Welcome to episode 6 of the Insider Podcast with me, Martin Green, a slightly different format this time around as the conversation you’ll be listening to was held live on stage in front of an audience of Glion students. My special guest was Martine Gerow, Group Chief Financial Officer at Accor, the European leader in hotels and a top 10 global player also. Martine joined Accor in July 2023. So for my first question, I asked her what it was that had attracted her to this business.
A couple of things. One, I like the travel industry. This is my first hospitality role, by the way. But I had been in the travel industry, or ecosystem as I like to call it, for almost 10 years before that. So I like the industry. But more specifically to Accor, I thought Accor was at a turning point in its history with the reorganization across two divisions. And it was a pivotal moment for the group to now execute against its strategy and roadmap. And really crystallize the benefits of what has been a probably 10-year transformation. And I felt excited to be joining the group at that point in time. Accor is a global company. I love working for global environments. And Accor, it’s a mix of entrepreneurship. And I think that also is something that was in sync with what I like to do.
And so for the benefit of those who are not as familiar with the company, you mentioned about the reorganization. I know that went live in the January of the year that you joined in the July. So just to put in context on what we’re going to be talking about in terms of the expansion, the operation of the group, just give us a little flavor of what that reorganization did and how the group is now shaped today.
Accor used to be, just to give you a bit of a perspective, 10 years ago, Europe was still 75% of the group. Today, it’s 40% of the group; 10 years ago the group was mostly, you know, premium, actually mid-scale, economy and a bit premium. Today, about a third of the revenue is actually luxury and lifestyle. So there’s been a massive transformation in the business model of Accor. But that transformation across business segments and geographies, we were still along the same operating model, which was regional. And Accor came to the realization, and Sébastien Bazin, who’s our chief executive officer, came to the realization, that actually those are very different businesses. They’re both in hospitality, but they have different growth stories. They have different needs and therefore they need different organizations. And so we decided to move from what was a regional model across all the segments and the brands to a divisional model.
So we have a luxury and lifestyle division, which looks after the luxury, and which is organized by brand. So it’s a brand led organization. And then we have the premium, mid-scale and economy, which has, you know, the historical brands of the group and which is regionally organized. And the reason it’s regionally organized is because that’s where 90% of the hotel rooms are, and therefore you have enough scale to be driving that model regionally.
And the reason we did that also is because we felt that to accelerate the development of Accor and to have a better value proposition for our owners, we needed to have that very differentiated focus.
And I think one of the other things that comes across when I’ve been lucky enough to speak to people like Steven Daines and Maud Bailly, one of things that really comes across strongly to me when I talk to people from Accor is the culture and the strength of the culture of Accor. Is that something you’ve experienced and how would you sort of put your definition on that Accor culture and what makes it so special?
You know, it’s interesting because as we moved to that divisional model, one of the concerns we had was how do we retain that common culture and that common purpose, and how do we not drift apart in some respect. Accor never had a purpose, formal purpose. And so we decided to define what our purpose was as a way to unify. And to avoid that fragmentation and dispersion. And so we came up with the purpose, and this was very much a bottom-up exercise, right? This was not a bunch of executives in a dark room coming up with what the purpose for Accor is. This was very about a bottom up exercise. This very much involved not just the corporate, but also the hotels, right, because the purpose has to resonate with our 300,000 ‘heartists’, as we call them, across all the hotels we operate under our brands.
And the purpose is ‘Pioneer the art of responsible hospitality, connecting cultures with heartfelt care’. And every word of that purpose matters. And it really captures what the culture of Accor is. It is entrepreneurial. It is about caring for the guests, caring for our staff, caring for the environment. We very much believe in being a responsible hotel operator. And we very much believed that what we provide to our guests, but also to our staff, is experiences and connections.
Most of my career, and I know we’ll go into this later, has actually been with American companies. I’ve lived in the States for 10 years, so I’m a bit of a hybrid in some sense, right? Because I’m French-born. And I asked myself a lot of questions before joining Accor, which is obviously a very global organization, but with a very strong European grounding or roots. And you feel that in the organization, it’s very entrepreneurial. It’s not very processed. Which is kind of surprising for an organization of that… and that goes with entrepreneurial. It’s hard to be entrepreneurial in a hyper-processed environment. I think it’s very innovative. It’s an organization that takes risks. There’s been some bold transformations in those last 10 years. So I think, it’s very much of a risk-taking organization. And it’s a culture that definitely promotes autonomy. We want our hotel GMs to have autonomy in their roles. We want our brand CEOs, our VP of Operations to have an autonomy in their jobs. So you have to be a bit of a self-starter to be successful at that goal.
