NOVOTEL Back to the future June 2015

NOVOTEL ‘Back to the future’ June 2015

Agenda The Accor Group The Early years of NOVOTEL 1990 -1992: Signs of crisis Planning the New Strategy Building a New Team NOVOTEL after the changes NOVOTEL into the Future 2

The Accor Group…. 3

Accor Group Presentation Ø One of the world leading hotel operators Ø Company’s logo is `Feel Welcome` Ø Innovation is its trademark Ø Continuing improving performance is its KSF Ø Respect to customer needs is its principal value 4

World Accor Hotel Network Europe 29 countries 2, 700 hotels North America 293, 925 rooms 2 countries 16 hotels 4, 716 rooms Latin America and Caribbean Asia Pacific 15 countries Africa and Middle East 20 countries 276 hotels 28 countries 647 hotels 43, 584 rooms 153 hotels 123, 060 rooms 29, 787 rooms 5

Brand Portfolio 6

Timeline Opening of the 100 th NOVOTEL, in Amsterdam Creation of NOVOTEL- 1 st NOVOTEL opens near Lille’s airport 1967 1972 1978 1 st NOVOTEL outside France 20 years NOVOTEL-200 hotels around the world New friendly to use website: Novotel. com 1983 1987 2001 2008 The group is renamed to ACCOR 280 NOVOTEL in 46 countries Accor becomes Accorhotels and asserts its desire to 350 NOVOTEL in 58 countries make everyone feel welcome 2010 2011 2013 Approved demerger in Hotel. Services and Hotellnvest 2015 Accor rewarded for its commitment to sustainable development

The Early Years of Novotel…. 8

NOVOTEL Competitive Advantages Bridging Gap Strict Management Location Ownership • Blend of features from 3 and 4 star hotels • Les Boulons (95 points to monitor standard procedures) • Control staff-guests interactions • Inspectors (incognito? ) • Hotel sites are out of town • Mostly owned-few franchised Standardization of services Product differentiation • Pastel shades with white standard-designed furniture 9

NOVOTEL 9 -level Management Structure Presidents of Accor Presidents of NOVOTEL Directors of Operations Head Office Regional Managers Directors Delegates General Managers Sub-Directors Heads of Department NOVOTEL Hotel Units NOVOTEL Staff 10

1990 -1992: Signs of crisis …. 11

External Analysis New entrants in hotel industry Companies become more cost conscious (Europe’s Recession) People avoid international travel (Gulf Crisis) 12

Internal Analysis Prices and rates are increasing over time NOVOTEL stays as benchmark and not as innovator for competitors Profits are declining - crisis in 1993 Long Hierarchical Management Structure has not resulted in agility/sensitivity Self-satisfied culture away from customers Expansion has made NOVOTEL impersonal Low motivation of employees-stack to Les Boulons 13

Planning the new strategy …. 14

Planning the new strategy Set new values ▪ Clients (guests) ▪ Personnel (staff) Change strategic position ▪ Customer is more important than product ▪ Change logo and brand-identity ▪ Gestion (administration) Obtaining external stakeholder support NOVOTEL receives support and sufficient funding from Accor in order to proceed to the planned project Form and motivate top team ▪ New Co-Presidents with complimentary personalities ▪ One intellectual , marketing oriented with artistic mind ▪ One operation minded and effective implementer of strategies 15

The new values of NOVOTEL The flower (NOVOTEL) gets life from the sun (the customer) 16

Building a New Team…. 17

Mc. Kinsey 7 S Change Model Structur e Staff Systems Strategy Style Skills Shared Value 18

Changes in 7 S Strategy Structure Style Systems • Focus on customer • Reduce costs & increase cost flexibility • Tolerance towards differentiation Reduce hierarchy levels in: • group management level (tighter & leaner operational center) • enterprise level (improved communication flow & reduced the No. of employees) Driven from tight control & absolute hierarchical structure to a more guided one with enriched authorities Recruiting, promoting, rewarding, cost control, supplies, quality control, reporting etc. 19

Changes in 7 S Shared Values Staff Skills “New” company culture based on NOVOTEL genes, customer not product oriented • Multi-Functional Training to increase flexibility • More autonomy and responsibility to staff • Hotel teams (empathy for colleagues’ work) • Reflective clubs • • Program: “Progress Novotel” for the development of multi-skilled employees with flexibility to work in different departments Program for the evolution of hotel managers 20

Project Organization Highlights ØAnthropologists’ Work • Identified NOVOTEL’s “genes” through intensive interviews across the organization and the need to place customer’s satisfaction at the top of the organization. • Open-space meetings among the top team helped further to refine the confronting organization’s issues ØThe War Room • Formed at HQ in Evry (1993): Walls full of charts each representing one NOVOTEL. Each chart contains 5 simple performance measures focusing on clients, management and people. 21

Progres Novotel • Progres ΝΟVOTEL project is designed to ensure that staff become competent employees with recognized steps in their training and development. • With Progres NOVOTEL new competences are introduced, each corresponding to a different level of difficulty: Bronze: Learn the rudiments of work Silver: Knowledge of work allows for some autonomy Gold: Knowledge of works allows for full autonomy and ability to train others Platinum: Skills of marketing and management are required here, to have the potential for Head of Department 22

Communication of change -Vertical 2 Coesidents 3 -Day Convention • 378 attendants • Discussions/ debates • Examined/Reviewed proposed changes & future directions Directors • New Logo was unveiled General of Managers Operations Training sessions for communicating the project to GMs Training seminars from GMs to staff for communicating the broad guidelines (brain-storming activities) NOVOTEL Staff 23

