10.Mar .2022 14:00

Accor becomes first big hotel group to limit business in Russia

Accor becomes first big hotel group to limit business in Russia
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Accor has abandoned expansion plans in Russia, the first big hotel company to signal a retreat in a country that has become toxic for international brands since its invasion of Ukraine.

The French owner of the Novotel and Ibis chains said it had suspended all planned openings and developments in Russia and any loyalty partnerships with Russian companies, although it will continue to run its more than 50 hotels in the country to support its 3,500 Russian employees.

“All management operations including booking, distribution, loyalty and procurement services to hotels for which owners are included on any international list of sanctions will be suspended,” the company said on Wednesday.

The company’s statement follows the cancellation of a planned meeting this week between Sébastien Bazin, Accor chief executive, and Russian president Vladimir Putin to discuss Russia’s tourism industry. Accor had been due this year to open five hotels in Russia and three in Ukraine.

Hotel groups have been slower than other consumer-facing companies to join the wave of businesses boycotting Russia or downsizing their operations in the country amid international condemnation of its invasion of Ukraine.

Fast-food companies including McDonald’s, Starbucks and Pizza Hut have all temporarily closed stores, while other consumer groups such as Heineken and Adidas have said they will stop selling their products in Russia.

Online travel companies Booking.com and Expedia have both suspended bookings from Russia. Booking.com said on Wednesday that while hotel reservations had been in line with 2019 levels throughout February, they had dropped 10 per cent compared with 2019 in the week to March 6.

Accor is the first big listed hotel group to announce efforts to minimise Russian activities.

Marriott, which operates 15 hotels in Russia, said last week it was “deeply concerned” by the situation in Ukraine and was “working with charitable organisations on the ground focused on providing meals, healthcare and safe water, with a number of hotels also providing accommodation and supplies to refugees fleeing their homes”.

Hyatt said it had put together a “fast-growing relief fund” for employees and guests in Ukraine and neighbouring countries.

Following Accor’s announcement, Hilton said late on Wednesday that it had closed its corporate office in Moscow and would suspend hotel developments in Russia. It added that it would “monitor the situation as it evolves”.

Accor has the most exposure of all the big hotel companies to Russia, with more than 50 hotels in the country including 21 in Moscow. In January it described Russia as a “noteworthy market” for 2022, thanks to the growth of its domestic tourism market. Planned openings included a spa resort on the Black Sea coast.

One industry executive said it would be “interesting to see” how hotel companies reacted to growing consumer pressure to cut Russian ties.

“It is much more difficult for hotels to de-brand than a Booking.com,” the executive said. “For hotels, there is a sign above a door and they have contracts with owners who aren’t necessarily on a sanctions list so there is no legal basis for them to cancel them.”

Source: FT