Now, you mentioned you have a background in travel, but not necessarily pure hospitality. Coming into this sector, has anything surprised you about the business of hospitality since you’ve become immersed in it with Accor?
When I was thinking about joining Accor and hospitality, I actually read a book by, and I can’t remember his name. I know his first name is Ira, but I can remember his last name (Editor’s note: it is Isadore “Issy” Sharp), who essentially started Four Seasons. He’s the founder of Four Seasons, and one of the elements that struck me is the fact that you can’t control the guest experience across 300,000 staff members, ‘heartists’. It’s impossible, right? So how do you ensure that your values, your culture, are going to be the compass, the guiding principles that will allow every one of those 300,000 ‘heartists’ to make the right decision for the guest at the right time.
And I think that that’s obviously a component of a service industry versus a goods industry or a financial industry, but it’s particularly critical for an industry such as hospitality. And therefore, what it creates is an environment where actually going back to the autonomy, you need to be able to be comfortable as a manager, as a leader, to give autonomy to the people on your teams, because they need to make that decision for the guests at the right time, not three months later.
And I guess that cutting away a little bit of that bureaucracy, giving more scope to be entrepreneurial, if you like, I guess, that gives a big organization like Accor and some of the other big hospitality players, a little of a weapon to fight back against maybe the sort of the boutique, the independents, where generally that sort of autonomy that ability to think on the feet, they see it as an advantage compared to what they would view as a bureaucratic corporate culture. So you’re trying to bring a little bit of that boutique hospitality entrepreneurialism into this huge organization?
Definitely have that and which is why we went to that organization, particularly on the luxury and lifestyle where it’s brand led. Now, as always in life, it’s all about balance. So yes, you need to give autonomy, but you need to give autonomy within a framework, within a set of values, within a set of standards. For example, one of the actions that we have been pushing very strongly – and even more strongly since we have this divisional organization, because in the PME (Premium, Midscale & Economy) side, the brands are also critical assets that we want to protect and nurture and grow – is brand standards, right? So yes, you have autonomy, but you have autonomy within a set of guidelines, within a set of standards. Otherwise, you have anarchy, and anarchy is not good for a group like Accor.
So it’s all about striking a balance?
It’s all about striking that balance. And it’s an evolving balance, right? What’s the right balance today may not be the right balance tomorrow.
You almost can’t mention the word Accor without talking about growth; and the last 10 years or more has been an extraordinary growth story. But I know that’s not about to stop anytime soon. And there are plans for a hundred more hotels this year, with plans for 50 more hotels to be added each year after that. You know, those are pretty punchy numbers. From your position in the C-suite, overseeing the finance, tell us about some of the factors that have gone into that ambition, why Accor is being bullish, what gives you cause to really go for it in this way.
I actually joined that call on the capital markets day, which was at the end of June 2023. So in some sense, I inherited that plan and I made that plan my own because at the end of the day, I’m part of the people who need to deliver it. And we made a very strong commitment, certainly to the financial markets, and internally, that we will deliver on that plan.
It came from, I think, a realization that one, this is a growth industry. Consumers are moving from goods to experiences. And in hospitality, we provide experiences. That’s what we’re all about. And so there’s kind of a secular, I would say, growth in the industry. Two, you have the rise of the middle class in a number of geographies. You have new travel destinations. And therefore, again, that’s secular growth for the hospitality industry.
So we felt very comfortable with the fact that there is demand for our services and our brands. Second element was we’re actually very well positioned. In those geographies which are higher growth. So for Accor, we’re number one in the Middle East, we are number one in Asia outside of China, and this is actually where most of the development is taking place. The US is a much more mature market. We’re not that present in the US.
So where we are strong aligns very well with where the demand is. So we felt that allows us to capture more of the growth in the industry. And so today, you know, we feel very comfortable with our development, our openings, our pipeline. Certainly warrants that.
And those hotels are pretty much across your different operating areas?
