On 23 April this year, the board of Europe’s largest hotel operator announced the termination of its CEO’s tenure with immediate effect. Stories had been circulating for some time of tensions between Dennis Hennequin and Accor’s major stakeholders – predominantly concerning a lack of urgency on the CEO’s part in moving the group towards a more asset-light model – and events served to reinforce a sense of instability at the very top of the French hotel giant. His successor is under no illusions about the potential pitfalls of his new position.

"Taking into account what happened to my two predecessors, it’s a dangerous life," says Yann Caillère.

Hennequin had been in the role since 2011, recruited from his position as president of McDonald’s Europe, and Caillère represents Accor’s fourth CEO in eight years. To put that number into context, over the same time frame, IHG, Hilton, Marriott and Starwood have each undergone only one change in leadership.

To the point

In the Pullman St Pancras on a typically rainy London afternoon in late May, Caillère may be only a month into his tenure, but the new CEO exudes a sense of upbeat confidence and bonhomie: "We French were delighted when you moved the Eurostar here," he says. "Waterloo evokes too many bad memories."

"One of Caillère’s first moves was to compose a five-point strategy, framing it and his stewardship in the simplest possible terms."

Caillère has witnessed his fair share of warfare in recent years. Having joined Accor in 2006, he is being widely portrayed as a safe pair of hands, but his first few weeks in the hot seat have already been characterised by a sense of exigency and momentum.

"After a change like this, there is inevitably a degree of stress and uncertainty within an organisation," he explains. "It was essential that I explain to the team exactly what I expect of them from the very start. It helps that they know me; I’ve been with the company seven years, I’m almost 60 years old and it’s too late for me to change my ways. I usually get straight to the point."

One of Caillère’s first moves was to compose a five-point strategy, framing it and his stewardship in the simplest possible terms: "Three weeks to unveil and explain; three months to provide concrete evidence of the transformation implemented; and three years to meet objectives."

"It creates urgency and focus," he explains. "I need to demonstrate that there’s no time to waste and we’ll be moving fast. That’s not for my benefit; it’s the need of the group."

A cynic might say it’s specifically the need of a very vocal group at the top of Accor. Private equity firms Colony Capital and Eurazeo, which between them own 21.4% of the company and occupy four board seats, have been particularly frank regarding their desire to see the sales of assets accelerated. Successfully restructuring Accor’s asset portfolio is among Caillère’s five strategic goals, but he refutes the suggestion that it takes precedence over the other four.

"No single objective is bigger than the others and their success is interconnected," he explains. "If we fail to fully accomplish our digital and brand revolution or fail to firmly establish our positioning as a supplier of services for partners and hotels, we fail. The same applies for accelerating expansion and maintaining operating excellence. It’s like soccer; if everyone plays well, we win – we must perform as individuals and as a team."

Challenges and objectives

Caillère does not deny that Accor’s exposure to a still sluggish European property market makes the restructuring of its asset portfolio a challenge. He cites the March appointment of Gilles Bonnier to Accor’s executive committee as a clear indication of the group’s commitment to this process. Its new global chief asset and investments officer was formerly CFO of French real estate investment trust Gecina and is the archetypal poacher turned gamekeeper.

"Ten years ago, when we did a big deal with the French real estate company Fonciere des Murs, he was their guy," Caillère explains. "He’s now on our side, ensuring that everything is done properly. In order to hit our targets, we may have to reinforce teams with outside expertise – the digital side of things is another good example. Even as we roll out a €100 million savings plan, it’s important that we’re willing to strengthen any areas that need strengthening. Nothing should stop us from reaching our objectives."

Of course, investment is not required solely on the part of the operator. Caillère is in London to unveil the global repositioning of Pullman Hotels & Resorts, Accor’s upscale brand that has grown to 80 hotels in just five years. The plan is to have 150 by the end of the decade. Underpinning this process is an increased focus on style and design, reinvented F&B and greater use of technology.

"Even as we roll out a €100 million savings plan, it’s important that we’re willing to strengthen any areas that need strengthening."

Pullman was launched in 2007 to accommodate properties that did not survive the overhaul of Accor’s Sofitel stable. It was a process initiated and led by Caillère in his then role of brand CEO that saw a portfolio of 204 hotels culled to 92. The CEO calls the upscale and luxury segments "a key element of Accor’s strategy" and plans to bring its number of properties in this space up from 300 to 400 by 2015, but one wonders whether all Pullman owners will be willing to make the investments necessary to meet the new brand standards.

"Some might have to leave," explains Caillère. "When you become crystal clear with your positioning, it’s inevitable. However, there’s no comparison to be made with what we did with Sofitel. Here, our starting point is 30 hotels, most are former Sofitels and we don’t face the same legacy issues. Two or three might be removed from the network, but it will not be a question of slashing."

Interestingly, the St Pancras property where we meet was a Novotel until late-2012, highlighting the possibility for some of Accor’s stock to make the move up as well as down. In fact, on first visiting the London property in 2009, Caillère struggled to understand why it had been positioned in the mid-market and cites Hong Kong’s Novotel Citygate as another property with the potential for elevation. These hotels, he says, only serve to highlight the vast gap between the mid-market and luxury segments.

