------ADRADR
80%
85%
90%
95%
100%
105%
110%
115%
2001 2002 2003 2004 2005 2006 YT D
2007
PENETRATION INDEXES
------ REVPARREVPAR
------ OCCOCC
Results were driven primarily through the management of our public pricing
S fit l E l S fit l N Y k C titi S t
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Sofitel Example: Sofitel New York vs. Competitive Set
------ADR IndexADR Index
85%
90%
95%
100%
105%
110%
115%
2004 2005 2006 YTD 2007
PENETRATION INDEXES------ REVPARREVPAR IndexIndex
------ OCCOCC
--- Competitive Set (Intercontinental, Loews, Parker Meridien, Omni, Royalton, Muse)
Public Prices Definition:
- RA 1 - (best unrestricted)- RA 2 - (72 hour cancellation)- RA 3 - (pre-paid rate)
YTD Room nights (+24% in 2007)
YTD ADR (+11% in 2007)
- RA 1 - $527- RA 2 - $395
- RA 3 - $367 YTD Room Revenue (+37% in 2007)
The Price Movement CRITERIA
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Lead TimeLead Time
RevPar PaceRevPar Pace
Competitive SetCompetitive Set
Booking PaceBooking Pace
The Price Movement CRITERIA
3 Automatically Linked Criteria
Lead-time
Revpar pace at the specified lead
time
Booking pace of key sub-segments
at the specified lead time
1 Subjective CriteriaCompetit ive Sets Weighted Average
Rate is reviewed by the Revenue
Manager at the specif ied lead time
The combination of all fourcreate the probabil ity rules or
If statements
Price Movements
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Price Movements
360 EXECUTION
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360 EXECUTION
Sofitel
Profitability
Change of Mindset
Revenue Quality
Account BehaviouralModel
Psychological PricingWillingness to Pay
PerformanceIndexing
New DiscountingGoals
PerformanceMeasurement
System
The Battle of Revenue : 360
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The Battle of Revenue : 360
Marketing andCommunication
Sales andDistribution
MarketPlacestrategy Revenue
Management &Dynamic Pricing
Loyalty ProgramAMiles
Reservation(Accor Hub)
New team spirit
New tools
New market share
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A unique advantageA Marketplace Strategy
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What is La Place ?
A consistent geographical market
impacted by the same environment,business flows and events
A battle field where Accor can
leverage its broad, powerful offering(multi-brands, multi-size, multi-
segmented) to pump out extra value
from demand through coordination
and synergy from each Accor Hotel
q gp gy
Each hotel is a key-player of the global
marketplace strategy
Each hotel is a key-player of the global
marketplace strategy
A Marketplace Strategy
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Increase and maximizeAccor RevPar
Gain extra revenue
Gain profitable marketshare without dilutionand cannibalization
Optimize each brands
value for money in eachsegment
Increase and maximizeAccor RevPar
Gain extra revenue
Gain profitable marketshare without dilutionand cannibalization
Optimize each brands
value for money in eachsegment
ObjectivesObjectives
Global competitive markettools
Accor integratedreservations system
Coordinating Revenue andPricing Management
Rerouting inter-hotelindividual and groupdemand
Synchronizing marketingand sales initiatives
Global competitive markettools
Accor integratedreservations system
Coordinating Revenue andPricing Management
Rerouting inter-hotelindividual and group
demand
Synchronizing marketingand sales initiatives
LeversLevers
Performances:Tracked Key Metrics(ARR, RevPar &RGI) above Off-marketplace hotels
13 marketplaces inFrance will generate
8M incrementalrevenue in 2008
Performances:Tracked Key Metrics(ARR, RevPar &RGI) above Off-marketplace hotels
13 marketplaces inFrance will generate
8M incrementalrevenue in 2008
Financial ImpactFinancial Impact
p gy
Focus France
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La Dfense
Orly
Roissy
Strasbourg
Lille
Bordeaux
ToulouseMarseille
Nice Cannes
Lyon
Paris Sud
Today in France :13 marketplaces (incl Paris IdF: 6)
260 hotels (incl Paris IdF: 90)
36 000 rooms (incl Paris Idf : 20 000)
Representing :
66% of revenue (40% for Paris IdF)
70% of GOP (43% for Paris IdF)
Paris Bercy
Paris Centre
Optimization levers some examples
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Over 100 000 individual room nights cross-sold yearly in FrenchPlaces Ex : Paris Sud
Over 10 000 groups room nights rerouted yearly Over 10 000 individuals room nights cross-sold yearly