Yeah, and the other point, another reason is not only are we present in those geographies where growth is taking place, but we’re also present across all the segments. It’s not to say that we’ll start building eco and mid-scale, but certainly we felt that being in premium hotels, so, Pullman, Mövenpick, Swissôtel, luxury, but lifestyle. The fastest growth part of Accor today is lifestyle. We’re growing that network at 18%, 19%, 20% per year, which is a massive growth. So we felt we were also in the right segments to capture, again, more than our fair share of the growth in the market.
Yeah, sure. So growth is not just organic. I think anyone that’s tracked our core over the years will also see that the company’s been very strategic on acquisitions, quite a lot of them before your time, but some of them have been since your time thinking particularly about Potel et Chabot and Rikas, which are 2023 and 2024 respectively. Want to talk a little bit about those acquisitions where they fit, etc. But first and foremost, you know, why those two particular brands?
Different rationale. Rikas is a restaurant brand in the Middle East. And what we see today is, we see when we talk to owners, when we try to get development hotel projects, being able to come up with more than a hotel product, but also a restaurant offering is actually quite critical. It matters. And we felt that Rikas was strengthening our offer in the Middle East. They also happen to be excellent restaurant operators. We also have Paris Society in France, which operates a number of restaurant brands. And we felt that we could actually use the Rikas platform in the Middle East, they’re based in Dubai, to grow Paris Society in a much more efficient way, overseas and in particular in the middle East. So that was for Rikas and we actually had some synergies already from that.
Potel et Chabot is a bit different and we, at Accor, not always, but at times we’ll gradually… we’ll start with a small stake, and then we’ll gradually increase our stake in that company and eventually buy it all. Potel et Chabot was a way to associate, it’s a catering company. It actually dates back from Louis XIV, I think. That’s how old it is. And we felt that it was a good complement to our luxury offerings and our luxury brands. What it also allows us to do is to be present in events. For example, Potel et Chabot is the caterer of Roland-Garros.
So it’s also a way to think about it as augmented hospitality in some sense, but it’s a way to enrich, again, the value proposition. We have luxury brands, hotel brands, but we also have luxury brand customers. For example one of the things we did as we set up those divisions is we created key account organizations. In luxury and lifestyle, which caters to the LVMH, the Chanel, you know, of this world. And Potel et Chabot actually does events for that. So again, there was a good complementarity in terms of what we’re able to offer to those corporate customers.
And it’s interesting that shows the strategic thinking, it’s just not just buying hotel brands. There was obviously a deliberate play to get into luxury catering, that side of the hospitality business. And in terms of the synergies that have come from those, and the customer benefits, what are you seeing coming through from those acquisitions?
So again, on the corporate customer side, that means we’re able to offer more than a deal on a corporate rate on some hotel brands, but we’re also able to cater to their events with Potel et Chabot.
It’s interesting because companies have different integration… I’m gonna call them philosophies, right? And it goes from no integration to full integration. We’re probably closer to the, as less integration as possible. And the reason for that is because we very much believe that giving autonomy is the best way to actually create value and it’s the best way to optimize and capture the full growth potential. Again, within guidelines, within standards, within… obviously capital allocation is part of my job, but we very much believe in that. And so we will integrate what we think is absolutely necessary, so compliance, cybersecurity. But we’ll not necessarily require that they get on the same financial system, or we try to give them as much autonomy, because we want to retain that – back to the entrepreneurial culture of Accor – we want to maintain that entrepreneurial culture within those smaller entities.
Yeah, and I think it’s interesting, having seen some of those acquisitions, that there does seem to be a tendency to still give them their space and not to close out that kind of creative thinking, that entrepreneurialism. Accor appears quite a kind acquirer.
It is. I mean, our Sébastien Bazin, our CEO, has a big belief, which is, you know, if you integrate fully, you kill them.
Yeah, because it’ll just stifle them completely.
And they become part of this “machine”. Accor is not a machine, by the way. Far from it!
Without giving any trade secrets away, is Accor still ambitious to acquire?
What we’ve said, and what we’ve committed to investors, is we will continue to do tuck in acquisitions, right? So let’s call it less than 50 million euro. We will not do big transformation acquisitions. And the reason we won’t do that is because we don’t need to. We now have a portfolio of, you know, 45, 47 brands. We cover all the segments. We may do token acquisitions either because we, like we did Rikas for example, because we think that it adds to the value propositions or because we need a platform to expand in a market. But again, those are gonna be small acquisitions.
