Staying In Russia, Or When The CEO Of Accor Loves People More Than Money

Faced with the war in Ukraine, some French companies are leaving Russia and others are staying. Sébastien Bazin, CEO of Accor, first European hotel company, and former boss of the investment fund Colony Capital in Europe, argued that he was staying in Russia because of his values and not out of financial interest. This deserved a thorough explanation/analysis.

Until recently, earning money was highly valued. In the village of my grandparents, someone who had succeeded in life was someone who had made money. People parking their Mercedes at the center of the village would be highly regarded. Leaving more money to your children than what you inherited from your parents was highly praised.

My grandparents had different views on the way to "succeed". My grandfather believed in investing his savings in growing markets, while my grandmother preferred investing in real estate. This lead to quarrels easily soothed. They always made me understand that people would forgive you a lot as long as you "succeed".   I thought this was a rather mercenary mindset and pursued my relentless reading of novels in which handsome, penniless Aladdins were loved by wealthy and bored Jasmines.

As I gradually lost my illusions on charming princesses, I enjoyed meeting my friend Athena at lunchtime. She coaches CEOs and often talked profit-driven funds. There was one investor she particularly admired: the savvy Sébastien Bazin. She would say that his striking blue eyes were so captivating that if given the chance, he wouldn’t have to sleep on the couch. She referred to him as "Seb," the self-made man who returned from America. She appreciated that he had studied at a university rather than prestigious institutions. He embodied the ideal of the French meritocrat, chosen by billionaire Tom Barak, the Lebanese founder of Colony Capital. This fund merged real estate with financial investment. I pictured Seb as Gordon Gekko, the hero of the movie "Wall Street," with an alpha and predatory demeanor, always dressed in a tailored suit. Seb was a rainmaker who transformed your savings into significant profits.

He seemed unscrupulous and straightforward. He would subdue or dismiss any boss who resisted him. One day, tired of waiting for something, he decided to take matters into his own hands, saying "If you want something done properly, do it yourself." He is aligned with my wife on that one. Thus, Sébastien took the reins of Accor, the jewel of French hospitality, where I have stayed more than 500 nights in my life. Needless to say, the day he was invited on the air, Athena calls me and says, "Seb is on at 9:10! Stop whatever you’re doing and listen!" I listen. The interviewer reminds us that Accor is the world's third-largest hotel group, present in 110 countries with 40 different brands. It opens a new hotel every day, “365 days a year”, just in case anyone forgot how many days are in a year.

The journalist praises Accor's post-Covid recovery, saying, "In 2020, you lost 60% of your business, but in 2021, you are back in the black." Seb acknowledges his modest success and provides data to support why there is every reason to be hopeful, even if we know that 25% of the international clientele might not return. It's refreshing to hear our Gekko back in action! He forecasts a surge in activity and perhaps even romantic encounters in his hotels. "In big cities, the man or woman living just down the street will work in an Accor hotel twice a week. From 9 AM to 9 PM, you'll see local residents working in the hotel as if in the office — this is just fantastic."

Hotels filled with locals on their days off is a dream come true. So people promptly buy shares on Saxo Investor. Others like me want to follow Seb’s positive attitude: "It's time to be positive. People want to live, enjoy themselves, and, above all, meet new people!" Spring is there, and Seb understood that it’s a small step from coworking two days a week to a “three nights a week” combo.

Nevertheless, we held back because the journalist who had patiently waited, now has an embarrassing question for our enthusiastic Seb. "You have 55 hotels in Russia, out of a total of 5,300.  In the past month, a lot of French companies such as Renault have decided to retire from Russia, including those for whom this decision is quite consequential. So I wonder, why are you still operating in Russia?"

Bazin promptly gets back on his feets: “We have always been present in difficult times all over the world. In 50 years, Accor has never closed one hotel in any given conflict zone. The staff is the only thing that matters to me. We love them.”

We are moved to tears. Here is a CEO actually saying I love you to his employees. Although Seb has not walked the path from bottom to top with them, he still loves them. One can be rich and still emotionally honest with people.

He goes on: “I am responsible for my partners. Don’t forget we provide an extremely valuable service in Russia for all of you around this table. Where would you guys stay — the media, charitable organizations, foreign delegations — when you come to report, help or negotiate?  If we close, you will no longer have any witnesses to what is happening in Russia.” This leaves the journalist speechless. Now we know that without Accor, press freedom, negotiations and NGO’s help could be jeopardized.

He concludes, “What's more, we don’t make any money there. Don’t come and tell me that I’m financing the war because I don’t pay taxes in Russia. I’m losing money there. Our occupancy rate is below 55%, which is our break-even point. We must stay to honor our core values.” Then he adds: “Russia accounts for less than 1.5% of our turnover. I am not economically dependent on Russia. I am not generating wealth there; I am there for my employees and to help those who need it.”

His willingness to lose money is news ! Now one wonders if we should sell our shares immediately. Leaving the market is costly and so is reentering. After examination, we conclude that it might be more interesting to keep it.

There is no shame or contradiction in upholding your values while remaining profitable. Sentimentality can indeed coexist with profitability.

Sentimentalement vôtre

Crédit photo : © D.R