Good afternoon everybody. Oh my goodness, I think everybody left the room. Shall we try that again? Good afternoon. How are you? I'm great. Thank you so much for joining me. Terrific fun. I'm having an awesome time here at FII, and I hope that it has not only been stimulating and exciting for all of you, but of course very, very fruitful at the same time. After all, we are talking about business. So the reason we all gathered here is to talk about hospitality and the question of human capital and new markets, building human capital so that human capital too is future-ready. I could easily have that conversation by myself because we all travel quite a bit and we experience hospitality quite a bit, and we have our thoughts about hospitality. But I'm going to leave that to the experts to do so. I'm going to ask you in the room to please give a very warm welcome to the following gentlemen, and I'm the only lady, but hopefully next time there'll be another lady. So gentlemen, if I could ask you to please join me. Sebastien Bazin is the Chairman and CEO of Accor. Sebastien Bazin. Omar Al Hamami is the Group CEO of Orascom Development Holding. Omar here. And Manfredi Lefebvre d'Ovidio, the Executive Chairman of Heritage Group, and probably a legend in his own right. You can tell this is going to be fun already. All right, gentlemen, please take a seat.
Okay, so we all know that when we talk about hospitality, it's about people. Regardless of which touch point, whether you're talking about the front, the middle, or the back end, it's all about people. I want to ask each of you, in your respective businesses, how, if at all, are you thinking differently about human capital moving forward, particularly in the context of new markets which you may want to explore? So Sebastien, if I can start with you.
Sure. Good afternoon. It's an interesting challenge because it is a challenge. We have 340,000 employees under the brands of Accor. The biggest challenge we have is we lose a third of those people every single year. They go to a different brand or they go to a different industry. That means that we have to hire every year 140,000 people because, of course, part of this is the hotels we're going to be opening during the last 12 months. And we realize that we're doing it in 120 different countries with different culture, different language, different religions. Two-thirds of the people we hire every single year never finished high school, let alone went to university. And that two-thirds, of course, never had a job before. So we train 70,000 people a skill. We trained them how to interact, how to behave, how to progress, and it works all the time. It works in Nigeria, it works in Sri Lanka, it works in Vietnam. And it's kind of a miracle of our industry. Our industry is generous, warm, welcoming if you do pay attention for those underprivileged people because they didn't have a chance to go to university. It's not their will, it's just that they could not go. You realize that again they are the best asset. So regardless of we're going to talk about AI and technology, the beauty of hospitality: this is the only industry I think on the planet where we can welcome so many diverse populations and keep them hopefully for 20 years.
I'll tell you something later about the low-income middle... you're going to tell me something later. In fact, a little bit about the churn question, because you're saying that you want to keep them for 20 years, but I think all of us sitting here know that keeping hospitality people in the business for 20 years is a lot easier said than done. But we're going to come back to that a little bit later. If I can come back to you, Omar, same question: how are you thinking differently about it?
Well actually, it's really interesting to hear the numbers that Sebastien is talking about because the scale and the diversity is huge. We have a slightly different approach, and it's based a little bit on the nature of the business of Orascom Development, which is ultimately developing land into centers of life and very integrated communities across three different continents: Europe, North Africa, and the GCC. And the way that the company started 35 years ago from one founder and grew for many, many years as a family-owned business, and still today I think very much has that look and feel, a very special family environment. And so when we look at our churn levels and when we think about where we get people and how we recruit them, it's incredibly integrated in the communities in the towns that we build pretty much from scratch. And the level of loyalty, I would say, that people have and passion that they have for the company, for the management team, for the owner family, etc., is such that it actually increases our resilience from a churn perspective. And you know, it's easier of course for us to do because we're operating on a dramatically smaller scale; we're only talking about 10,000 employees in total. But still, I think it's something that's really interesting in those more emerging markets that we're in.
Manfredi, for you the same question. You thinking differently in a different space: you predominantly, not on land, predominantly on the waters. But the human capital question remains. How are you thinking differently about it?