Yeah. And do you actually have a team within Accor that looks for brands on the creative side, if you like, that actually will perhaps come up with new concepts themselves? I mean, is that something that, I mean I presume you will then get involved in actually providing finance for those? Does that happen in-house?
We actually have not created brands in-house. Not in a long time, right? If you think about the brands we have today, certainly on the luxury and lifestyle side, they’ve been acquired. We’ve done that through acquisition. And on the lifestyle side, which is a bit of a different animal, they’re founder-led brands. And we have made sure that we’ve retained the founder, sometimes as a co-CEO, sometimes as an advisor, to make sure that we retain the identity of that brand as we develop the network.
So we don’t actually have a team, a unit that develops brands… but interestingly enough, we were very much challenged by investors as to ‘why do you have so many brands? Can’t you sell some of them’? Obviously to return to shareholders as always. And we get less and less questions actually. I was just on the roadshow because we released our annual earnings, so I was meeting with a lot of investors. And we didn’t get that question this year. And the reason we didn’t get the question is actually now our peers are also starting to buy brands, because they realize that guests want different experiences and you can’t be able to answer all their needs under a small amount of brands. We started the trend in fact.
Yeah, and I think also looking from the outside in, I kind of felt that the Jan ‘23 reorganization really was the response to that and the rationale that was given for that and how that luxury and lifestyle division was created as a home for the brands that you’d acquired. That felt like the response, to me, and that perhaps that’s also perhaps the reason why people are not questioning it now, because they can see what you’ve done with that.
I’m sure we’ll have questions later about the past, present and the future of Accor, but I want to move on to talk about your role, if I may. And to start with, for those in our audience who are not familiar with what a Chief Financial Officer does, I wonder if you could maybe just give us the elevator pitch on your role before we delve into some more detail on it.
One, I ensure that the company stays funded. Companies don’t die because they don’t grow. They die because they run out of cash. Part of my job is making sure that we never run out cash. Second, how do we allocate that cash? So capital allocation is also part of what I do. Third, it’s really working with the executive team and working with the business to drive performance. We’ve made some very strong commitments in that capital markets today, almost two years ago. We need to deliver on those commitments and we will deliver on those commitments. And so part of my role is making sure that I am the compass and I make sure that we’ll deliver on that trajectory.
And it’s never a straight line. Things never happen like exactly you’ve planned. And so you need to be agile, you need be able to pivot and be very reactive. Fourth, it’s managing the investor relations, as we’re a public company.
How proactive would you say the modern CFO is, even compared to sort of doing this job for other organizations? Do you now have to be interventionist and quite proactive in the role?
You mean internally?
Yes, when you’re in the ExCom and dealing with people like that.
I like to think that the CFO is the person who says ‘no’. So, you know, if you want to be a CFO, you may not get love. OK. So just be comfortable with that. So I am the person that says no, but I don’t say just no. I say, you can’t do it that way, but you may be able to do it that way. So I have to come up with optionality and scenario planning.
You know, my job is to make sure that people understand what our commitment is and to make sure that the organization is accountable and that the business is going to be accountable. And actually, having crystallized a very clear financial trajectory for 23-27, by division, not just for the group, by division creates tremendous accountability because there’s no escape route from that. And so my job is to make sure that we always go back to that and to, again, help the business identify how we’re gonna get there and what are the various trade-offs that we need to do to get there.
Sure. And I imagine a big part of the role is being a problem solver too – again, without giving any trade secrets away, what are some of the sort of typical pain points that the CFO has to step in and solve? Maybe not necessarily just with Accor, but perhaps as a CFO more generally.
As a CFO, you should expect the unexpected; and it’s even truer these days without going into politics than it has been in the past. Some of the pain points are actually making sure that people work together. And this may sound like a very mundane comment, but in an organization as large as Accor, and even within my own team, because people are very focused and very committed, but they tend to work in silos. Part of my job is making sure I’m breaking down the silos and I make sure that people actually talk to each other. To get to the best outcome. I would say that’s one of the pain points.
The second pain point is probably making sure that the message is heard. In finance, we deal with lots of data, lots of numbers. Part of my job is distilling those vast amounts of data and numbers into very simple, clear messages that the business can comprehend. Because the business is not, they tend to be more – particularly in hospitality – they tend have more operational backgrounds. So I just need to make sure that my messages are simple. And that they are very consistent, because you need to repeat several times to get the message across.
