Comprehensive Strategic Analysis Report: Accor Hotels

This report provides a comprehensive strategic analysis of Accor Hotels, a major player in the global hospitality industry. It begins with an introduction to strategic analysis and its importance for organizations. The main body of the report delves into several key frameworks and analyses, including the VRIO framework to assess Accor's resources and capabilities, a SWOT analysis to evaluate its internal strengths and weaknesses and external opportunities and threats, and a PESTLE analysis to examine the political, economic, social, technological, legal, and environmental factors affecting the company. Furthermore, a financial analysis is undertaken to assess the company's performance. The report concludes with a summary of the findings and recommendations for Accor Hotels, offering insights into its strategic positioning and future prospects. The analysis covers factors like occupancy rates, loyalty programs, sub-brands, government regulations, and the impact of online business.

STRATEGIC ANALYSIS

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Vrio framework...........................................................................................................................3
Swot Analysis..............................................................................................................................4
Pestle Analysis.............................................................................................................................6
Financial Analysis.......................................................................................................................8
SWOT Analysis.........................................................................................................................11
CONCLUSION..............................................................................................................................11
REFERENCES................................................................................................................................1

INTRODUCTION
Strategic analysis is the process that involves researching the company's business
environment within which it operates. Strategic decisions are essential for the organisation so
that smooth operations can be carried out. With the help of strategic planning, the aims and
objectives of an organisation can be achieved in an effective manner. The present report is based
on Accor, a French multinational hospitality company that manages and franchises resorts,
holidays, and hotels as well as operates in over 5300 locations in over 110 countries. In addition
to this, the present report will discuss external and internal analysis of the company in order to
know about the factors which may affect the performance of the organization. Lastly, it will also
discuss the financial position of the company.
MAIN BODY
Vrio framework
Accor hotels try to achieve higher customer satisfaction to maintain their goodwill and
earn profits in the long run. Company has smartly accumulated the resources with the alignment
of strategies that has helped in providing the customers with great ambience. The company has
implemented digital techniques by which the records of the customers are being maintained. The
demographics of the customers are recorded in the database with their respective preferences and
choices. Various techniques are applied for evaluation of this database to extract useful
information (Vlados, 2019). Tracking this information, the company gets input in the strategical
process. These inputs are used as the basis for targeting customers and the strategies are
formulated accordingly so that the customer serving techniques can be enhanced. Use of digital
techniques also includes collection of feedback from the service user through various digital
platforms. This feedback is used along with the outcomes of the evaluation, which helps the firm
to recognise the areas that need improvement.
The development of such areas in the organisation helps them in maintaining continuous
growth and maintaining customer satisfaction. Moreover, the database comprises the information
of customers regarding their social media handles, which is used by the organisation to market
their products and services. Professionals in the marketing department advertise the company's
services to the customers according to their preferences. This helps in saving the cost of
advertising that is incurred on the irrelevant customer base. Facebook, instagram and twitter are
the social media platforms which are availed by the organization to reach their customers. The

data collected through this technique is used to enhance the digital campaigns of the firm in more
than 100 countries.
Value
Use of digital technology adds up to the services provided by the organisation to its
customers. Perfection in every aspect of business is achieved by the use of this technique. This
makes it easier for the firm to formulate strategies and make decisions that can lead them
towards greater success.
Rarity
This technique is not widely used in the hospitality industry. However, the giants in the
sector use such techniques, but the competitors operating at a smaller level are very less familiar
with such methods. The industry is highly influenced by such small businesses as they cover a
larger portion of the sector.
Imitability
Somehow, this technique is highly imitable as there is an increasing awareness of the use
of social media nowadays. Many big firms in the hospitality industry have already incorporated
digital marketing techniques into their business. Ease of access to this technique makes it more
viable for the competitors of the firm and reduces its rarity.
Organization
The information collected in the database is analysed with various methods. The outcomes
of the analyses are used in the alignment of resources with the strategies to achieve the
determined goals. Staff are directed to act according to the preferences of the customers and to
increase their satisfaction. Human resources and other resources are accumulated with the
strategies that make it more viable.
Swot Analysis
Strength
Occupancy rate
It can be seen that the firm has achieved success in gaining higher recognition in the
market. This helps in attracting new customers. This is due to the better services provided by
Accor that have resulted in achieving a higher retention rate of customers. Thus, the occupancy
rate increases.