Manfredi Lefebvre d'Ovidio
5:53 ↗
I'm very lucky compared to Sebastien. I'm not lucky because my business is much smaller, but I have two businesses. One is Abercrombie & Kent, which is made of 60 offices around the world and it has mainly river boats or camps in Africa etc. If you have a camp in Africa, the community will be very tied to that camp. We are the choice for them. We train them, we sustain the community, we help the community with other things in their life. So that creates a great bonding, and in general the people in our peripheral offices are of great loyalty to the brand, so very stable. The other experience which was very interesting to me is at a certain point I sold my cruise line which was Silversea, and I bought another cruise line called Crystal. I bought it out of bankruptcy, which means that everybody had been fired. So I sold my cruise line and I bought another one, everybody fired. When I bought the cruise line, 250 people from the offices or from the ships of Silversea wrote in the first week to come and work with us. And incredibly, 85% of the crew of the ships came back after one year. They came back. So they were affectionate to the brand. Why? We treat them very well, they were very proud of the product and so on. It's also a privilege of the cruise business that we bring people from remote destinations to work all over the world, and the kind of compensation that they get is very high compared to the life standard of their families. But even there, they prefer to come to work for us and other cruise lines because of the culture of the company. So treatment of human capital is very important, not only on the assets but also on the business, because if you change people all the time, you lose the culture of the business.
Well, exactly. So we come back again to the churn question. Two things on churn: when you are looking at a rate that is fairly high but you're upskilling in the process, the people who are going back into the system are better skilled, right? So you kind of reap the benefits of that investment on a broader scale. But you still have to upskill the new team that comes in. How are you thinking differently about the retention question if you are at all? And secondly, to Manfredi's narrative, when you are working in environments where you're finding there is higher rates of poverty, there is perhaps a lower economic performance, you find that for one individual you have multiple people who depend on that person. So the job question becomes important, but keeping a job when another one that is similar pays better is also more tempting. So you've got this push and pull factor. Sebastien, if I can come to you to address how you're thinking about that, and then Manfredi maybe you can add on to that.
Well, first of all, are we sad that they leave after three or four years? The answer is no. And the reason why we're not sad is any job in the world, don't ever kidnap that person. People are free to go. And we realize half of those people we hired feel stronger, better, greater self-esteem, more courageous, and they go because they probably did not like the hospitality industry. But they are very thankful that somebody actually showed them a hand and welcomed them. And the mere fact that we do it again and again every single year means I can provide a greater chance to a greater number of people. So we have absolutely no regret. The only thing we're trying to do to slow down the 33% is something which we call 'reveal talent.' Because if you come with no diploma, there's a glass ceiling after year five or six where they don't really... we don't offer you the job you might deserve. So what we do is we then ask and offer to those people to go to university at that time for a couple of years, for three years, which is under sponsorship from Accor. So the way to minimize is get them that chance to go higher up in the hierarchy with a diploma they never had before. For the rest, there's one thing which is paradoxical about the industry, and it's very much two sides of the same coin. Why do we exist? Why is it blessed? Our industry is great because it is all dependent on higher demography and higher emerging middle class. When I was born, the world had 3 billion people. In only 62 years, we had 7.5, and we're going to probably 10 billion. That's good news. We live and die on travel trade hospitality with a greater number of people. And the counter side of this in low- and middle-income countries, Southeast Asia, Sub-Saharan Africa, South America, we know today you're going to have a billion two new people between 14 and 24 years old looking for a job within 10 years. Only a billion two. And we know as of today we can provide them with maybe 400 million jobs. So 800 million will be on the sidelines. Many of them won't go to university. We need to respond to it. So as a curator of the industry, you have the two paradoxes: I'm blessed, but I need to respond for those who are actually under-blessed.
