Serial 3: Peter Verhoeven, Managing Director, ACCOR Germany


PETER VERHOEVEN
MANAGING DIRECTOR, ACCOR GERMANY


Interviewed by Lily Lin

INTRODUCTION
 
Peter Verhoeven holds an MBA from INSEAD (European Institute of Business Administration) and graduated in Hotel Administration from Hotelschool The Hague.  He has an extensive experience in the international services industry. Peter began his career in operational positions at Golden Tulip International in Africa and at Gran Dorado (now Center Parcs) in the Netherlands.  After spending ten years at Disneyland Resort Paris in senior leadership roles, such as Director of Business Solutions (Marketing, Sales & Business Development), he joined Avis in the United Kingdom as Group Director of Sales for Europe, Africa, Middle East and Asia.  In 2007, Peter began with ACCOR Hospitality as Managing Director in the Netherlands.  Since July 1st, 2009 Peter holds the position of Managing Director and Chief Operating Officer (COO) of ACCOR Germany.  ACCOR is a French multinational corporation, part of the CAC 40 Index, operating in nearly 100 countries.  ACCOR has more than 4,000 hotels worldwide, ranging from economy to luxury.   ACCOR Hospitality Germany has an extensive network of 325 hotels, with well-known names such as Sofitel, Pullman, Novotel, Mercure, ibis, etc., enabling it to cater for all tastes and budgets.

To make the interview more interesting and give it a personal touch, the interview questions are a mixture of RM-related business questions and questions that project the human side of the interviewee.  Questions are divided into five categories:

A.     Education Background & Career Path
B.      Perspectives on the Hotel Industry
C.     Perspectives on the Company
D.     Management Advice from the Interviewee
E.      Personal Reflection & Aspiration

INTERVIEW:
 
 Peter, I first met you in 2008 shortly before I developed the revenue management course for the Hotelschool The Hague.  I tried to pick your brain then so that I could develop a revenue management course with an industry perspective.  I had the impression that you were --- and still are quite interested in education.  Why is education important to you?
When you choose the hospitality business, you choose to work with people.  When I was studying at the Hotelschool The Hague I was very young.  I can remember how insecure I was.  At that age many choices you make will determine your life.  At the same time, when you are young there are many things that you don’t really know.  I think it’s our duty to guide young people.  Besides talking to students from the Hotelschool The Hague, I also talk to students from other schools.  I enjoy being with young people helping them with advice.  That’s why I like education.

What subject or course you took during your studies that you find most helpful in shaping your career?
Working on assignments together with other people.  You need to work together and it’s not always easy but that’s life!  In terms of subjects I enjoyed financial management and statistics.
I did notice that there was a difference in my attitude towards study.  When I graduated from Hotelschool The Hague, I was only 22.  I started MBA at INSEAD when I was 30.  Eight years of working experience really made a difference.  I could better relate to my professional experience.

The current economic situations in Europe as well as in the US do not look promising and forecasts for the next couple of years also look rather deem.  In your view, how would this influence hotel business in Europe and worldwide?
I believe we all know the hotel business is a cyclical business.  With the current economic situation, will it influence the core of the hotel business?  It probably won’t.  Forecasts are not always accurate, and it’s difficult to predict the future. Of course there are some indicators.  However, if you look at the OECD’s 2009 statistics and compare the GDP in Germany with the actual results, there was a four-percent gap.  So much for forecasting …..
The question is: “Will governments be able to help spur demand by offering conjuncture packages?”  The answer is probably not --- due to the high level of debt incurred in the last three years.  The good news is that many companies in Europe deleveraged during the last couple of years.  Therefore, they are more “cash-rich” and are better prepared for the economic crisis.  But it is very difficult to predict: if you look at 2009 in Germany, it was a bad year; 2010 was a good year and 2011 was good so far.

Is it possible to have a winning strategy to offset the poor economic outlook?
Every crisis creates a strategy.  For example, the franchise business is more popular with entrepreneurs during difficult times because franchisees need a brand to build their business.

Are you willing to reveal what would be your winning strategy?
The core strategy does not change – we aim to remain as the world’s largest hotel operator.  We also want to lever and strengthen our brands and expertise to achieve a strong EBIT as well as return on capital employed, and at the same time, pursue growth worldwide.

You have not only extensive hotel management experience; you also worked for Avis, which is a car rental company.  What are the major differences between hotel business and car rental business?
If you look from the perspective of revenue management, car rental business is more complicated because you have a moving inventory.  It is tougher to manage revenue because car rental can be commoditized much easier .  But the main approach and the metrics in revenue management still apply.  In hotel business there are much more opportunities for differentiation.
  
