Accor CEO: Anyone betting against hospitality is likely to be wrong

Woody, let's turn now to someone with a worldwide presence and hospitality and leisure and luxury. That's a core group. The hotel operator is the name behind 45 or so brands, including the Orient Express, Fairmont and Sofitel. They're near 6000. Properties are in 110 countries. They've got 1300 more hotels in the pipeline. Joining us for more is Sebastian Bazin. He's chairman and CEO of a core. Please excuse my French accent and welcome. It's good to see you. Your friends was perfect, my dear. Merci beaucoup. OK, She she came up with it. OK, what is going on with European economy? Let's start there. We just had an analyst downgrade the whole block saying the US looks more attractive. Right now. 44% of your rooms are in Europe. We just had those elections. Are you concerned about about risks there? Well, not really for my industry. Anybody. Maybe I'm going to be the outlier. Anybody who's going to be betting against hospitality is likely to be wrong because it's all linked to demography, emerging middle class, envy of travelling. We're going to have the Olympics in front of us. Who's going to be a fabulous moment in France. We have the European Soccer Cup playing in Germany today and I've been hearing your predecessors live on TV. We're doing just fine and we have occupancy picking up. We have pricing stabilizing and still actually very strong. And you know, I only a year ago people have been telling me we're never going to be able to cope with inflation. And not only did we, but we had great results in 2023, all of us. So just, it's all a matter of demography, emerging middle class and and we are travelling, so I won't bet against any of us. OK, What about your US properties? How are those looking? Actually pretty good. We are in pretty great cities like Philadelphia, NY, Washington. We are in the three to 5% growth, actually less so than we could be in Middle East, which is way above 20%, less so than Middle East, which is way above 10%. Northern Europe is fragile, Southern Europe super strong. Italy, Spain, Portugal, South of France, Omed, they're still very strong. So we're looking for pretty good summer season. We're up compared to last summer season, which was already very strong. So now we, we, we not blind optimistic, but we have some good data in front of us. 20% growth in the Middle East is, is super impressive, not least given some of the turmoil that they're going through right now. You mentioned the southern Spain and Portugal, areas like that. Who is fueling this growth, especially the really rapid high growth we've known in many past years. It was often Chinese travelers. Is that still the case or is it different parts of the global population? Well, it's been Chinese travelers being 150,000,000 traveling in 219. They've been down to 40 million last year. I've been out in China last week. We're betting on probably 80 million of them being back at the end of this year, which is twice the numbers of last year. A lot of Indian travelers coming for the first time still a lot of Americans going to be traveling here for the summer, mostly in the southern Europe and in Greece. So it's coming from all over the world, including from the Eastern Europe countries. So it's, it's a very different mix that English still been traveling. So it's you just need to be at the right place with the right brands. You said something interesting though that Indian travelers are starting to kind of be a bigger force for the first time. Does that change? Do they have different kinds of travel preferences or experience or seeking out the maybe the Chinese or other populations or are they just a new motor of growth for you? You have the third of India is emerging middle class which was not the case five years ago. And you know what they have today is capacity to travel. Indigo airline which is 60% market share, largest airline in India has opened 30 international hubs from Seychelles in Singapore, Bangkok and of course Middle East. So they have capacity to travel. They have a way of travelling and they have an envy to discover the world and it's only 14,000,000 Indian travelling today. Count five years and they would be well above 100 million of Indian travelling trying to pair with the Chinese and the Americans. So India is the biggest bet for each of us in terms of welcoming new travellers. So as we're debating here, the kind of what's going on with the consumer over the next 6 to 12 months, would travel slow down before a broader slow down we're coming or would you have early warning signs you think or? No, Yeah, we have early warning slide in turn about slowing down in price. Pricing is not increasing as big as they were a couple years ago. But I guess you just have to basically compare only one thing which is critical. You have a demand in the world of people traveling probably growing between 5 to 7% every year for the next 20 years. It was 3 to 5%. The last five years supply is extremely slow between 1 1/2 to 2%. So you're going to go for the next 20 years three times the man of a supply from the last 20 years was two times the man of a supply. So what you need to really watch is the number of new hotels being actually built and those are very minimal because of cost of construction, interest rate and there is being taken by investors. So those who have the greatest market share, Myriad, Hilton, Hyatt, Accord, the world do benefit from the pace in demand and actually slower growth of supply. Sure. Although as I mentioned, you still have some hotels in the pipeline. Let me ask you as a final question, what you think about Airbnb. It came on the scene in such an explosive way and changed a lot of people's travel habits potentially for good. But there are some of us who might say, you know, after doing it a few times, maybe there's something to be said for the traditional hotel experience. Well, just please say that to everybody next to you. Do I? I think I think we've been able to cope with one another. Seriously, it's the same travelers. Anybody's going to go for four or five days with more than four or five family members or friends, like he's going to go for Airbnb, which I don't like, but they are. And the same person is going to go for less than two nights. Less than two person will not go to Airbnb, would stay in a hotel. So we we're not enemies of one another. We just have to cope. And I just have to do a better job of seducing those group of five people for five nights and better stay with us because we probably can offer them the ability to meet somebody in the bar, the restaurant, the local community, which you cannot do if you go to an Airbnb flat because you don't meet anyone. So just welcome to my world. I'll actually get you the cross cultural experience that I guess you're looking forward to get. I think it was, you know, one late night in, in, in, you know, in Eastern Europe and I couldn't get in. And, you know, now that now it's so expensive and, you know, it's nice to have the housekeeping. Anyway, I don't have to tell you. Sebastian, thanks for joining us today. We appreciate your time. Well, thank you for inviting me.