The furniture is inflatable and the tables are on wheels. Even the kitchen units can be swiftly moved aside if a party breaks out. There are guitars in the corner ready for an impromptu jam session, projectors hang from the ceiling, and the fridge is fully stocked with beer. There are USB points everywhere. There is even a smoothie machine powered by a bicycle for the health conscious.
The sleeping arrangements are casual – room prices start at €25 (£21) – and the centrepiece in a shared room is a round bed, large enough for 10 people. It is a hotel, just not as we know it. This is French hospitality giant AccorHotels’ latest venture – welcome to Jo&Joe.
The main communal area can be instantly redesigned to accommodate any mood – a dance floor, a dinner party, or a chill out session – and is proudly displayed in a showroom on the fifth floor of Accor’s headquarters in Paris.
It is a hotel concept designed to be as flexible (or perhaps indecisive) as it core audience: the millennial.
Despite running one of the world’s largest hotel empires with an array of brands to cater for all segments of the market, Accor has a limited offering for this large and fast-growing global consumer base.
Brands such as Sofitel and M Gallery offer five-star luxury for the business elite and indulgent leisure travellers. At the other end of the spectrum, brands such as Ibis are a more affordable option, while Mercure offers something in the middle.
But none of these are popular with millennials (born between 1982-2004). When travelling for business or pleasure, the majority of millennials choose not to stay in hotels. According to the Power of youth travel report, those aged 16-29 accounted for 23% of international travellers in 2015, and 78% would rather spend money on a desirable experience than a hotel.
Accor realised it was missing out on a major consumer base that is only set to grow – it has estimated that millennial spending power will be $336bn by 2020. It needed something to offer this generation, and to do it fast. Now the company has plans to open 50 Jo&Joe locations globally by 2020, and has established a lifestyle division specifically to manage this and other new brands.
Senior vice president of operations Cédric Gobilliard has been promoted to head up the new division and oversee its aggressive expansion plans.
A new customer
“The customer and what’s happening in the hospitality industry pushed us to either invest, or to create new brands, because the customer is looking for a different experience,” says Gobilliard.
Gobilliard was appointed to head the new lifestyle division at the beginning of this year. He previously managed the Mama Shelter and 25hour hotel brands at Accor, which have also been incorporated into the new division. Before that he was chief executive of Club Med in North America.
While Accor is the main funding power behind Jo&Joe, Gobilliard wants to keep the brand separate from the Accor name in order to create its own identity.
“We are very good at creating standout brands, but we don’t yet know how to protect small or specific brands, so we decided to create a special division and to let them develop alone without the power of the machine that is Accor,” he says.
Inside the millennial mind
To fully understand the millennial mind, Accor worked with a panel of under-35-year-olds and hired French sociologist Olivier Mokaddem to oversee the development of the model.
“This brand is all about experience, philosophy and feeling something different,” says Gobilliard. “It’s about relationships with people and mixing the local community and travellers. So we have had to redevelop and recreate the way that we operate hotels, which is something amazing.”
The interiors have been designed by London-based Penson, which counts Google, Jaguar Land Rover, PlayStation and YouTube among its clients. With millennials and their hunger for experience in mind, the communal areas and amenities are the main focus of the design rather than the bedrooms.
Gobilliard is keen to stress that Jo&Joe isn’t just for the under-35 brigade, however. “It’s millennial and millennial-minded – just because you are 40 years old does not mean that you are not millennial-minded,” he says. “We are not looking for just young guys, we are looking for people with a specific mindset. A bunch of the population do not think about hotels when they travel. By developing this product, we are trying to attract this new generation and new people to enlarge our customer base.”
The first hotel opens in May in the French coastal surf town of Hossegor. It will have 145 bedrooms and will be followed by sites in Paris and Bordeaux, due to open in 2018. Further hotels in Warsaw, Budapest, Rio and Sao Paulo are in the pipeline too.