What is your vision for ACCOR Germany?
Our vision is to remain the market leader in Germany and keep expanding.  We have now 325 hotels, of which 80 are franchisees.  We want to be the largest hotel operator and the most profitable one.  We are now opening one hotel a month and we are aiming to have two openings a month.  Approximately 75 percent of our development will be done through franchising and management contracts and 25 percent will be done in subsidiary models.  <A subsidiary is a business entity that is controlled by a separate higher entity, often called a corporation or a company.  A subsidiary can be either partially owned or entirely owned, known as “wholly-owned subsidiary”.> 

Is the franchise business profitable?
Yes, it is --- and it gives us multiple advantages.  It gives us market presence and is an important factor in continuing to strengthen our brand by creating intricate networks.  This, in turn, helps to increase our value.  Market presence and brand awareness also help to attract and retain young people working in our industry --- the battle for talent is really out there.  But most importantly, franchisees are savvy entrepreneurs, who are knowledgeable and on top of the opportunities in their market.  They are the key in accelerating our development.  

Do you face difficulties in controlling the franchisees?
The bigger you grow the more complex the business becomes.  When dealing with franchisees, it helps to have clear rules, quality standards as well as a more formal organization of auditing.  I believe that having franchisees really benefit us as a company.  It keeps us on our toes.  The franchisees are entrepreneurs; they really want to succeed in their business.  They are the first to come up with suggestions and to implement innovations.  This arrangement is mutually beneficial.

Can you give a short description of your company’s organization reporting structure?
I am the head of ACCOR Germany but of course I have a team to cover the management of the network of 325 hotels in Germany.  I have nine employees reporting directly to my Direction Committee, which includes:  three Operational Senior VPs (one for Eco brands, ibis and Etap, one for Mecure, and one for Novotel and Pullman), a Senior VP of Commerce , a Senior VP of Finance, a VP of Human Resources, a Director of Legal Affairs, a Maintenance and Construction Director, and a PR and Communications Director.
Furthermore, we meet with other dedicated Committees to advance on strategic important subjects, such as development and asset Management.  At the same time, each functional or operational member of my Committee participates in international group initiatives to strengthen our functional expertise and to develop our brands.  The balancing act is to stay both relevant and efficient locally --- and at the same time show initiatives and share best practices at the international level within the ACCOR organization.

As the Managing Director and the COO (Chief Operating Officer) ACCOR Germany and as you go through your daily routine, what concerns you the most?
I am very concerned with communications within the organization.  In my experience it is even more evident in crisis situations.  You want to ensure that there is trust between you and your team, and this can only be achieved by regular and open communications.  Preferably, this is done face to face or by phone rather than by email blizzards and long memos ….
Everyone in a large organization is focused on his or her expertise but if we are to understand the bigger picture and know why some decisions are taken, someone must explain and clarify the vision regularly, so that it becomes clear to everyone where we stand.  Taking time for this task is the key.

You must be one of the youngest top executives, if not the youngest, in your company.  What is your secrete?
I believe that there is an element of luck, an element of hard work and the right timing.  First, you need to be passionate about things you do.  It is a marathon, not a sprint….  The fuel you need is passion!  I think strong analytical skill and the art of using languages to persuade or influence others are also important.  You should be convincing and are willing to be convinced.  Be a good listener and always have an open-mind.  Another important point is the lack of arrogance.  If you think that you are better than others, you are in the wrong business.  And of course, you must be willing to make personal sacrifice.  For example, I would love to be able to spend more time with my family if I had more time.  But you cannot do this job part-time….  And high level of energy does help!

Revenue management is one of the major business and management developments in the hotel industry during the last 10+ years.  ACCOR recognizes the importance of revenue management.  So, what do you think of the concept of product development/improvement and revenue maximization?  Why aren’t revenue management and/or marketing heavily involved in product development?
Hotel development is based on an economic model where market demand is the most important drive!  The economic model is different for a luxury property versus a budget hotel.  However, in both budget hotels and luxury hotels square meters are developed and designed keeping in mind the average revenue and return that square meter can produce.  The number of suites versus the number of standard rooms, the number of meeting rooms and their maximum capacity are some examples of taking marketing, i.e., segmenting the product offer, and revenue management into consideration.
In ACCOR, there are various types of hotel designs.  We have an Innovation and Design Department.  Based on the briefs of Marketing and Operations, it works with the Construction Department.  When we did the standardized design of Etap with Priestmangoode Architects, we did it in collaboration with the Marketing Department.
So, hotel and product development strategies are based on marketing and revenue management – forecasting top and bottom-line performance of a property.  Still, the most efficiently designed hotels can stay empty --- if there is no brand and well-formulated distribution strategy behind the business.

