In April, Accor Hotels installed Jean-Luc Chrétien, the French hotel chain’s executive VP of distribution sales and loyalty, as co-CEO of Fastbooking, a seller of software to hotels, that it had just acquired.
With the new job, Chrétien entered a global fishbowl. All of the world’s major hotel groups, major online travel agencies, and most profitable independent hotels are now watching his moves.
The reason? His team at Accor is trying to gain leverage against the hotel booking conglomerates Expedia Inc and Priceline Group.
In an unusual move, it will put hotels it doesn’t own or franchise side-by-side with ones it does.
In September, Accor began to use Fastbooking’s technology and branding as a way to distribute rates and inventory from independent hotels on AccorHotels.com.
The service rejects the high commission rates of brands like Hotels.com and Booking.com for a model that may be more appealing to independently owned boutiques.
Hotels can list their properties on Accor’s website at a commission rate of 14% — lower than the more typical rates offered by many third-party websites. Hotels also receive full information on the customer, unlike what some OTAs and mobile apps offer.
The first independent hotels to appear on the system are all based in Paris. Tnooz found several in trial searches, such as Hotel De Nell and the Vic Eiffel, appearing side-by-side with Accor’s own brands.
Independent hotels are also given access to the loyalty program. Guests who stay at the non-Accor properties earn points that can be redeemed in the program — at a cost to the hotel of 5% on top of the commission.
For upscale independent hotels, Accor’s website and marketing muscle might be just the way, after a few years of soaring guest acquisition costs, to find sunlight.
Meanwhile at the other five largest global hotel chains, executives are interested in Accor’s marketplace, having also been staggered by the mobile-era wave of hotel reservation apps from third-party distributors, who threaten to chisel away at their profitable direct bookings.
Plus, the idea of a chain pairing its properties with other offerings may catch on more broadly if Accor’s example is successful. Will Hyatt begin offering short-term rentals thanks to its OneFineStay investment? Will Marriott present its vacation rental brand inventory more prominently and side-by-side with hotel rooms?
For both independent hotels and large hotel chains, maybe Chrétien’s team is pointing the way to the future.
Fastbooking is also simultaneously working on revving up the technical development of its original signature products: a channel manager, a booking engine, and other digital marketing tools.
The brand wants to expand its technical services to hotels in ways that overlap with the services of Priceline Group’s recently acquired a digital marketing service that it has renamed BookingSuite, and a rate-optimization service called Pricematch, among other competitors.
Fastbooking has 200 employees with teams with clients in more than 40 countries. Chrétien says it plans to hire 60 more technical people to its IT department by year-end.
Tnooz recently spoke by phone with Chrétien, who was at his Paris office. The interview was shortened and edited for clarity.
Tnooz: Fastbooking has been through a difficult last two years.
Jean-Luc: Yes. It needed re-capitalization to grow. Accor is providing that now.
Tnooz: How does Fastbooking stand out from competitors?
Jean-Luc: Fastbooking intends to help hoteliers create websites that convert more visitors and that acquire more visitors via search engine optimization and metasearch connections.
We lead in our capacity to stay close to its clients and to provide them with very efficient account management, our cutting-edge interfaces based on feedback from customers, our support of Sabre’s SynXis, and so forth.
Established in 2000, Fastbooking already leads in many geographical markets. We’re strong in Japan, for instance, where we connect to local channel managers and local OTAs as well as to global channels.
Tnooz: What role does the takeover of Fastbooking play in Accor’s new digital strategy?
Jean-Luc: A year ago we at Accor launched our five-year digital plan with an emphasis on investing in technology to speed up our capacity to adapt to a digital customer but also to reinforce and amplify our digital distribution. Accor’s CEO and team have set out our roadmap. …
A lot of our guests are interested in being able to access hotels in cities where we don’t have properties, or a density of properties. We aim to fill the gaps….
As part of the continuing thinking about how we can improve our position on the web, we wanted to launch a marketplace that offers a broader choice of hotels to customers. Fastbooking’s technology helps us lay the first bricks of the AccorHotels.com marketplace. …
We are starting with the 4,000 hotel customers of Fastbooking to recruit independent properties to the AccorHotels.com marketplace.
Another part of our interest in Fastbooking is that many of our individual properties need customized and optimized websites to support their local marketing strategies. We also needed to develop more and more enriched solutions behind connectivity.
So the acquisition also tightens and reinforces our capacity to deliver digital solutions to our own properties as well as to independents.
Tnooz: That’s a lot on your plate. What’s Fastbooking’s mission?
Jean Luc: Our mission at Fastbooking is to really make every independent hotel and every Accor property stronger in the face of the influence of online hotel agencies.
Tnooz: You’re worried about the large OTAs?
Jean-Luc: We must make sure that the travel agencies remain, I would say, reliable and good partners but not become so strong that they will dictate or will dictate even further more, the distribution strategies of hotels.
Tnooz: What is the global rollout for adding independent’s to Accor’s marketplace?
Jean-Luc: We have started in France, followed by Italy. We’ve just started this week with Spain and we are launching also the marketplace number.