Although the model will be replicated globally, each site will be slightly different to incorporate local culture, says Gobilliard. At Hossegor, Accor is working with surf brands Quicksilver and Roxy to make it a surf hub for locals, with a café, restaurant and shop to buy and hire surf equipment.
Jo&Joe is targeting sites of around 40,000 sq ft close to city centres with excellent transport links. Each hotel will look to cater for 100-400 guests, with prices for a bed for the night starting at just €25 (£21) for a shared room.
The sites will have a much higher F&B offering than traditional hotels, with bars and restaurants, which Gobilliard estimates could contribute 40-50% of all revenue.
“In terms of profitability per sq m, F&B is going to be key,” he says.
Part of the vision is that the hotels will become destinations in their own right, attracting both locals and tourists to the hotels for parties, bar nights, events, and affordable dining where main meals will start at €10.
“This is totally new for Accor – we want it to be somewhere you go for a nice dinner, a party, to see your friends, and we want to develop it as a destination.
“We have no choice but to evolve,” he says of the new lifestyle division. “Even with the more classic brands, we need to try to redefine the way that they welcome and treat their customer. The whole hospitality industry is changing, and it is not the same as it was three years ago.”
The AccorHotels lifestyle division brands
A combination of hotel, hostel and private rental formats to cater for the modern millennial traveler
A boutique hotel offering an urban living spaces and integrating people of all ages and backgrounds
German-based boutique hotel brand with a global expansion plan
This design-led hostel concept was sold in March by Patron Capital to Queensgate in a €450m (£395m) deal, showcasing the growing demand and appetite for the sector. There are currently 8,369 beds in the portfolio in London, Paris and Copenhagen, with plans to expand in the US. Queensgate plans to invest around €300m on acquisitions.
Dutch boutique hotel chain CitizenM is an affordable lifestyle brand which focuses on communal hotel areas while keeping the bedrooms small and simple. It is planning to double the size of its estate by 2020. It has eight assets in London, Paris and New York.
Cédric Gobilliard CV
- Jan 2017 – present: senior vice president lifestyle division, AccorHotels
- Jan 2016 – present: senior vice president operation Mercure Novotel, AccorHotels
- July 2009 – April 2015: Senior vice president global sales, AccorHotels
- 1999 – 2009: chief executive, North America Club Med
- 1995 – 1998: senior vice president sales and marketing, Disneyland Paris
- 4,100 hotels and resorts globally
- Operates in 95 countries
- Luxury brands include: Raffles, Fairmont, Sofitel Legend, SO Sofitel, Sofitel, onefinestay, MGallery by Sofitel, Pullman, Swissôtel
- Midscale and boutique brands include: 25hours, Novotel, Mercure, Mama Shelter, Adagio
- Economy brands include: Jo&Joe, ibis, ibis Styles, ibis budget
- Regional brands include: Grand Mercure, The Sebel, hotelF1
- Sébastien Bazin, chief executive
- Sev Boinet, deputy chief executive officer
- Guarav Bushan, chief development officer
- Jean-Jacques Morin, chief financial officer
- John Ozinga, chief executive officer HotelInvest
The group launched its ownership and investment arm in 2013. At the beginning of this year it was valued at €6.6bn. Under the leadership of Sébastien Bazin, the group reorganised its business model by separating HotelServices – its hotel operating business – from HotelInvest, which is its property arm. The group is currently in discussion with potential third party investors to take over the majority share in this division.
At the beginning of this year, it announced that it was planning to spin the hotel investment arm into a separate business to allow the core firm to expand. At the company’s recent investor day, the group said that HotelInvest would focus on Europe, with 86% within the region and 60% in European countries outside France. The sale has been given a target of mid-2017.
AccorHotels said that, between 2013 – when HotelInvest was created – and 2015, the profitability of the portfolio improved, with operating margin standing at 7.8% in 2015 (versus 4% in 2013), with the company describing HotelInvest as Europe’s leading hotel investor.