Loyalty programs
Accor hotels have introduced a very lucrative way of getting customer loyalty. The
loyalty programme is where the customers can earn points by availing the products and services
of the firm (Teoli & et. al., 2019). These points can be available in the form of discount
coupons. This helps the firm retain the customer’s loyalty.
Weakness
Overemphasis on sub brands
There are many sub-brands of the organisation that have overshadowed their originality.
These are some hotels that are named differently and have gained strong recognition in the
market. Many of the customers barely know that the origin of these brands is Accord. This
overemphasis has affected the profitability of the outlets that are referred to by the original name.
Less focus on each franchise
The organisation has flourished in many parts of the country with numerous outlets. It
has been noticed that the management is unable to give focus to each of the outlets. Moreover,
greater focus on the outlets with good growth has impacted the ones with less growth. This has
resulted in decreased profitability for the firm.
Opportunities
Destination wedding
Nowadays, there is an increasing trend of destination weddings, which can give
unimaginable profits to the firm. The demand for hotels providing an ambient experience has
increased in the past decade. This opportunity can be grabbed by the firm through making
changes in the infrastructure and the ways of serving customers.
Private villas
Group travellers prefer to stay in villas rather than hotels as it provides a more
comfortable and private space for them. A company can deal in this area and can provide
accommodation in villas in the region with higher environmental significance. This can
introduce diversification in the customer base of the firm.
Threats
Government regulations

Due to the global operations of Accor, the company needs to comply with different rules
and regulations of the respective countries. It is harder for the firm to work according to different
regulations. Various laws threaten the existence of the firm if they are not thoroughly followed.
Government policies bear a higher risk to the profitability of the firm as they restrict the business
operations to a certain limit. A new law related to property majorly impacts the firm.
Business online
The higher shift of customer preference towards the online services provided is impacting
the business of Accor(Benzaghta & et.al., 2021). Firms like Oyo have diverted the demands of
customers towards them. This level of competition jeopardises the organization's profitability
and forces it to constantly improve its services in order to remain competitive.
Pestle Analysis
It is known as a strategic tool that helps organisations know about the factors that are present in
the external environment and the way they will affect the overall growth of the company.
Political: This factor consists of political rules and regulations made by the government and may
also affect the performance of the company in both negative and positive ways. Along with this,
the administrative division has an essential impact on the industries and companies, as well as
the purchasing power of customers, which also affects the company's sales (PESTLE Analysis of
Accor , 2020). Pandemic restrictions like lockdown policies from the government have affected
the growth of the organisation as the hotel industry was closed and it was specifically used for
the purpose taking care of COVID patients (Kara, (2018)). Due to restrictions on trade, the
company was not able to have customers from other countries which has severely impacted the
profitability of the firm in negative way. But now many countries are trying ease the lockdown,
which will directly contribute to maintaining the profitability of the hotel industry and increasing
their revenues.

Economic: Before establishing a hotel in a specific country, it is important for organisations to
check the economic condition of that country, as economic factors may affect organisations in
direct or indirect ways. It consists of factors like GDP rate, inflation, growth, and interest rate of
the country. Although Accor hotel is luxurious company, it should focus on countries that have
people with high disposable income so that customers can easily afford its services (Strategic
PESTLE Analysis, 2022). Moreover, having a stable economic environment is crucial and it is
important for the growth of hotel industry. Due to the pandemic many countries have poor
GDP rates and very low interest rates. Loans are also available at cheaper rate. Thus, this is one
of the best ways to expand business, as credit is available at low rates.
Social Factors
Accor hotels are well known among international visitors and hotel finance is affected by various
social factors like consumer lifestyle, demographics, population growth rate, gender etc. With the
increase in income of the customer, they will increase people's spending on luxurious items. Due
to the pandemic there has been a change in taste and preferences so most of them like to prefer
to stay at home (Arafat, (2018)). The social gatherings have been avoided by the customers, so
events at the hotel have been closed, which has impacted the growth in a negative way. In order
to increase the growth of the organization, it can make use of new services as well as innovative
products in order to attract customers.
Technological: There has been continuous enhancement in technology in today’s competitive
world, so a company has to keep up with the changes so that it can meet the tastes and demands
of the customer and keep up with competitors (Roy and Chowdhury, 2021). Along with this,
technology is necessary for improving the value of the organisation and offering the best to the
customer. Adopting technology that disrupts the industry as it will reduce costs and also enhance
the customer experience. Moreover, after the pandemic, there has been an increase in
digitalization, and hotels should accept all types of payments so as to cope with the trend of
business. Due to the increase in use of social media Accor hotel website has helped customers
book rooms anywhere at any time at their convenience. Although hotel booking systems are
becoming sophisticated, this factor can be overlooked by businesses.