Over 100 000 individual room nights cross-sold yearly in FrenchPlaces Ex : Paris Sud Over 10 000 groups room nights rerouted yearly Over 10 000 individuals room nights cross-sold yearly
Reservations
cross-selling &
rerouting
Reservations
cross-selling &
rerouting
Example la Dfense :
Ibis, Suitehotel rack rates adjustments: +400K Last room availability optimization: + 600K Calendar optimization (calendar, events, environment) for2008 vs 2007 (+ 1,5M)
Example la Dfense :
Ibis, Suitehotel rack rates adjustments: +400K Last room availability optimization: + 600K Calendar optimization (calendar, events, environment) for2008 vs 2007 (+ 1,5M)
Price
Optimization (*)
(*) vs daily market demand bycategory and segment
Price
Optimization (*)
(*) vs daily market demand bycategory and segment
Local special offers on needy periods Sales blitz
Local special offers on needy periods Sales blitz
Marketing &
sales initiatives
Marketing &
sales initiatives
2012 Vision: A worldwide strategy deployed in over 80 Places
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Asia Pacific
15 Places
Europe
60 Places
Americas
5 Places
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Marketing andcommunication
Sales andDistribution
Marketplacestrategy
RevenueManagement &Dynamic Pricing
Loyalty ProgramAMiles
Reservation(Accor Hub)
New team spirit
New tools
New market share
How the AMiles loyalty program will work
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Web basedprogram
Top membersget Gold and
PlatinumStatus
Convert
AMiles into
Hotelchecks Airline miles
Earn AMilesfor each
spentEnroll for free
Miles
1 Million members 2007
4 Million members 2012
AMiles will catch up with our global competitors
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Economy
Mid scale
Upscale
Luxury
InterContinentalPriority Club
+ 2 500 hotels
StarwoodS. Preferred Guest
700 hotels
HiltonHHonors
+ 2 500 hotelsAccor
A Miles
+ 2 000 hotels
MarriottMarriot Rewards
+ 2500 hotels.
Miles
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The battle of Revenue : 360The battle of Revenue : 360Consequence onConsequence on
RevParRevParIndex FranceIndex France
France : The battle of the RevPar index (from 2004 to 2006)
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90
100
110
120
130
140
2004 2005 2006
Ibis and Etap Hotel
90
100
110
2004 2005 2006
Mercure et Novotel
Ibis and Etap Hotel
Market leaders
+ 0,7 Pts increase
Mercure is strengthening its position
Novotel is maintaining its positioning
+ 2,5 Pts increase
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FlowFlow--Through BattleThrough Battle
Yann Caillre
COO Hotels France, Southern Europe, Middle East & Africa and CEO Sofitel Worldwide
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Productivity gains through changes inProductivity gains through changes in
management of operationsmanagement of operations
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Y. Lecret 56
Novotel Caf
Concept
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Concept
Bar more than a restaurant
Trendy and high-quality products
Simplified menu 5th products generation in partnership with Lentre
Open 24/7
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Olivier Devys
Chief Executive Officer of SuiteHotel
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Previous advertising: Good Morning by Suitehotel
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20 original new recipes, especially created by a chef and a nutritionist,presented in individual transparent glass casings.
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4 kinds of Dammann-brand teasSeasonal fruit
selectionFresh milk
Trays designed forSuitehotel to meet
Good Morningspecifications
3 kinds of bread,freshly baked in the
hotel + minicroissants.
2 kinds of organiccereals.
Selection ofon-demand ground
coffees such asespresso andcappuccino.
Creamy hot chocolate
and hot water for tea.
4 flavors of jam,porcelain mugs,
glasses, cutlery,sugar, etc.
3 fruit juices,
100% pure juice,100% fruit taste.
Good Morning by Suitehotel
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A new breakfast concept introduced by Suitehotel in two test hotels in late 2006
and deployed across the network in 2007.
Innovative both in its design lay-out and in the quality of the products,
Responding to customer values: simplici ty, independence, easy access,
generosity
Anticipating emerging customer expectations: broad offering, low-fat, healthyproducts, unusual recipes, an unexpected experience, etc.
