Why Accor Won’t Let Movenpick Swallow Its New Little Sister Swissotel in Asia

Here’s the thing for Accor: Movenpick is having a heyday signing up hotels in Asia. Swissotel is not.

Movenpick as a single brand chain has been moving way faster in Asia in the last two years than Swissotel, but now both are under the ownership of Accor.

The French chain completed Swissotel’s acquisition in July 2016. And just as Accor was rolling out a new global flagship hotel in Singapore, Swissotel The Stamford, it has brought a Swiss rival, Movenpick into the family, a  purchase completed in early September.

The deals seem to come easy for Accor, one of the most acquisitive hotel companies in the world as of late. What you don’t read about as often is how the company must manage all the new brands, sometimes between hotels that were fierce competitors. Accor’s unfolding experiences in Asia offer a glimpse into the challenges large hospitality companies face once the deals are done.

A bigger chain and soaring beautifully in Asia-Pacific, Movenpick must look like a huge threat to Swissotel — and it does not help that its original founder, Swiss hotelier Ueli Prager, named it Movenpick because he was inspired watching seagulls (Möwe in German) swooping for crumbs (pick) over Lake Zurich.

But Michael Issenberg, the CEO of Accor Asia-Pacific who led the integration of Fairmont, Raffles and Swissotel into Accor, is quick to quash any speculation that Movenpick will swallow Swissotel one day. He points out both share the same Swiss DNA, values, and upper upscale positioning.

“We want both brands to grow,” Issenberg said. “People thought we would rebrand Swissotel to Pullman when we acquired it, because there were only 32 Swissotel’s and we would rebrand them all Pullman. That was never our intention.

“And why would we [AccorInvest] just spend $100 million on renovating Swissotel The Stamford if our intention is to rebrand it?”

Issenberg also pointed out that in the luxury and premium play, the biggest opportunity in gaining more contracts is in the upscale and upper upscale segment.

“Which is why we intend to keep Swissotel, Movenpick, Pullman, and so on. Brands like Raffles, Banyan Tree or Orient Express — these are very special hotels. It takes time for owners to build them, sometimes this could be due to building in environmentally sensitive locations or that they are part of a mixed-use development if they happen to be in an urban environment.”

The History in Asia

In the last two decades or so, Movenpick had focused its expansion on the Middle East and Africa, which is now where most of its hotels are  — 51 out of 84.

Asia development, particularly Southeast Asia, started in earnest in 2015, led by Andreas Mattmuller, then the chain’s chief operating officer of Middle East and Asia. In 2017, Movenpick hired a senior vice president Asia, Andrew Langdon, based in Bangkok. The management contracts started rolling in and Langdon was promoted to Movenpick’s global development officer last year, still based in Bangkok.

Under Langdon, Movenpick is enjoying the same spurt of growth in Asia as it did in the Middle East back then. As of August, it has a pipeline of 18 hotels to open in Asia in the next three years, and 16 in operation, half of them new openings in 2017 and this year.

In contrast, despite being present in Asia longer and even being under Asian parentage at one time, the now defunct Raffles Holdings, Swissotel’s pipeline in Asia is short. Accor Asia-Pacific said four, but only one in Bali and another in Queensland have been announced (as of February), both set to open in 2020.

Issenberg shrugged this off. “Around the world, brands resonate in a different way,” he said. “Pullman, which is positioned similarly to Swissotel, has been extremely successful in Asia but hasn’t been so successful in the Middle East. Swissotel is growing more quickly in the Middle East than in Asia, for some reason it resonates more in the Middle East than in Asia. But that will change over time.”

Swissotel’s development factsheet, however, shows as of February Swissotel’s pipeline is a bit bigger in Asia than the Middle East in terms of room count [1,781 rooms versus 1,384-plus rooms]. Actual number of hotels, locations, opening dates were not disclosed in the factsheet.

It also takes time to integrate and interpret a newly acquired brand for the future, Issenberg said. Accor’s vision of the brand can be seen only now as renovation of Swissotel The Stamford gets completed by yearend. An enhanced vitality and well-being positioning for Swissotel is evident, with Accor telling investors this is a mega trend worth $3 trillion. A new vitality room-type has been unveiled at the hotel, a feature of which is a fitness wall fitted with an interactive digital display that guides guests on workouts.

Sisterly Love and Rivalry

But enters Movenpick and Accor has some answering to do on how the two Swiss brands will differ, why one isn’t more superior than the other, which should an owner choose — questions that are particularly critical in Asia because of the growth momentum the brand is enjoying.

Movenpick will be kept as a Swiss brand, said Issenberg, when asked about this.

“Certainly I think one of the great elements of Movenpick is its products — chocolate, wine, coffee and ice cream of course — and even though they are technically not part of the hotel brand, they are Swiss and truly Movenpick, so we’re looking at the best way to feature those products, probably in the lobby concept because hotels are moving towards more active lobbies, and then there are other elements that we’re still developing.

“We’re still learning and discovering as it has been only six weeks since completion,” he said.

Much of the work is actually being done in the Asia-Pacific office in Singapore. That’s because the series of acquisitions that Accor made have also resulted in several of Issenberg’s senior staff being promoted in the last three years to global roles on top of their Asia-Pacific roles but they continue to be based in Singapore. This includes Kingsley Amose, global chief of design and technical services, Gaurav Bhushan, global chief development officer, and Graham Wilson, acting global chief marketing officer and chief marketing and distribution officer Asia-Pacific.

“Graham and his team come up with the brand DNA/essence, Kingsley’s job is to then interpret that to the design brief,” said Issenberg. “So we’re right at the cutting edge of knowing what’s happening and how the brands are going to be positioned.”

Accor Asia-Pacific itself has gained a new talent from the Movenpick acquisition. The chain has made Langdon senior vice president development Asia, pushing not just Movenpick but Swissotel and all other brands, a nod to the fine work he’s done with Movenpick in the region.

But with 19 brands in the Accor luxury and premium portfolio alone, will Langdon be as effective as when he had only the sole Movenpick brand to push? There are pros and cons, say hotel consultants.

“A single brand has the advantage of focus and a clear message, but there are also many opportunities which may not work in terms of style, size of property and location [including the issue of exclusivity areas]. Equally, it is possible that Movenpick may have been able to offer flexibility regarding contract terms as a standalone company than within a larger structure,” said Simon Allison, chairman and CEO of Hoftel, an association of hotel property investors.

Robert Hecker, managing director, Pacific Asia of Horwath HTL, said: “In general, being able to offer a variety of brands at varying product/price positioning levels is a huge advantage over someone in a position to only offer one brand. You’d get exposed to a lot more developers, potential owners and opportunities.    

“Yes, it will be harder for Movenpick as a brand to distinguish itself as one among a portfolio, that also includes similarly positioned brands, but I think that’s more than compensated for by the deal flow.”

Allison agreed. “The potential is enormous.  Accor has the largest pipeline of any brand in the Middle East and I’d expect a significant raft of deals in the months ahead in Southeast Asia, especially if Accor continues to deploy its balance sheet.”

The challenge for Accor will be having it all, and keeping its vitality too.