In Asia we have just initiated the beginning of the marketplace customization, specifically in Bangkok and in Singapore. In those five markets we expect to add around 500 hotels by the end of the year.
Starting in 2016 we will open more destinations to the marketplace. We will open Germany. We will open Malaysia. We will open Indonesia.
Tnooz: What is the breakdown of staff by task at Fastbooking?
Jean-Luc: Basically Fastbooking is, I would say, a third of our employees is working on our tech platform, one-third is made up of account managers, and one-third is dedicated to recruiting hotels onto our hotel technology services platforms. The market managers’ job is also to visit hotels, to explain to them what benefits the marketplace can present.
Tnooz: Okay. What properties are you looking for? Can any hotel sign up?
Jean-Luc: The contract that we have and what we have announced around commissions, first of all, they are compact. We are recruiting in the marketplace based on certain criteria. It’s not open to everyone.
Our criteria include, of course, the quality and the category of the hotel. As we explained we want to have hotels which also complement the AccorHotels.com network. You might not be aware of it but 50% of Accor network is in the inexpensive category, so we are we are looking to expand the marketplace’s inventory of three, four and five star hotels.
We also want to fill in gaps in locations where we don’t have enough upscale properties, such as eventually in Venice, Rome, Naples, London, Barcelona, Valencia — all in due time.
We also want high-quality hotels, judged by things like their TripAdvisor ratings as given by customers.
Tnooz: What is the commission?
Jean-Luc: Once the hotels have been trained on the conditions on the contract, we have a commission of 14%.
Tnooz: A 14% commission seems high relative to Booking.com’s typical 17%-ish or TripAdvisor’s 10%-ish.
Jean-Luc: This commission is discounted if the hotel is already a customer of Fastbooking, because onboarding costs less for us then.
Tnooz: Okay.
Jean-Luc: Apart from that, our contract is very simple. There are no restrictions in terms of rate parity, for instance, because we know this is a touchy subject with all the online strategies, especially in Europe.
We are very cautious about imposing on them the kind of restraints that we might have with the online travel agents. We really are a complementary channel for them and the cost of receiving bookings through us is lower than what they would incur if they were working with an online travel agent.
Tnooz: How quickly can a hotel change its rate that it’s offering? Can a hotel manager change its rate and inventory for a particular night and it is reflected in real time or is there a …
Jean-Luc: We’re still onboarding. But in October, we will have a full interface. Hotels will be able to change their package on a daily basis if they wish to do so. I think it’s 10 October it’s going to be live. That’s for the marketplace.
What we are working also with Fastbooking, which is different from the marketplace, is that, in the beginning of 2016, we’ll have a new generation channel manager for our clients, which will enable them to not only manage their price and inventory but manage it very, very precisely by channel, by resort, by hotel.
For example, a hotel would be able to change inventory all the times they want based on their contracts and based on the platform, which is to take advantage of the evolution of the contractual negotiations between online agencies and hotels that are happening right now in Europe. That is also a strong innovation coming from Fastbooking for its clients.
Tnooz: We asked Guilain Denisselle, editor of trade news site TendanceHotellerie.fr and a hotel distribution expert, if there were any questions we should ask you. Here’s one: “Why does this distribution contract only work for B2C portals and not for the B2B Accor portal? Accor’s key business accounts are all complaining about its lack of inventory in Paris, which drives Accor to have higher rates than nearby competition.”
Jean-Luc: We stick to B2C for the following reasons: This is a B2C marketplace to reinforce our web platform proposition through a larger offer and propose to our partner hotels an additional direct channel so that they can be less dependent on the OTAs.
We maintain a clear distinction with B2B activities, which stay restricted to our branded hotels, who can benefit from the full scope of our distribution platform. This is not a cheaper alternative from our brand value proposition offered to franchisees and hotel owners. We do not use this to enroll hotels behind the Accor Hotels banner.
Tnooz: Denisselle had another question: “How can a hotelier complain about paying commission on value-added tax (VAT) when it comes to Booking.com’s or Expedia’s invoices, but does charge its commission on full price including VAT when working with independent hotels on its new platform? Instead of 14% on the full rate including VAT, 15% or even 16% on the rates excluding VAT would have shown the way to the industry…”
Jean-Luc: We just discussed this with the biggest hotel union in France. This is not an issue for French hotels as we are a registered French company and they can recover VAT. Which they can’t with many large players that are registered in foreign countries. They can for Booking through a cumbersome process as it is registered in EEC but not with Expedia, for instance.
Tnooz: Is there a brandjacking clause in the contract with independent hoteliers wanting to be on AccorHotels and, if so, what does that mean?
Jean-Luc: We have a clause telling the hotels that we could use their hotel name to reinforce our acquisituon campaign but we give them a clear possibility to say no (unlike OTAs). We are victims of brand-jacking, too, and we do understand this issue very well.
However we can aid those hotels that are not very active in their web protection. We also discussed this with independent hotel unions.
Tnooz: Okay. Back to my questions, and moving past the marketplace and focusing on Fastbooking’s traditional core products. You’ve noted that early next year you’ll introduce a revamped tool. What other changes are in store for Fastbooking?
Jean-Luc: We need more capability in the street, so to speak. We’ll be adjusting our market strategies and account management.