Yeah. Manfredi, if I can ask you for a brief response to the question, and then I want to come to Omar. If I can ask you just to respond a little bit about how you're thinking differently when it comes to retention and the push and pull of keeping your team, not wanting to hold them hostage but at the same time understanding that there will be a desire to move on depending on what their specific pull issues are.
I think that in our industry, we are one of the areas of the business which allows most osmosis between lower jobs and higher jobs. At least in the cruise industry and also in our businesses around the various continents, the amount of people that start in a low position and arrive in a high position is very high. So you have a number of persons who have entered on a cruise ship as a waiter, becomes a maitre d', becomes a head of hotel operations. They can make it. It's one of the incredible things of our industry, and that is one important thing which motivates people: 'I can have a career.' Another thing which motivates people is that it creates, especially in certain industries, my basic experience is a cruise industry, you have a very, very high loyalty of passengers, of guests, with the brand. When I acquired Crystal and the first cruise that they did, people were coming to me crying and saying, 'Thank you for having helped and saved the Crystal.' Very much affection. And affection is not only on the asset, 'I like the ship,' it's on the crew. So you have passengers who are affectionate to a brand, also and very much because of the crew that they will find. And the crew, they like to be part of the value of the brand. And so then the people, the guests come, 'Oh finally, you know me, this and that,' so it's a mutual thing. So you have the career path, you have the satisfaction of serving the people, and you have the other human factor which is our guests. I mean, loyalty, I think we all agree, is very important. If we can have people recurrently coming to our assets, and it's much better, and this is done very much also by the kind of service they will have and how they're recognized.
Yeah, yeah. Omar, I don't want you to feel like I'm neglecting you. It's not because you used to be a consultant. I'm not neglecting you. Let's just chat for a moment then about looking forward and this balance between profitability – they're all businesses, so you got to make money – but also this increasing ESG imperative, particularly on the question of sustainability, and how that has also a very direct impact on trying to find the mix that works for you, even with a unique model like yours.
Well, from our point of view, we were always designed by nature, if you will, to be incredibly integrated in the nature and the environment in which we are. Be it the physical environment, kind of the nature on the Red Sea, on the Indian Ocean, in the Swiss Alps, or on the Adriatic. That's one. But also in the social fabric of the places, which typically tend to be a few hundred kilometers away from large cities or capital cities in many of these places, where we actually have to make sure that we're fully integrated with the local social fabric and employ people in those places. So for us, this whole concept of ESG is frankly a backward-looking nomenclature on something that we've been doing for 35 years. And if I look, for example, at the economic impact that we have in some of those towns that we've developed, our towns in Egypt on the Red Sea near Hurghada, we've had economic impact that surpasses $500 million simply from the employment and the multiplier effect that you have on other economic activities, as well as FDI that you bring into the country and hard currency etc. to a country like Egypt that requires it. And I think this for us is this broader ESG which includes the social dimension, which is absolutely critical.
Yeah. If at all, how much pressure then is the – I won't say the advent because technology has just been improving, but as it improves and as it gets smarter and as we more integrate it into our businesses – how much of an impact is that having on again your thinking on the business broadly speaking, but more specifically in the context of this conversation, human capital?
I think in the context of this conversation, hospitality is always a high-touch, personal kind of experience. And where we're using a lot of the new technologies, be it AI or whatever, predictive analysis etc., is to figure out for this particular customer, for this particular family that's coming to visit us, what actually is all the stuff that we can take out to make the process much easier for them? All the overhead stuff: how do you do the check-in, how do you do the checkout etc.? All these not necessarily super value-adding moments. However, the actual touch when they require assistance on 'What am I going to do tomorrow morning?' or 'I have to have my baby taken care of somewhere' – that's where actually we're keeping the same number of colleagues working in our hospitality hotels etc. to actually serve our customers a lot better than we used to before. And I guess that's where this space is slightly different to what a lot of other industries are facing: there's only so much that you're going to be able to do in terms of efficiency before you still have to revert to the person who's either on the other end of your phone or who is on the other side of the counter.