Considered by customers as good value for money (12)
and highly profi table for Suitehotel (GOP: 45% of To)
A high satisfact ion rate and a 60% increase in breakfast revenue.
An innovative breakfast concept based on emerging customer expectations
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Organizational and skil ls management programs
Salvatore Serio
Managing Director France Hotel Division
A team organization program
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Organizes work schedules depending on the
hotels forecast demand
Organizes work schedules depending on the hotelsavailable human resources (quantity and skills)
Ensures compl iance with each countrys labor
legislation
Reduces time spent on administrative tasks and
improves cost management.
FORECAST DEMAND
AVAILABLE PEOPLE
COMPLIANCE
COST MANAGEMENT
The right person in the right place at the right time to improve
cost management and increase customer satisfaction
A skills development program
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An employee skills evaluation system
Training programs providing certification
in various fields of expertise
By developing identical ski lls recognized
across the global Ibis network
A career plan for each employee
ASSESSING
TRAINING
ENCOURAGING MOBILITY
OFFERING A CAREER
A holistic management process
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Identify skills
Integrate employee desires
Offer training
Anticipate demand
identify skills + resources
Build the hotel organization together
Equipe
Hotel
Acteurs
EmployeesCompatibility
Equipe
Hotel
Acteurs
Employees
Guest satisfaction Employee turnover (- 5%)
Labor costs
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ProcurementProcurement
Jol Vatan
Chief Procurement Officer
A i th t d li l t t
Procurement
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Net rebates (% of revenue) 1.0%Net savings (% of revenue 2.6%
Average 2006 Ebitdar rate 30.5%
(Accor Hospitality)
2006 total Hospitality business volume = 10bn
Procurement volume = 3.4bn
The Procurement process is geared to offer hotels
solutions that increase their productivity while preservingtheir flexibil ity and abili ty to meet customer needs
The Procurement process is geared to offer hotels
solutions that increase their productivity while preservingtheir flexibility and abili ty to meet customer needs
A service that delivers value to our partners
Procurement: an ongoing strategy to deliver value
to all our business partners
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3 countries
Vol. nom. Purchases = 0.3bnNet savings: 12%
Creation
1992 - 1997
Extension1998 - 2005
20 countries
Vol. nom. Purchases = 1.5bnNet savings: 10%
35 countries35 countries
Vol. nom. Purchases =Vol. nom. Purchases =2.6bn2.6bn
Net savings: 8.5%Net savings: 8.5%
100m in savings in 5 years (2006-2010)
Impact on PBT: 65m
100m in savings in 5 years (2006-2010)
Impact on PBT: 65m
5 drivers for 100m in savings in 5 years PBT impact: 65m
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Openings
in newcountries
Expansion of
categories
managed by
the
Procurementdepartment
International
sourcing
in low costcountries
6 new
categories
in 5 years
New sourcing
team
in Asia
Expansion
of
internationalcontracts
From 10%
to 20% of
our spend
Improvement
of the terms of theexisting contracts
Category
management
benchmarks
USA
UK
Germany
Category
Manager
2005
Coverage
rate
201010 countries
in 5 yearsArg enti na
ItalyChina
Indonesia
Middl
e East
South Africa
10 new countries
in 5 years
15m 40m 10m 10m 25m
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France: Significant growth in results
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Development / Network
rationalization
Topline
Maximization
Profitability
(drop through)
2007 RevPar : 49.4 (+9% vs 06)2007 Ebitdar Drop through : 57%
2007 PBT : 261 M (+28% vs 06)
France: RevPar and Drop-Through Impact
-
8/12/2019 Chapter3 Complet
73/74
73
REVPAR (in )
41,243,1
45,3
49,4
2 004 2 005 2 006 2007 E
+ 8,2
(07 est. vs 04)
Drop Through Percentages
43,0%
20,3%
27,6%
57,0%
2 004 2 005 2 006 2007 E
+ 36,7 Pts(07 est. vs 04)
France: Impact on Profit Before Tax
-
8/12/2019 Chapter3 Complet
74/74
74
+ 66 M(07 est. vs 04)
Profit Before Tax
194200
204
261
2 004 2 005 2 006 2007 E
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