Now, travel and hospitality, we love it. We wouldn’t be here if we didn’t. And I’m sure you wouldn’t in your present role if you didn’t. But travel and hospitality is quite a unique business, I think. It has its own challenges and rewards. But in terms of a CFO, in terms being able to work within that sector, forecasting, dealing with things, what are some of the most specific challenges that come in this particular business for your role?
It’s interesting because I, you know, this is my fifth CFO role. What I find particularly challenging in this business is that it’s very hard to forecast demand, because demand can be influenced by many factors in any, you know, given part of the world. One of the beauties of Accor is that we are so geographically diverse; and again, across the segments, that actually what happens in one region or one country is not going to have a huge impact on the group, right, it’s not going to derail us.
But if you have a cyclone in Australia, like we just did, that’s going to impact. There’s no way you can forecast that. So you just need to make sure that in the way you manage that financial equation in some sense is to make that you have buffers and that you have compensating mechanisms to protect your P&L.
But forecasting demand is just impossible. And I think the worst, or the most extreme example of that was obviously Covid. I mean, I went through Covid not with Accor, but with my previous job. And it’s interesting because having gone through Covid, it completely transformed the way I was exercising my role, because I suddenly went from a P&L focus to a cash focus, from having a forecast on a quarterly basis to actually looking at what was happening on a daily… I mean, it just completely changes the way you think about your job and the way you interact with the business community.
I always say, you know, painful experiences are often the best experiences because that’s where you actually learn the most. Hopefully they’re not gonna last too long. But, you now, I look back on Covid and yes, it was tough, but I think it was one of the, you know probably one of best experience as a CFO in my career.
In terms of putting you to the absolute test. But I think it’s also interesting. I mean, I can remember we did a lot of communications during lockdown and a lot of people I spoke to from the industry said, ‘yeah, you know, this is awful, but this industry is resilient’. And they were saying, ‘we survived 9-11 global financial crisis, we’ll be fine’. Which at the time, sort of April, May 2020, I was like, Okay, yeah? But, the industry’s come through strong, most operators are back up above 2019 levels, still expanding. I mean, what is it, do you think, that makes this industry so resilient?
You know, it’s interesting because I think, going back to, you know, goods vs. experiences, I mean, people particularly – and it’s even truer, I think in today’s world – you need some escape mechanisms. So, and I don’t mean escape in a, you know, in a bad way, but I think people are looking for a way to connect, a way to experience different cultures. And I’m talking about leisure now, but even in business, you now, I was, I was in business travel before. It’s about connection. about, you know, doing business. It’s about growing your company on the business side. And on the leisure side, it’s about connecting, it’s about experiencing. And so I think that this industry will be here forever and will continue to grow. It’s extremely, extremely resilient and I fundamentally believe that it has secular growth. This is an industry that’s always grown a couple of points above GDP growth. And I absolutely believe that will continue to be the case.
And ultimately, we all want an escape from the everyday in whatever format that takes. That’s what we like. So then hospitality provides that absolutely straight up every time.
In conversations with GMs and other people on the sort of revenue management, other things, there is a constant balance between profitability, cost management and making a profit and maintaining guest satisfaction and maintaining a very, very slick business. As the person who oversees it from the top, what are the priorities you set in terms of maintaining that balance? It’s an important balance, isn’t it?
Yeah, and I often say that part of my job, and I think part of anybody’s job, is managing contradictions, right? So it’s not either or, it’s both. And finding that, you know, that balance is not easy. It’s different for a hotel GM than it will be for me. But what I try to, you know, what I aim to do is… these are the commitments we need to deliver on. And so these are, you know, kind of funding and investments we can make. But I always tell the business, I say, look, if you want to invest in this project or whatever it is that you’re trying to do, how can we work together so we can help find the funding? And the funding is either going to come from the fact that you’re growing your top line and therefore you’ll be able to invest, or the funding will be coming from the fact that you are going to allocate your existing spend differently.
There are things that we can’t compromise on. For example, that’s why we have brand standards, because we cannot compromise on that brand experience and that promise that we’re making to that guest. And obviously, that promise is different across the segment. We cannot compromise on that. We’re very attentive to making sure that we pay a decent salary, that we provide our employees with good working conditions. We cannot comprise on that either. So there’s a number of red lines, if you wish, that we will not compromise on. And then there’s a number of, again, other investments where we actually may be more or less selective depending upon the environment and the conditions of the business.