What about the development of using social media to book a room --- and eventually with a mobile device?  Do you think this will be the future?
Yes, in the US it is already the strongest marketing tool.  ACCOR also has developed an application to connect with our guests.  Social media brings more transparency because it is two-way communications.  It gives you opportunities to increase efficiency; at the same time, it gives your  guests more opportunities to express what they think.  Social media, in effect, has changed the market environment!

How much value do you place on human judgment versus, for example, automated revenue management system?
It’s getting more complicated to manage revenue.  A couple of years ago, we rolled out the revenue management program.  We hear from every GM who participated in the program that the revenue management program adds value to their properties.
I have nothing against the system --- but it does not take all things into consideration.  The problem is that the current tools are not so sophisticated.  For example, machines don’t see the importance of a key client, and they don’t incorporate such information in their decision-making.  Automation helps, but I don’t think that the time is here that machines will take over human minds.  We still need human common sense.  Of course, if the machine is fed correct data and sufficient parameters, there is a chance of a better outcome. 

Is this due to the fact that CRM (customer relationship management) and revenue management systems are not integrated?
Yes, it could be one of the reasons.  In general I think we have a couple of decades to go before machines will be comparable to human judgment.
                 
If you were to hire a GM, what are the most important qualifications?
It depends on the type of hotels, size, brand, etc.  In general, I think it is important that the individual:
  • has hands-on mentality
  • lacks arrogance
  • has the ability to think on his/her feet
  • is good with communications
  • is willing to be exemplary for his/her employees
If the individual has these qualities, I would then look at his/her education --- of course, I am exaggerating here!   But I do believe that interpersonal skills are very important --- and of course, they must be guest-oriented also!

What advice would you give to inspiring students who are interested to enter the hotel industry?
Just start in the industry somewhere either in an operational or functional job.  Don’t worry whether or not it is your final calling.  Choose something that you think you will enjoy and that you think you can be passionate about.  Do the best you can and experience the industry.  Most importantly, do your work with passion!
No matter how successful and how much experience you get, remain humble and respect others.  Be exemplary in your attitude and behavior.
If you want to study and get a master’s degree, work a little before you start. If you want to go international, don’t give up.  Sometimes I meet people who dream about an international career and ended up working next to their homes.  My message to them is: “Don’t give up.  There is no limit on what you can discover!”
Do not think that any organization is responsible for your career path.  An organization can help you along your way --- but you are in the driving seat.
And don’t listen too much to the advice of others --- like mine :0).  Choose your own path.

Do you think a master degree will help?
Yes, in my case it helped me a lot --- that is, if you want to become an executive and work more in corporate functions.  A master degree is not necessary for all jobs in our industry.  Education is one of the entrance tickets.  It is only one of the many ways to get somewhere.

ACCOR is a French company and you are the head of ACCOR, Germany.  Which aspect of the culture do you find, as a Dutch person, most challenging to adjust to?
I think the ability to master the language is very important.  If I cannot convey a message with ‘spirit’, it would be very difficult for anyone to adhere to and implement anything.  But the biggest difference I notice is in the “meeting” culture.  Germans are very organized and value efficiency in meetings, whereas the French see that a good discussion is very important.  I believe this is my niche --- I can mitigate under these circumstances, which can add value --- I’ve lived in both countries and have a better understanding of the dynamics.

What are the most important lessons you have learned from your current job?
The only thing that really matters at the end is the time you spent with the people you worked with.  When you look back, you look at the pictures of your colleagues.

You are only 41 and you have already achieved a high position.  What’s next?
Actually, I just turned 42.  I never created a very precise plan for myself, and I didn’t know what I was going to do in the next 5 years.  I just started doing something and if I enjoyed it I would continue.  So, I have no precise plan.  May be tomorrow I will be a teacher.…  I know I will probably take on a role at the European group level in 2013.

Will you stay in the hospitality industry?
I like hospitality because you can create an experience.  For example I really loved working at Disney.  It was an amazing 10 year-period.  The car rental business was more about dealing with commodities.  I find it easier to put my heart in the hotel business.


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