In an exclusive interview with Asian Hospitality, Accor’s Senior Vice President Dean Savas and Executive Vice President, Bernard Rudler, speak candidly about fair franchising, their ambitious plans for Motel 6 and their admiration for Asian hoteliers. They spoke with executive editor, Shailesh Solanki at the recent AAHOA Convention in Washington…
The economy is the topic on everyone’s minds. How is Accor performing and how are your franchisees performing?
Dean Savas: In regards to the economy there’s good news and there’s bad news. The Motel 6 brand is performing better than its competitors in the economy lodging segment, so that’s the good news. The bad news is we’re still down – it’s just that our deficits aren’t as great as our competitors’. We’re down about 10 per cent and I think the segment as a whole is down about 18 per cent.
Accor EVP Franchising Dean Savas
Would you like to comment on the other brands?
Bernard Rudler: It’s very difficult to talk about Sofitel because when you have a property in New York and a property in LA, the markets are so different. Overall, as far as market share, Sofitel is gaining some other customers, getting some other part of the market. In terms of going down, it’s more painful than in the economy business.
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Accor EVP, Franchise, Procurement North America
What are you doing to help franchisees in this time of trouble?
DS: This is a little bit in regards to our franchising philosophy: We have never looked at our franchisees and said, ‘This is what we’re going to do for our franchisees,’ or ‘we’re going to do this.’ We take more of an individual approach because to assume that every franchisee needs the same thing, I think is a little naïve as a franchisor. I’ve always said that I would get every individual franchisee’s problems or issues or environment and we work with them from that position. Someone may need more education or more training. Somebody else may have trouble with staffing while someone else may need marketing assistance – there are always different types of problems. Someone may need a little more time to pay their fees, and when we work with people we may even look into cutting their fees during a difficult time to make it easier on them till things come back.
Do you help franchisees who are having money problems and may need to restructure their loans?
DS: Restructuring loans is not what we do. But we’ve been known to do payment plans with our franchisees. Now, understand when I talk about franchisees I of course mean our franchisees who are in good standing with us. Someone who does not provide a good guest experience, someone who does not maintain their properties, someone who does not follow our pricing guidelines and doesn’t run their brand in accordance to the way we tell them to be successful and they come to us and say ‘I’m suffering’ – I have a problem with that. Now, someone who has good quality, who has no guest complaints, who does everything we tell them to do and still is having difficulty because their market is suffering – we look at them on a case-by-case basis and we work with them.
BR: We understand that in some cases, it is difficult for you. We do some payment plans for franchisees.
What does the Motel 6 brand stand for?
DS: That’s an interesting question. I would tell you that Motel 6 is the strongest brand in the economy lodging segment. There’s all the good brands in the upper scale or the midscale – Hampton I think is a very strong brand, and Hilton Garden. So why is Motel 6 such a strong brand? It is different than everyone else in the economy segment. We have a very specific pricing business model. Think about that – in the economy lodging segment, who else can say that? No one.
BR: And when I think what a brand can do for you, it’s have a strategy long term and to stick to this strategy. It’s not just during the high end that everyone had a temptation to give more and give more. You mention amenities – people ask why not add some amenities? But we say no – we are in the good days and what will happen in the bad days to come? And that is a long-term strategy. Let’s stick to the strategy – low price for the customers – and what the brand can do for you, have a strategy of what to do in different economic times.
Has the downturn affected your development pipeline at all?
DS: Absolutely. It’s affected our development in a certain way. Our development pipeline has not lessened, but it’s shifted. During the time when money was available and financing was available, we were doing probably 50-50 of conversion projects to new build projects – because, again, it’s economy lodging, it’s more of a conversion brand than a lot of midscale to upper scale are. Since the recession and since the difficult times, we have probably moved more to the 80 per cent conversion, 20 per cent new construction. There is still some new construction, but they’re few and far between.
By your estimation, when do you think there will be an upturn in the economy?
BR: We have two levels. First of all, stop to go down – that would be the first step. I think probably this summer will be the end of it, I hope. For the economy really to come back, let’s talk about end of 2010, probably. We’ll have two tough seasons, probably.
DS: I would agree with that. I think that coming back at the end of 2010 is the best-case scenario.
What percentage of your franchisees are Asian?
DS: Between 60-65 per cent.
What do you think are the strengths of the Asian community and how they’ve come to dominate the economy sector?
DS: The two things that come to mind are the work ethic and the family orientation. They’re probably as family-oriented as any culture I’ve ever seen. And that has really driven them to success in the sense that when someone in the Asian community is successful, they’re willing to share the success. That’s important to them. As a community, they’ve got the work ethic. But when they do well, they’re first idea isn’t to go off somewhere else. I believe that there are other cultures where as soon as someone does well, their first inclination is to leave everybody they know behind and not worry about the family.
So when you take a work ethic and a strong family bond and good business acumen – I think when you take all of them together, you have an opportunity to enter into an industry like hospitality and dominate it.