And I guess also there must be a bottom-up element of listening to the customers, you know, guest satisfaction, all that.
Yes, we do a lot of that. We look at how our brands are. We actually have this analytical tool which goes and mines the ratings across the web, dark or not dark. Hopefully not dark! And basically comes up with a cluster for a hotel. It tells you this is what people say about that hotel. That allows the operations team to work with that hotel on, you know, hurdles. And we obviously can do that at the hotel level, but we can also do that at brand level for a given geography. So we have, you’re really mining the data to understand which lever do we need to, and this is obviously a competitive set, which lever do we need to pull to stay ahead?
Yeah, and presumably things like AI is starting to power some of those decision-making tools. And I guess from your perspective, things like those technological innovations, that’s a good thing in terms of the extra power it gives you.
No, absolutely. And, you know, it’s interesting because we’ve had the internet revolution. I mean, we’ve a bunch of revolutions, right? Now we have AI. And I think it’s a very evolving landscape and it’s kind of really hard to tell exactly how it’s going to impact us. But at the end of the day, we believe that AI is going to be an enabler. It’s not necessarily going to a disruptor.
Because at the of the end the day what we provide is we provide a service. And that service cannot be provided without a human component, right? You can’t have a robot walk in, I mean… yeah, you can go to McDonald’s and order your thing on a machine, right? Personally, I don’t like it, probably because I’m older generation. But you need people at the hotel. That’s part of the experience. That’s why guests are going to like your brand and why they’re going to come back. AI will not disrupt that.
Now, we can actually, and the reason I say it’s an enabler is because we can make the job of hotel receptionist easier and therefore provide a better guest experience if we make it easier on the backend for them.
Yes, so it’s about the knowledge and the insights that feed the guest experience, but that guest experience will always be a human to human experience.
That’s right. Or the call centers where you can have a better answer and some of the answers, some of the calls, you can deflect and move to an AI chat type solution, so that you can focus the agent’s time on the kind of higher value call or more complex questions.
I know there’s no such thing as a linear career in any role, but it means what might typically be a first two, three steps of a career progression in a finance role?
I would say that what’s important is to seek as many, you know, experiences as possible because you may not… what you think you want to do today, coming out of school, may actually be very different from what you’re going to be doing in 10 years or 20 years. We probably don’t have nine lives like the cat, but we have more than one, okay? And so make sure that you seek that diversity of experiences, diversity of geographies, because management styles and problematics are different across different geographies.
And seek diversity of… unless you, and this is not your case, so it probably doesn’t apply to you. Some people have decided that all they want to do in life is tax. Okay, that’s okay. Most of you are probably more generalists in your mindset. So make sure that… don’t put yourself in too specific of a role at the beginning. Look for that broader experience.
And presumably with a function of size that you were talking about, there would always be opportunities to jump across specializations if one was willing to do that and had the ability to make that jump. I guess you do see non-linear careers even within that finance function?
I very much believe that career progression is not linear. I didn’t start in my career thinking that I would be a CFO of a cacaon company. Certainly not. I had absolutely no idea. Actually I started in consulting, so there you go. I think I crystallized that kind of in my mid-40s, so back to what I was commenting on earlier. And the moment I crystallized that, I said, okay. And basically, I had unknowingly, in some sense, taken the necessary steps and acquired the necessary skills to land me my first CFO job.
So let’s talk about this role, the CFO. We’ll instantly promote all these people to CFO right now. How do you see the role of the CFO evolving, let’s say over the next 10 years, what do you think are going to be the big changes to the role?
The role has changed, first of all, you know, very much, you know. Being a CFO today is very different from what it was certainly 20 years ago. I think that going forward, a CFO is going to have to help the business to deal with increased volatility. It’s probably, again, I think we are, you know, Sebastian Bazin often says we are in a blessed industry. I think that’s very, very true. Blessed industry because, you know, we’re not a capital intensive business. Actually, Accor now is completely asset light. And because we’re not a capital investing business, what’s at stake financially, we can pivot relatively quickly.