"It’s the story of Accor," he adds. "The group started with Novotel and then moved into economy with ibis. When I joined, I insisted that we needed to push into the upscale segment and that’s what accounted for cleaning the Sofitel network. But, between a Mercure or Novotel and a Sofitel, the room for positioning is huge. It’s an area where Accor was traditionally rather weak, but that is certainly not the case anymore."

The problem is that it’s a rather crowded marketplace, with IHG, Hilton, Marriott and Starwood already well established in Europe and the emerging markets that will account for the majority of Accor’s growth. Caillère believes there is one particular strength that puts the brand and the group at a real advantage.

"Unlike our competitors, we’re real risk-takers," he exclaims. "I’m an old guy and I’ve been in the hotel industry a long time. It still amazes me to see how easily hotels change the branding over the course of a weekend. Everything is a kind of brown and there’s nothing that really defines the brand. We take risks, we want our hotels to be instantly recognisable, and we feel able to do that because we know what it means to own hotels."

Setting standards

There is some irony in Caillère leveraging Accor’s experience as a property owner while in the midst of a concerted effort to shed assets, but there is also a lot to be said for an operator willing to lead by example. Accor holds the lease on its St Pancras property and has made the investments necessary for it to be considered an international flagship. Paris’s five Pullman hotels have recently undergone multimillion-euro refurbishments overseen by leading designers and architects, including Didier Gomez, Laurent Moreau, Christophe Pillet and Didier Rey.

The CEO cites the 2012 repositioning of ibis as a model for deciding on a direction, leading from the front and then executing group-wide. Although initial investment may come from the operator on its own hotels as it seeks to make the business case for change, Caillère also acknowledges that stakeholder involvement is essential.

"We took some of our owned hotels and treated them as pilot properties," he explains. "They set the standard. It’s only when we’re fully ready that we’ll take our partners inside, explain the model, outline the costs and demonstrate the potential impact to revPAR. With the ibis rollout, we took our time, it was a question of wanting to have all the figures at our fingertips before proceeding, but on getting to that position we moved very quickly."

Story changes

Mercure is next on the list, with the unveiling of its London flagship in late-June indicative of a move towards a warmer, more relaxed, accessible and localised feel for the mid-market brand that, at the time of writing, accounts for 732 hotels worldwide – currently averaging an opening a week, and with plans to have 1,000 properties within five years, that number will soon change.

"The starting point for Mercure was France," Caillère explains. "More than half our properties there are franchises, but we told them from day one what we wanted and implemented those demands into our own subsidiaries first. We may have been the ones initially spending the money, but our franchisees were very much part of the testing process. They had a lot of input."

"We take risks, we want our hotels to be instantly recognisable, and we feel able to do that because we know what it means to own hotels."

The approach clearly worked; 70% of the French network has already been renovated. As a non-standardised, predominantly franchised proposition, it is easy to understand why Accor sees such potential for Mercure’s rapid expansion. But what is the future of the group’s oldest brand, Novotel? Yet to undergo a similarly comprehensive repositioning process, does its traditional mid-market offering have a significant role to play in the future of Accor?

"In terms of revPAR potential, there is still a huge space between ibis and Pullman, but the challenge that midscale faces is that it must now stand for something quite different," says Caillère. "Before, it was all about being the best value for money, but that’s no longer enough. You need to tell a story. We must write that story for Novotel and a big part of it will be told through design, atmosphere and our F&B formula. We’re already testing some hotels – I can’t tell you where or the competition will turn up."

Caillère puts much of Accor’s ability to conceive and instigate these overhauls down to the reorganisation of its European operations from country-to brand-based teams at the beginning of the year, a move he led in his previous role as worldwide chief operating officer.

"People now look at their own markets and direct competitors, rather than being distracted by what’s going on elsewhere in the company or within segments that don’t affect them," he says. "We’re seeing the results of such an approach with Pullman and Mercure, and it will be the same when we’re ready to roll out the repositioning of Novotel."

These ideas may start in Europe, which accounts for more than 70% of Accor’s sales, but it is their introduction within new markets that will go a long way towards determining the success of Caillère’s tenure. Almost 80% of the group’s development pipeline is outside its home continent, a proportion that will only grow over the coming years.

Border control

One particularly interesting element of Accor’s geographical expansion is its marked willingness to adapt to new locales. While its traditional brands are all posting impressive growth forecasts in Asia and Latin America, last year’s launch of Grand Mercure Mei Jue and Grand Mercure Maha Cipta, upscale brands targeting domestic Chinese and Indonesian guests, respectively, is a marked departure from the cookie-cutter approach taken by a number of international operators.

"It started with our Asian team saying they wanted to open a Pullman in China, but with more of a local feel," Caillère explains. "We had to tell them that it’s not intended to be localised like that; it’s an international brand and everyone must feel at home.

"However, it did make us think that where there’s potential for targeting domestic markets with an upscale brand, and the market is big enough, we should be willing to look at the opportunity. Whether that’s the Middle East, India, Latin America, starting with Brazil, or possibly Africa, it’s certainly worth considering."

It’s an exciting thought and if the CEO is still in office making those calls at the end of his first three years, he’ll have fared better than his predecessor. Having emerged battle-hardened from a tumultuous period for the organisation, stakeholders will be hoping that Caillère can usher in an era of peace and prosperity that will only evoke happy memories for all concerned.