Jet Setters use more than before their pied-à-terre, says Accor CEO
By his own admission, Sébastien Bazin almost missed the boat on the boom in branded residences. The CEO of hospitality giant Accor was busy growing its 40 brands, which now include more than 5,200 properties in 120 countries. That changed six years ago, when Accor acquired luxury brands Fairmont, Raffles and Swissôtel, and “woke up” to the potential of branded residences, Bazin said.
Today, the Parisian company has become a category leader, with more than 35 branded residences around the world and increasingly developing scores. Among its award-winning properties: The OWO Residences by Raffles in London, Mondrian Gold Coast Residences in Australia and SLS Dubai Hotel & Residences. Elite brand Raffles alone has developing properties in Bahrain, Jeddah and Boston.
The stakes are high; Over the past 10 years, the number of branded residences has grown 230%, adding more than 50,000 units in 356 programs, according to a 2021 report from Savills. Building on record growth last year, 2021 is expected to bring 77 new development projects to market in the category, Savills said.
Mr Bazin, who has been CEO of Accor since 2013, spent time talking to Mansion Global about the rise of branded residences, how the pandemic has altered the demands of luxury buyers and why hotel brands have an advantage in an increasingly competitive residential market.
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Mansion Global: Why do you think the branded home category is growing so explosively?
Sébastien Bazin: Comfort. The analogy is it’s similar to a gated community if you go to Palm Springs [California]. It is the feeling of guarding. Your accommodation is taken care of even if you are there 10 days a year. If you’re spending $ 10-12 million or more, it’s reassuring to know that your place is in the hands of an experienced hotelier. We have 300,000 people working for Accor. You know someone will be there to fix it if something goes wrong. People have a lot of wealth, more than ever in the past decade. MG: What types of changes have you observed in branded residences since the start of the pandemic?
SB: We tend to have larger units than three years ago. The buildings once again put the emphasis on kitchens and wardrobes. People are spending more time in the pied-à-terre than before. Health and safety, of course, is even more important. People don’t think about it enough, but it’s a key attribute of branded residences. Most owners allow us to enter their apartments and do the same level of cleaning as we would in our hotel rooms.
MG: Non-category brands, from Porsche to Baccarat via Fendi, have launched into branded residences. What advantage does a hotel brand like Accor have in space?
SB: If you buy a Porsche apartment, you are not reassured about Porsche’s expertise in everything we do for a living at Accor, including health and safety. They have the brand, but they don’t have everything we’ve been built to do in the past 50 years. Some of those luxury jewelry or auto brands are probably partnering with a hotel brand anyway.
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MG: Can the concept of branded residences work on the “economic” side or on the three-star side of the market?
SB: We have a few Mercure-branded residences, with average prices in larger, denser cities. Could you have an Ibis labeled residence? Of course, but with an 8-10% premium for developers rather than the 20% for a luxury brand.
MG: When you translate a hotel brand into a branded residency project, what is the most critical part of the brand’s DNA to highlight?
SB: Everything related to the social hub and the local community. A brand represents 90% of the location it occupies, it’s different in Miami, New York or London, where we opened the OWO by Raffles residences. You have to fill in what is lacking in this neighborhood, but also respect what surrounds you.
MG: What are the key attributes that appeal to buyers in a branded residency project?
SB: Aesthetics, amenities, design, space and access to everything you will have nearby. Homeowners want privileged access to services, features and amenities, whether adjacent or nearby. They also appreciate being known, recognized and identified, knowing that they will have a place in a bar or restaurant because of their “club membership” of the brand.
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MG: What differences have you observed in buyers around the world who buy branded homes?
SB: Owners in some areas tend to use their units much less often than Europeans or Americans – I’m talking about the Middle East, the Chinese, Hong Kong, and Singapore, for example. They spend about half the time in their units. It has to do with needing less units, or having many pied-à-terre, or the difficulty of traveling. Almost half of the Accor-labeled residences belong to a rental-management pool, which makes it possible to operate these apartments, the rental income being shared with the owner. It’s an easy thing for us, and for most of these homeowners, the income pays for local expenses like taxes and cleaning. There is also cachet for many buyers in their home country to say that they have a pied-à-terre somewhere like London.
MG: What are your prospects for 2022?
SB: We’re looking at around 80 locations for branded residences. In the United States, things are going very quickly with Fairmont. We have 300 units at the Fairmont Century Plaza in Los Angeles. There are the Raffles residences in Boston. And brands like Mondrian, SLS and Delano are finding huge success in trendy cities like Nashville; Austin, [Texas]; and Saint-Louis.
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MG: What about Accor’s hotel business, especially in light of the latest wave of the pandemic?
SB: There is one group of customers that has grown at an incredible rate since the start of the pandemic: the local non-traveler community. They come for co-working, flex office, restaurant, bar, well-being. There are hundreds and hundreds of people who work at Accor properties and are also looking to have fun. It’s like going to Starbucks for them, and it’s a whole new set of customers that we need to satisfy more. People will pay for a brand if they know they end up staying in a high-traffic place. There is nothing more reassuring than knowing that downstairs there are lots of locals and people from the community.
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