In today’s world, when you need to make a capital investment because you’re going to build a factory or you’re gonna start a new product line, in today’s world, it’s actually very challenging to decide where you do that – because you are making a 10-year, 20-year investment and there’s increased volatility. So, dealing with volatility, I think, is going to be an increasing challenge. And the second challenge is obviously going to be around artificial intelligence and how is that going to impact your function, but also how is that going to impact your business?
Yeah, in terms of the whole AI thing, and we talked a little bit about how it’s doing that now, but I mean, presumably it’s too early to tell exactly all the aspects of corporate life it’s going to impact upon.
It will be, you know, it will be impacting. At Accor, we have an AI team that sits in our digital and technology organizations. We have decided to focus our AI efforts right now more on the… not the guest facing, well, some of the guest-facing, because for example, some of what we do on our websites in terms of updating stuff is actually leveraging AI. And we’re looking at how the search journey of the potential guest is so that we can optimize that search journey, because you will search differently. Actually, for those of you who are using ChatGPT, you’re already searching differently for content. So we’ve got to make sure that we stay on top of that search results. And AI is obviously going to be a big enabler for that.
But we’ve looked at AI for call centers, for example. We’re looking at AI for what we can do on the back end, even in the kitchen. How can we reduce waste through AI, for example?
Yes, it really will touch on a lot of the operational and financial areas; it’s going to have quite a future. So for my final section of my questions, I want to talk about careers and get a little bit of advice from you, but also just to recap a bit on the steps in your career and some of the factors in there. Now, you did an MBA, Columbia Business School. Tell us why and what led you to do that program?
So I’m going to give you a very honest answer. Love. I know you’re not expecting that. But basically, I was in my second year at HEC (Paris) and my internship was in New York, and I fell in love with an American. And a couple of years later decided that the best way for me to work in the US was actually to get an MBA. And I was fortunate to be able to do this at Columbia. So that is really the driver. That’s the honest answer!
What a wonderful driver!
What I got out of that was… and actually it was interesting because it gave me an appreciation for what is business in an American environment. It gave me, obviously, a diploma that was quite recognized in the US. And when I graduated Columbia, I basically was looking at banking, investment banking and consulting. And I did consulting.
Tell us about that consulting experience and what you learned from it. And if you like how that’s kind of led you to the path that you’re on now.
So… and look, consulting is not for everyone, right? But what it does give you is skills that you will take with you during your entire life. Because it gives you the ability to sift through data very quickly, to see the patterns, to formulate assumptions, to de-complexify a complex problem and to ask the right questions.
I always say, look, you don’t need to be an expert in everything. You need to have… I’m not a tax expert. I’m, not a treasury expert, but I know enough about those to ask the right questions. And the last thing consulting does, because you do that across, I mean, you know, as a consultant, you’re going to be put on a client team in an industry that you know nothing about and you have to make it look like you’re smart and you know something about the industry, right? So you have, to be comfortable with uncomfortable situations. But at the end, what it really also teaches you is being able to come up with impactful messaging and impactful communication. And that is something that is very important in any role that you will have at any point in your career.
So tell us how you then went on that pathway from consulting to the CFO roles and roles I say plural, that you then took on.
So I very much enjoyed my consulting role and I did that for a couple of years, but I realized that I didn’t want to be an advisor. I actually wanted to be an actor, right? As a consultant, you’re an advisor; you advise a client, but you never get to implement. I mean, now it’s changed a little. But just really never accountable to the results of that particular… and I wanted to be accountable and I wanted to be an actor; and therefore I decided to join the corporate world.
And I did that at the time I was in New York, and I chose PepsiCo. And typically for a consultant what you typically will join into either a transformation role, an M&A role or a corporate strategy role. So I ended up joining PepsiCo in actually corporate FP&A. And the reason I chose PepsiCo was one because I liked the, you know, I thought the consumer goods industry was an interesting industry, fairly dynamic, fairly global; but also because PepsiCo at the time was known to having a strong finance culture and therefore providing a strong financial training, which is what I was looking for, because at the time I had sort of decided that I was not going to be in marketing and sales, but finance was probably closer to what my own personality is.
Had you actually worked with them in your consulting role?
No, not at all.
So this was a fresh company in terms of working with. So yes, you were straight into this corporate world. I mean, just say compare and contrast to Accor today. Was it a very different culture to what you have today?
Yeah, very different because it’s a very global organization, but it has a very strong American culture. It’s very processed. It’s quite entrepreneurial because it operates in so many geographies. You can’t control from corporate what happens in India. So you need to give some level of autonomy, but much stronger processes.
