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ACCOR IN SEARCH OF

VIETNAMESE
EMBEDDEDNESS
QUESTION 1

Thuy Trang Ta Hoang


1. Which are Accor’s international business model
key characteristics (economic, financial, technical
and social)? Which have been the main steps of
its internationalization process? Worldwide? In
Asia?
The Accor Group

Created in 1967 under the name Novotel - SIEH by Paul Dubrule and Gérard Pélisson in France

Present in 92 countries

Internationalization strategy based essentially on acquisitions and strategic


Manage operations and
provide services for partner
hotel owners. Hotel in luxury,
upscale, midscale or economy
depend on customer segment
and country risk exposure
→Economic Model

Fully owned, leased,


International CSR, trust and respect,
managed, franchised the
imagination
hotel business model of →Social Model
Digital strategy
→Technical Model
Accor

Listed on Paris Stock


Exchange - owed by
shareholders
→Financial Model
Which have been the main steps of its internationalization
process? Worldwide? In Asia?
merged with Jacques the group
Creation of « Novotel- Activities in Brazil, Borel International and becomes
SIEH » Africa and Middle Est become ACCOR Thailand Myanmar AccorHotels
1967 1976-79 1983 1989 1993 2015

● ● ● ● ● ● ● ● ● ● ●

1972 1982 1984 1991 2011


pening in Belgium and first Novotel in Accord enter in China Vietnam Accor in Australia and
Switzerland Singapore New Zealand
ASIA entry VN entry
Accor in Asia

In Asia

International leader in Thailand, Indonesia, South Korea and Vietnam

In Vietnam

International leader in the country

21 hotel (Sep, 2015) located in the main cities and major tourism areas

All market segments to luxury to economic


QUESTION 2

OLIVIER
Sustainable tourism is a long-standing concern, since 1992 at the Rio Conference.
Major values and corporate culture of Accor...

Sustainable performance Respect

Innovation Conquest spirit


International challenges in Asia and Vietnam

Fulfil its own commitments with CSR since 1992


- Environmental issues
- Social issues

Ensure that the future CSR challenges will be embraced by hotels’ managers through the
management contracts.

Increase customer loyalty in a country where customers often come only once in their lives.
QUESTION 3

Maxime
The major pressures that may influence the
present and future evolution of the hotel
industry in vietnam:

Political - regulatory Socio-economic Technological

- Not a business
destination (Lack of
- The hosting funds to promote it
regulation (Visas)
- Lack of tourism in
- The non regulation somes zone
of hotel’s - Internet
alternatives - Lack of
infrastructure in
- The corruption and somes zone
political influence
- Lack of qualified
human resources
The consecutive challenges all actors
operating in Vietnam would have to face

Adaptation Redeployment Competition

- The developing
- Develop a new market brings a lot
format with a large of competitors
range of quality
- Should re-deploy to
- Deal with the Airbnb
the internet sales
- Develop the competition
communication to
- Deploy only in
be seen online - Price war
touristics areas
- Develop partnership - Size of the hotel
with providers (Go (Big Resort vs Small
local) hotels)
The key competitors and group of competitors
operating in Vietnam

Luxury Upscale Economic

This segment offers a


From the small & cheap
larger offer and range of
hotels to the variable
Offer a top quality range price.
quality other options.
rooms with a high price
and service.
- Airbnb
- Crown Plaza
- Intercontinental
- Home Inns
- Hilton
- Marriott
- All the small hotels
- Sheraton
Competitive map
QUESTION 4

HELOISE
Following which incentives (using OLI grid) Accor has been developing its presence in Vietnam as in some other countries
of the area?
INTERNATIONALISATION
OWNERSHIP ADVANTAGES LOCATION ADVANTAGES
ADVANTAGES
● Technical know-how: trained
● Customers’ internationalization: in ● Widened vision of demand:
managers with high standards
business as well as in leisure growth is driven by asian
countries
● Price competitiveness: a large
● Emergence of new customers
scale of prices
categories:growing of Vietnamese ● Ability to coordinate support
middle class, growth of tourism functions
● Local and international good
image
● Access to low cost workforce ● Ability to limit country-risk
exposure
● Expertise to go fast on a market:
● Low cost country, work force and
standards but flexible
suppliers ● Ability to follow their customers:
large panel of cities, the
● Long international experience : 45
● Lowering of institutional entry customers will find Accor in all big
years, manager equipped for it,
barriers cities in Vietnam and Asia
flexibility
● A country with tradition of ● Aware of new opportunities
● Implementing with management
hospitality but underequipped
contracts

● Presence in comparable areas :


24,5% of its presence in Asia
Which stage of its international development has it been reaching there?

merged with Jacques the group


Creation of « Novotel- Activities in Brazil, Borel International and becomes
SIEH » Africa and Middle Est become ACCOR Thailand Myanmar AccorHotels
1967 1976-79 1983 1989 1993 2015

● ● ● ● ● ● ● ● ● ● ●

1972 1982 1984 1991 2011


pening in Belgium and first Novotel in Accord enter in China Vietnam Accor in Australia and
Switzerland Singapore New Zeeland
How would you position different target countries in the McKinsey-General Electric matrix?
Which would be its major functional strengths and weakness?

