The travel sector saw a boom in 2023 with more consumers choosing to spend on experiences. Although some signs point to consumer pullback, the travel sector may still continue to be resilient, especially with advent of corporate travel revitalizing.
Accor CEO Sébastien Bazin (AC.PA) joins Yahoo Finance for Travel Guide 2024: Industry Insights to discuss return of corporate travel and how the sector is bouncing back in new ways.
Bazin explains how corporate travel may be different between the US and abroad, compared to pre-pandemic: "It's probably going to be vastly different between America and outside of America. Corporate travel in America is 90% domestic. For me, corporate travel has a lot to do with international corporate travel, so probably 10% lower than 2019, and we're likely going to be 3% or 4% up at the end of this year compared to '19."
Bazin also says he was "dead wrong" about corporate travel. He had expected that corporate travel was going to decline significantly due to the shift to work from home. However, he notes that though executives, for example, may not travel as much for work, the number of remote workers traveling to the home office for gatherings as increased. "It's a different mix," he says.
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BRAD SMITH: The travel industry boomed last year. And although consumer spending is expected to slow this year 2024, should still see good growth for the sector here. Now, one aspect that's coming back stronger than ever-- corporate travel. All week long, we're diving into the travel sector as part of Yahoo Finance's Travel Guide 2024 Industry Insights. For more on the future of corporate travel, we've got Sébastien Bazin who is the Accor CEO here with us in studio. Thanks so much for taking the time.
SEBASTIEN BAZIN: Thanks for having me.
BRAD SMITH: So what are you seeing right now in your business in the corporate travel rebound that many of the travel executives are spelling out to us?
SEBASTIEN BAZIN: Well, I could say I was wrong three years ago. Three years ago, I thought corporate travel was going to go down by 20%, 35% forever because of Teams, Zoom, ability to work remotely. And I was dead wrong. It's actually back. It's a different mix. So the international-- to what? Executive for Microsoft or Boeing in Seattle, probably is going to cut his trip by half if he was to go to Seattle, go to Boston, go to New York, Singapore, because he can actually do it remotely.
But because of this ability to work remotely, the same reason that I guess a lot of people don't go back to the office, i.e. For any big companies like Accor to preserve the culture. Then you have for the last 12 months an enormous number of small groups. 10% or 20% from the same corporation in 20 different cities, when they regroup together for a couple of days, just to bond back together. So as opposed to have international travel coming alone, we have small groups of companies, people working in different locations. And that is corporate travel.
So it's a different mix. It's almost back, but with a different kind of actually clientele.
SEANA SMITH: You say it's almost back. So I guess, what is the level look like compared to 2019? And are we going to get back to 100% of the level that we saw?
SEBASTIEN BAZIN: Again, it's probably going to be vastly different between America and outside of America. So corporate travel in America is 90% domestic. For me, corporate travel has a lot to do with international corporate travel. So we're probably 10% lower than 2019, and we're likely going to be probably 3% or 4% up at the end of this year compared to 2019.
BRAD SMITH: As you look across your property portfolio right now, where does it make sense to identify more opportunities to add to that portfolio? Or where are you scaling back right now based on the environments that--
SEBASTIEN BAZIN: We're not scaling back. It's still a blessed industry. We're probably going to have all of us and my peers and my core a better year in 2024 than we had in 2023. You have a decelerating growth of the price per room but it's still growing. And I don't know whether there's going to be 2% or 5% this year but way off from 15% or 20% last year. But you're still going to have a scarcity of supply and new supply coming on. You still have a large market share for all of us. And two, you have a growing demand.
You have billion five international travelers as of 2019. We're still 3% below 2019. And part of the billion five, people don't realize, China was 150 million, America 150 million international travelers, but India was only 35 million. And the emerging middle class out of India is going from 300 million to 800 million people the last five years. So you're going to see India going up from 35 million international travelers to 80, 90, 120 matching up with China and the US. That alone has a huge impact on the hotel hospitality in the world.
And Accor is probably the best beneficiary of it, because they're going to go three or four hours west or east, so they're going to go to Southeast Asia, Indonesia, Malaysia, Singapore or they're going to go west, they're going to go to sub-Saharan Africa, Egypt and Middle East where we have the largest market share. So you're going to have more than billion five international travelers the next probably two to three years. So demand is probably going to go 4% to 6% compared to 3% to 5% the last 20 years.
SEANA SMITH: Sébastien, when you talk about that uptick in demand, we have outside of the business travel space. We also have a couple of huge sporting events taking place. One of those being the Paris Olympics this summer. How big of a catalyst is that for your industry and specifically for Accor.
SEBASTIEN BAZIN: Not as big as I wish for. It's probably for Accor, it's going to be half a percentage point in terms of par for the year. So it's going to be plus 2 and 1/2 percent for France. Why is not that much bigger is because in France in July and August is pretty robust. So they're going to add maybe a 2% occupancy. So you're go from 90% to 92%, but it's a bit anecdotal. It does give a big flashlight on France at the country and destination. That's helpful. But you're going to have the European Soccer Cup in Germany, Austria in June.
You're going to have the Olympics in July and August. You're going to have the America's Cup Sailing in Barcelona. It's a hell of a good year actually for us in Europe this year, which is remarkable.
BRAD SMITH: Just on the labor side as well, how have you needed to perhaps moderate how the business operates given some of the higher labor costs as well right now?
SEBASTIEN BAZIN: We're being increasing the low paid salary. The first entry salary, we've been increasing the salaries quite a bit, and we've been blind for too long actually not accepting to pay those people more. Now, the main reason why people come back to the industry and funny enough, those are not the guy who left us. It's actually newcomers. They're coming back as long as you can actually assure them a sense of purpose-- human interaction, caring, emotional.
A lot of people are moving away from the media and telecom industry because being alone with your headset in front of your screen is pretty boring and depressing. So as long as you can actually show to them that they're going to be able to evolve in their own career and do something when they actually do something every day, and a lot of it is unforeseen event, it's kind of a fun job. So it's human interaction, which is why I joined this industry from the financial industry much more fun.
BRAD SMITH: More indeed. And it looks far better, especially when you get out of the office as well here. Sébastien, thanks so much for taking the time here with us.