So what was your first CFO role and who was that for?
So my first CFO role was for a company called Campofrio. And actually it didn’t start that way. My first CFO role was for company called Smithfield in the food industry in France. And three months after I joined, we actually decided to merge with the Spanish companies, and six months after I joined I was moving to Madrid.
So one learning is to expect the unexpected and be ready to pivot and be comfortable, you know, with that. And again, don’t think that there is one definition of success, you know, what will be very important for you. And it may change during your lifetime because you may have different priorities and therefore you may think about trade-offs differently. Don’t think there is, you know, one path to success or one definition to success. You’re going to have to find your own because if you don’t find your own, you won’t have what I call a fulfilling career. And a fulfilling a career is more important than a successful career, because at the end of the day, you know you want to be happy with what you do.
I ended up in Madrid. I didn’t speak Spanish, by the way, so I learned Spanish. What was interesting in that job is it was my first CFO job. So it was my first experience with anything that had to do with financing. So I definitely learned on the job in somewhat of a challenging situation. And the second thing was it was the first time that I was managing a Spanish team. And you may think that Spain being part of Europe, the way you manage a Spanish team is actually quite similar to the way that you manage a French team. You’d be wrong. It’s very different. It made me reflect on adaptability and flexibility. How do you flex your leadership and management style? And how do you pick that up early as you take that role?
So I’ll give you one anecdote. I was used to doing working lunches. You don’t do, at least at the time, may have changed now, but you don’t do working launches in Spain, or at least not in Madrid. And it took actually a person in my team coming to me after I think a couple of months, and telling me, you know, Martine, people actually don’t do working lunches. So maybe you don’t want to do working lunches. And it worked, right? And it was OK. And we still got to where we wanted. But it’s those little bits of culture. And actually working in different culture helps you to pick those cultural nuances so that you can be more effective at what you do.
That’s got to be a great asset coming into a global business like hospitality, which is so multicultural, it’s untrue. And what do Campofrio do?
So they are in the charcuterie business. So we had basically hams and saucisson and a bunch of other things. And my fondest memory of that job is walking through the drying halls of Aoste, which is in France, south of Lyon. You see all these hams drying for a month in those huge halls.
Totally different! Then I think you moved to Amex, am I right?
Actually, after Campofrio… and talking about trade-offs, so after Campofrio… so I have two kids, grown-ups now, and my daughter, after I had moved to Madrid, but was in an international school near Saint-Germain en Laye, and she was very much wanting to go back to that school and finish her high school there. And so I decided to leave Spain and come back to France, and I joined a company called SoLocal, which is a very interesting experience, which basically is a yellow page, right? And at the time the company was transforming from print to digital. I was there for four years, was based in Paris, probably one of my toughest, outside of Covid, probably one of my toughest experiences, because the business was, I mean, think of a business where 80% of your historical business is declining at 20% per year. And you have to basically compensate that, and you have a 50% EBITDA margin, okay? And you had leverage because it’s a private equity. Challenging situation for a CFO. Tremendous learning experience. But very challenging.
So I did that for four years, and then I joined Carlson Wagonlit Travel, which is a business travel company based in Paris. And then I moved on to Amex Global Business Travel, because the CEO of CWT actually moved to Amex and hired me there.
And of course that exposed you to the travel market. And was it ‘love at first sight’ when it came to the travel and hospitality industry?
Yeah, because what I found absolutely fantastic in this industry, in travel and tourism, is the ethos of this industry. Which is very much guest-focused. There’s different service businesses, but when you are in travel and tourism, you’re really, really aiming to provide the best service and the best guest experience because that is what is going to create loyalty.
It’s not just about how beautiful your room is or how great of a lunch you’re gonna have. It’s really about that human component and those contact points that you’re going to have across your journey. And what it does is, because we’re in the business of caring to some extent, the culture it creates within the organization is a caring culture, is a collaborative culture. And so it’s very, very different from a culture of working, you know, in a tech organization, or auto manufacturer.
Martine, it’s been an absolute pleasure talking with you this morning, we thank you enormously for the insights that you’ve given us and for the candor with which you’ve answered our questions. So ladies and gents, please do show your appreciation to our guest, Martine Gerow.
Thank you, Martin.