Apart from that, we have now, I would say, consulted with almost all of our clients on the new booking engine and we continue to develop that. We are developing a platform with APIs.
One of the things in which we are investing right now to capacity for our clients to connect to marketing platforms…. We’re strongly integrated with Sabre’s SynXis, unlike some other platforms out there….
We’re also innovating in our tools for distribution management. We’ll give hotels more flexible options for choosing how they want to allocate their inventory by various channels.
We’ll also be debuting enhanced web marketing tools, and we’re making it clearer to hotels which of their campaigns are the best returns on investment.
We are also starting to launch for them the capability to participate in targeting and re-marketing campaigns. Usually it’s not very easy for an independent hotel or for a small one to access the kind of technology so where is the packages to give them access to that and transfer their web marketing expertise.
Tnooz: What about revenue strategy?
Jean-Luc: In the second part of next year, we aim to debut a next-generation rate checker.
We have a rate compare tool like many other providers, but we will provide a new generation one which will not only help a hotel to compare its prices with its competitors or to check its comparability with third parties, but also will then optimize the rates intelligently based on market supply and demand.
That’s a very important matter for hotels right now — how to better manage their pricing strategies.
We are investing in developing a much better, I would say, a much more user friendly interface, with this tool than what else is on the market that these hotels have seen.
Then we are working also on the more long term projects that I won’t mention here but that will appeal to hotel clients.
Tnooz: Let’s say I am a hotelier. Why should I trust Accor’s Fastbooking?
Jean-Luc: First of all, Accor is behind Fastbooking as a financial backer but again, I would say Accor is not mingling with Fastbooking technology.
One of the main things that we are available to sell is that there is a Chinese wall behind the information that we use and that we gather and that we connect and that we share with our customer at Fastbooking and Accor. This is very independent.
Accor is also becoming one of our customers. Not the major one but becoming one of our customers.
Therefore we need to make sure that our technology is efficient, state of the art and continue to serve both our clients, but also our Accor Hotels clients. So we’re committed to making these products the best they can be.
Tnooz: Can Fastbooking compete? There are a lot of players out there.
Jean-Luc: Of course? We’re not just competing. We’re leading in many markets.
In terms of the market universally, you have basically two types of players. Local players, which are usually committed to one market, sometimes two. These guys have a good visibility. They are usually very good, not very expensive.
I would say Fastbooking is very competitive with these guys, pricing-wise for product set. What we pour right on top of our services is customer account management. We provide more than the technology. We are also providing our clients support. Hotels need consulting on strategy, tactics, and training staff to act on data responsibly.
I would say Fastbooking also has an edge in its international aspect. We offer a lot more connectivity than most of these platforms.
Then you have a large international platforms like your SynXis or like your TravelClick. Of course we are competing with these guys.
What can I say? Fastbooking probably is the provider that has most of the in-house tools. Some of our competitors have products that they have acquired from others and that might have been better integrated had they all been built in-house.
In terms of integration, the hotel wants to have a full integrated platform with a booking engine connected to websites and integrated with the channel manager. Seamless.
We are providing one of the best integrated solutions on the market.
We have demonstrated our capacity to adapt to local markets like Japan, like Indonesia, like Thailand and therefore we are, I would say, the capacity to customize and to adapt to local needs. In other words, we are a lot less standardized.
I would say we are a lot more human. We have a lot more human support that a lot of the smaller players and we are a lot more able of customization and adopting developments as some of our biggest competitors.
Therefore we are sitting in between the two and I think up to now we’ve been quite successful with our clients. We do hope, again, we need to increase and add more clients because that scale would let us lower cost of our services.
Tnooz: One of the main concerns — hoteliers have several concerns — but a main one is, how easy will this tool be to use?
We pride ourselves on having user friendly and easy-to-use interfaces. We have the capacity in one tool to manage the channel manager as well as the booking engine as well as the website. That’s what we work and strive to achieve, to get better with the user experience.
Tnooz: If hotels are already members of other affiliated groups like Leading Hotels of the World or other soft brands like Mr. And Mrs. Smith hotels, can they participate?
Jean-Luc: Yeah. What we don’t take on board for the time being is the top 50 international chains and hotels. But we’re happy to talk to hotels that belong to marketing alliances like Leading Hotels of the World, those kind of branding programs. If a property wants to join the marketplace and fit into our criteria of course, we will take them on board.
Tnooz: Okay. It’s quite a challenge that you have taken on.
Jean-Luc: Regarding the distribution landscape, this is part of our strategy of containment of the travel agencies.
Tnooz: How do you expect the industry to react to the marketplace?
Jean-Luc: I expect travel brands that sell products that aren’t hotels to come up with marketplaces that are analogous models to what we’re doing as a hotel chain distributing independent hotels.
I believe our marketplace model for distribution and marketing makes sense not just for hotels as a product. I bet you’ll see other examples in the travel industry soon.
CONTEXT:
Digital revamp at Accor: mobile first, buys Wipolo, runs hacks
Study: At upscale hotels, guest acquisition costs are devouring room revenue growth
Accor Hotels: How it’s adapting to mobile