STRENGTHS WEAKNESSES

● Volume strategy
● Diversification
● Ownership
strategy
● Portefolio effect: risk
● Foreign currency
balanced
fluctuations
● Digitalisation KSF
● Good international
● Strong competition
and local image
● Continuous
● Difficulty to see all
improvement
AccorHotel product
● Good network of
as one brand
suppliers
● Excellent Human
Resources policy
QUESTION 5
What are Accor’s major internationalization strategy features, especially in
countries like Vietnam?

Internationalization strategy features:


- Expand horizontally and vertically through M&A, leasing, partnership or franchising (all types of ownership structures)
- Cover all segments but focus more on midscale and economy brands
- Criteria for ownership structure:
o Positioning (luxury, upscale, midscale, economy)
o Size of country and state of economy (mature or emerging markets)
o Location (large / medium / small urban areas)

Emerging markets (e.g. Vietnam):


- Luxury & upscale --> Management contracts
- Midscale --> Joint-venture and management contracts
- Economy --> All types of ownership structures depend on brand and location
Which are the key dimensions of its strategy in Vietnam (what / where / when /
how)
I don’t know the answer for this question
Which have been the specific choices it made in terms of segmentation and ownership
structure?

Segmentation: Cover all segments from luxury to economy


- Luxury - Upscale: MGallery, Sofitel, Pullman
- Midscale: Novotel
- Economy: ibis
Ownership structure: All hotels are operated under management contracts.
Difference from other competitors?

Segmentation: Other competitors only engage in luxury and midscale sectors


- IHG: Inter Continental (Luxury), Crowne Plaza (Upscale)
- Hilton: Hilton (Upscale)
- Marriott: JW Marriott (Luxury), Renaissance (Upscale)
- Starwood: Sheraton, Le Meriden (Upscale)
Location: So far they only opened hotels at big city (HCMC, Hanoi, Danang and
Nha Trang). Famous tourist cities like Ha Long Bay, Hue, Hoi An and Phu Quoc are
not yet exploited.
Sensitive aspects of the business?

“The issue of the structure is that technically, they have decision-making power. But
in practice, they can prevent you from implement your decisions because they
control the purse string”

Conflict between Owners and Manager (Accor)

Improvement: Change type of ownership structure to either leasing or joint


venture.
QUESTION 6
How does Accor demonstrate its commitment to sustainable development ?

1992 2006 2012

Rio Conference Earth Guest Program PLANET 21 Program

Accor started its social and EGO: local development; child Accor’s new sustainable
environment commitment protection; fight against development program
process epidemics; balanced food
ECO: energy; water; waste;
biodiversity
How does Accor demonstrate its commitment to sustainable development ?

Sustainable initiatives:

- Has programs for the benefit of local communities


- Deployed the WATCH (We Act Together for
Children) program to combat sexual tourism
involving children.
- Contributing to the fight against epidemics
(HIV/AIDS) through protection programs for
employees and awareness campaigns for guests.
- Launched the Plant for the Planet program =>
regenerate the natural areas neighboring its
hotels and to support local people
To what extent this commitment would differ in VN from the corporate policies implemented by the company since
1994?

➢ Accor achievements in Vietnam:


❖ 33% of hotels perform at the Gold level, 33% Silver & 7% Bronze.
❖ 100% of hotels offer healthy menu options (global target 80%); 93% promote local
procurement of produce (global target 70%); 13% of hotels are using some form of
renewable energy (global target 10%)
❖ Supported NGOs, Smile group => to help people living with HIV/AIDS in HCM City, to create
careers training program for social vulnerable young people in HCM City

➢ Compare to 7 pillars and 21 commitments of Accor’s PLANET 21


● Which could be the kind of CSR initiatives that Accor could develop in Vietnam?

Healthy and
Plant for the Fighting child
Eco design sustainable
Planet exploitation
food

Accor could focus on such initiatives:


- Deeper control of their supply: favour local supply in food or services => large possibility of purchasing in
Vietnam and around, minimize energy footprint, sustain local economy
- Develop less polluting means of city transport => regarding the lack of common transport and the over
circulation (in Ho Chi minh for ex)
- Reduce waste => regarding the lack of waste management in the country
- Develop Eco-building: As a country in fast development and build they should consider eco building as
the reference of basis
- Highlight training and education for employees: promote best practice inside Hotel and changes in their
daily behaviours
● How may Accor’s social and environmental commitment facilitate its embeddedness in the local
vietnamese environment?

- Social and economic benefits from such initiatives allow acceptance and integration

- Matching the objectives of the country: commitment 2030, Vietnam Agenda 21

- Launch partnerships with local in order to include them and to be sure to match their needs: purchasing,
services

- Create hotel and concept belonging to vietnamese environment and respect it: ecotourism, “green hotel”
inside the nature