Communication of change -Horizontal Hotel Teams are formed usually from people of the same functional area, who are meeting everyday and discuss with Heads Of Departments Reflective Clubs are informal groups of staff meeting together to suggest initiatives Hotel Teams The Clubs are formed from Novotel hotels with similar profiles and interests Progress Groups are formal groups, which operate at the level of country managers and Directors of Operations, which meet regularly once a month 24

The New Behaviors Ø Recruitment processes: consistency between the actual behavior and the desired behavior Ø Top-managers were removed if not able to demonstrate the desired behavior Ø Participation of mid senior personnel in joint actions & activities Ø Praise the “champions” by promoting their efforts & actions Ø Motivate team spirit 25

Evaluation of the project Final Results • Accelerated decision-making processes • Faster responsiveness to customer needs and demands • Cost reduction • Prices reduction • Quality improvement • Cultural change • Financial results improvement 26

Kotter’s 8 Step Change Model Kotter NOVOTEL Create a Sense of Urgency Management proceeded immediately into changes that established a sense of urgency (removing CEO). Build a Coalition Form a coalition with the contribution of regional managers. Develop a clear Vision Share the Vision Formulation of a clear, simple and concise vision. Continuous activities/actions to convey the vision to the executives and the employees with the contribution of the management team 27

Kotter’s 8 Step Change Model Kotter Empower People NOVOTEL Abandon hierarchy levels, delegation of power Secure Short. Term Wins Distinguish among the “champions” and the good practices developed Consolidating & keep moving Expansion of training programs Anchor the Change Development of a new culture and behavior 28

…. NOVOTEL today – new strategic changes. . 29

The Digital Era • Check-in online the day before you arrive so as to save time • Receive an SMS with practical information & your invoice by email. • Available on PCs, tablets and smartphones • Personalized and customizable application On line check-in / Fast check out The loyalty card: Classic, Silver, Gold, Platinum The new multi brand application The new Accorhotel. com experience • Priotity check incheck out • VIP Treatment • Free night- Room Upgrade • 18 languages/32 versions • Virtual guides • My Trip Planner : discover, choose, book and pay for activities online 30

The Digital Era • Customer feedback • Customer satisfaction surveys Novotel Virtual Concierge • Send offers via app • Streamline processes with real-time status updates on all rooms • https: //vimeo. com/1056 76118 Voice of the Guest (VOG) program Connect Staff mobile app B 2 B clients • Online booking of meeting rooms • Negotiated rates and conditions 31

A Sustainable Future • Accor group’s Earth Guest program – federates the Group’s social and environmental projects and mobilizes its 145, 000 employees, millions of customers, and thousands of suppliers and partners to protect the planet and the well-being of its inhabitants. • PLANET 21 Program – a shared knowledge platform on sustainable development in the hospitality industry that is both free and open to all. 32

Earth Guest Program 8 priorities divided into 2 projects 33

Planet 21 21 Commitments for 2015 7 Pillars • Ensure healthy interiors(85%) • Prevent diseases(95%) • Promote responsible eating(80%) Achievements 97% of hotels use eco-labeled products 74% of hotels organize disease prevention training for employees 97% of hotels promote balanced dishes • Reduce our water use(15%) 5, 6% % change between 2011 and 2014 • Expand waste recycling(85%) 88% of hotels recycle their waste • Protect biodiversity(60%) 41% participate in the Plant for the Planet reforestation project • Reduce our energy use(10%) 4, 5% reduction between 2011 and 2015 • Reduce our CO 2 emissions (10%) 3. 8% reduction between 2011 and 2015 • Increase the use of renewable energy(10%) 9% of hotels use renewable energy • Encourage eco-design(40%) 40% of hotels have at least three eco-designed room components • Promote sustainable building(21) 13 hotels are certified as sustainable buildings • Introduce sustainable offers and technologies. (20%) - LED-based lighting solutions are being tested - Filtered instead of bottled water for meetings are being tested 34

Planet 21 7 Pillars 21 Commitments for 2015 Achievements • Protect children from abuse(70%) 48% of hotels have committed to protecting children • Support responsible purchasing practices(70%) 87% purchase and promote local products • Protect ecosystems(100%) 93% hotels ban endangered seafood species from restaurant menus • Support employee growth and skills(75%) 69% of hotel managers are promoted from internal mobility • Make diversity an asset(35%) 27% Women are hotel managers • Improve quality of worklife(100%) 55 countries organize an employee opinion survey every 56 two years and 613 hotels had organized training to 57 prevent psychosocial risks. • Conduct our business openly and 3 indices for socially responsible investment transparently(6) • Engage our franchised and managed 41% hotels are ISO 14001 -certified hotels(40%) • Share our commitment with suppliers(100%) 80% of purchasing contracts are in compliance with our Procurement Charter 21 35

Asset Light Strategy “Asset-light” business model A business model focusing on minimizing “in-house” resources and maximizing usage of outsourcing opportunities. Hotel Invest: ownership and investment Hotel Services: Management under a fee Increased profitability of the company 36

Asset Light Strategy 20102013 Ø • Focus on hotel business • Sells non-strategic assets • 450 hotels, worth € 2 million, sold Ø Ø 20132015 Compagnie des Wagons – Lits (40%): catering on trains Groupe Lucien Barriere (49%): cazino 49 hotels in France, Belgium and Germany worth € 388. 4 m 18 hotels in Sweden( franchise ) 5 in other EU countries for € 154 m • Sells 175 hotels so as to reduce the adjusted net debt by € 1. 0 billion. 37

NOVOTEL into the Future…. 38

2016 Action plan Branding Invest in digital app Increase by 50% online Bookings Expansion Invest in new hotels in developing countries Develop the management chain Asset Management Focus on EU hotels Restructure the non profitable hotels 39

NOVOTEL in 2020…. https: //www. youtube. com/watch? v=-_k. Iel. Tx. Eus