Legal
The laws and regulations of the country do affect the operations of hotel industry in both direct
and indirect ways. Along with this, Accor hotels have to follow employee laws, customer laws,
and various other legal frameworks in order to protect themselves from various suites (Gul, Gani,
Govender, and Bux, 2021). The motive behind following such rules and regulations is to not
invite the intervention of the government and NGO’s in the work of business. However, legal
factors are mainly related to political factors, and Accor should have a close look at the company
law of the country in which it is operating. Nowadays, various countries have implemented new
laws related to COVID-19 like maintaining social distance between customers and sanitising
hotel areas so that disease does not spread. However, following such rules can increase the cost
of operation of the hotel and majorly impact the profitability of the organization.
Environmental:
Nowadays, people have become more interested in protecting the environment from hazardous
substances. They keep an eye on hotels which follow CSR provisions like waste management
and their contribution towards the development of society and pollution of the environment. One
of the most serious threats to the hotel industry is climate change (Graham, 2018). However,
various countries have different norms on environmental protection rules, which can impact the
profitability of the company in those markets. Following CSR policies results in enhancing the
goodwill of the organization, and it can be beneficial to the hotel industry in the long term.
Financial Analysis
The financial analysis of Accor hotels can be evaluated by analyzing two years financial
statements i.e. 2021 and 2020. The financial statement includes income statement, balance sheet
and cash flow statement. The accounting ratios are calculated for evaluating financial
performance of company and the ratios that are used are liquidity ratio, profitability ratio,
solvency ratio and activity ratio.
Liquidity ratio

The liquidity ratio is used to assess the company’s cash position i.e. whether company is
having enough cash for repaying short term debts and working capital requirements (Megaravalli
& Sampagnaro (2018)).
Current ratio
This ratio is used for comparing company’s current assets and current liabilities. Current
ratio can evaluate whether company will be able to repay its debt within next twelve months. The
ideal ratio is 2:1 and the formula is-
Current ratio= Current assets/ Current liabilities
2021 2020
Current assets 3079 3684
Current liabilities 2635 2934
Current ratio 1.17:1 1.26:1
It can be evaluated that the current ratio of company has decreased from 2020 which
concludes that company there is a decrease in ability of company to repay its short-term debt
however the positive current ratio indicates that company is still capable of repaying its current
liabilities.
Quick ratio
It is also known as acid ratio and it is more cautious approach in determining company’s
short-term solvency.
Quick ratio= Quick assets/ current liability
Quick assets= Current assets- inventory
2021 2020
Quick assets 3070 3663
Current liabilities 2635 2934
Current ratio 1.16:1 1.25:1
The quick ratio of company is decreasing which shows that company is required to
improve its ability to quick assets to pay off its current liabilities. The quick ratio of company in
2020 was 1.25:1 on the other hand ratio of 2021 is 1.16:1 which indicates that company’s ability
to repay current liability is decreasing or getting weak. Company is required to strengthen its pay
off ability by effectively using its quick assets.
Profitability ratio
Profitability ratio is a financial indicator which is used to assess company’s ability to
create earnings in relation to revenue, operating cost, assets and shareholder’s equity (Miransyah
& Dempo. (2021)). The higher ratio outcome indicates positive and better position of company.

Profit margin
This ratio is used to evaluate company’s overall profit and it will be easier for company
to compare it with its competitors. This enables investor to know how much profit is being
generated by company through revenue.
Profit margin= {(revenue- operating expense+ non-operating income -interest expense- tax)/
Revenue} *100
2021 2020
Net profit 90 (1990)
Revenue 2204 1621
Profit margin 4.08% (122.76%)
The table evaluate that company has an increase it its net profit and there is a positive
ratio in 2021 in comparison to negative ratio in 2020. The positive ratio is due to increase in
revenue in 2021 from 2020 and this ultimately result into increase in net profit. This shows that
company is moving towards better financial position by enhancing its performance.
Return on asset
Return on asset is calculated to evaluate and analyze how profitable organization’s assets
can generate revenue.
Return on assets= Net profit/ Total assets
2021 2020
Net profit 90 (1990)
Total asset 10669 10553
ROA 0.84% (18.86%)
The profit margin of company has increased by 19.7% as the total asset of company has
increased by 1.1% and the net profit has also increased. Accor’s assets are able to generate
effective revenue for company and this leads to enhancement in company’s financial position
and performance in comparison to last year.
Solvency ratio
Solvency ratio is calculated to evaluate the capacity of organization to satisfy long term
obligations (Baraja & Yosya (2019)). This assess the financial health of company i.e. whether
company has enough cash to pay off its long-term debts.
Debt to equity ratio
This ratio gives a view regarding the company’s dent and equity ratio. Higher is the ratio
there will be higher risk of default. This evaluates how much debt can be covered by equity.
Debt to equity ratio= Debt/ equity

2021 2020
Debt 6121 6393
Equity 4549 4161
Debt to equity ratio 1.35 1.54
The table reflects that company has decline in debt to equity ratio which is due to
decrease in debt of company. The higher ratio indicates that company is expanding its business
using debts. The increase in debt indicates greater financial risk.
Activity ratio
Activity ratio is calculated to analyze effective utilization of company’s assets in
generating revenue and cash or bank balance (Kurniani (2021)).
Total asset turnover ratio
The ratio is used to evaluate how effectively company’s assets are utilized for generating
revenue. The low ratio indicates that company has difficulty in moving its products and
generating revenue.
Total asset turnover ratio= Net revenue/ net assets
2021 2020
Net revenue 2204 1621
Net assets 10669 10553
Asset turnover ratio 0.21 0.15
In terms of asset turnover ratio, company has an increase in ratio from 2020 as there is
increase in revenue as well as net assets of company. The net asset of Accor hotel in 2020 and
2021 are 10553 and 10669 respectively. An increase in asset turnover ratio indicates that
company’s assets are effectively and efficiently utilized for generating revenue.
SWOT Analysis
SWOT analysis is a tool that is used to evaluate internal environment of organization which can
have an impact on business and its operations. The SWOT analysis is used to assess strength and
weakness of Accor to understand the areas of improvement for enhancing performance of
company. The opportunity and threats identification can enable company to take advantage of
opportunities by linking the same with its strengths and weaknesses and take corrective actions
to mitigate loses that may incur due to threat.
Strengths
 Having worldwide business i.e.
company is top operating brand
worldwide.
 Company has shifted to asset light
Weaknesses
 The increase in globalization and higher
level of competitors in hospitality
industry.
 The company is catering in all segments

operating system
 The online sales and adaption of latest
technology and digitalization
which makes it difficult for customers to
relate hotel as brand.
Opportunities
 Sustainable and inclusive growth has
developed good image of company
(Benzaghta and et.al. (2021)).
 The growth in hospitality industry has
given opportunity to company to
expand its business in different
countries.
Threats
 High competition demands for
continuous innovations.
 The global economic condition may
impact sales of luxury segments.
CONCLUSION
From the above report, it has been concluded that there are various factors affecting the
company's growth in negative and positive ways. Also, various models have been used in the
study, like VRIO for analysing the competitive environment, as well as SWOT and PESTLE
strategic tools for evaluating external and internal environments. Moreover, the study has also
summarised the financial status of the company.