Essay Example on Acquisition of John Paul helps to Accelerate a Global Strategy

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4 1 Acquisition According to researchers the main motives for an acquisition are to lover costs through economies of scale acquire new technology or increase market share Anderson et al 2012 Capron Pistre 2002 Porter Singh 2009 Chung 2004 agrees and adds that through acquisition companies can balance cash flows spread the business risks and eliminate their competitors In 2016 AccorHotels has acquired an 80 percent stake in John Paul for about 150 million in equity and debt Ting 2017 John Paul is a worldwide network of 50 000 partners who provide concierge and hotel employee loyalty services through proprietary CRM software applications with embedded 360 degree personalization and profiling capabilities AccorHotels 2017 According to AccorHotels Chief Executive Sebastian Bazin the acquisition of John Paul helps to accelerate a global strategy to position the customer experience at the very heart of initiatives Vidalon 2016 Due to John Paul s experience in customisation blended with a wide range of services and advanced technology AccorHotels can boost the value of relationships with guests and partners and multiply the number of touch points Through the partnership with John Paul AccorHotels can support the whole customer journey from non hotel offers to 24 7 assistance by providing multi nature services to guests AccorHotels 2016 Moreover the acquisition of John Paul helps to transform AccorHotels into the new breed of hospitality company Ting 2017 According to Sebastian Bazin AccorHotels aims to change the way people interact with their hotels Ting 2017 According to Accor the hotel is no longer just for travellers or guests but for everyone and anyone who has the ability to interact with them and to use them Ting 2017 Therefore AccorHotels launched AccorLocal community initiative which provides local services that give shopkeepers the opportunity to offer their products within AccorHotels properties and allow hotels the opportunity to promote their hospitality services for non hotel guests Ricca 2017 These services include spas the swimming pools fitness rooms pilates relaxation classes deposit points a pay by the hour car rental access to printers ironing rooms parking under surveillance

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The services will be based on local needs and their relationships with local shopkeepers and business Ricca 2017 Thus it is clear that AccorHotels desires to enter into new market space through the development of hotel services which will result in greater customers satisfaction acceptance and loyalty This strategy is known as the blue ocean strategy that focuses on value innovation and makes competition irrelevant by creating a new demand in an uncontested market space Agnihotri 2015 Ahmat et al 2015 Chakrabarti 2014 Kim Mauborgne 2004 With the successful implementation of blue ocean strategy AccorHotels has diversified their business and increased the size and complexity of the company therefore acquisition of John Paul can be considered as a strategic decision 4 2 Disruptive Innovation According to Christensen and Raynor 2003 disruptive innovation underperforms when compared with existing competitors primary features and it does not come from improved product performance Guttentag and Smith 2017 state that there is misconception about disruptive innovation because very often the term disruptive innovation is erroneously used to any exceptionally new product that disrupts a market in a more colloquial meaning Therefore Guttentag and Smith 2017 clarify that radical and discontinuous innovations demonstrate a significant degree of newness through radical technological advancements or major changes in customer use while disruptive innovations bring a new value proposition

Disruptive innovations offer a different set of benefits generally focused on being cheaper simpler and more convenient Guttentag Smith 2017 Disruptive innovations early consumers are low end or previous non consumers of the incumbent competing product Guttentag Smith 2017 However the disruptive product upgrades over time therefore it can meet the expectations of mainstream consumers Guttentag Smith 2017 One of the disruptive innovations in the hospitality industry is Airbnb which is innovative internet based business with unique appeal to low end market Christensen 2006 As mentioned above disruptive products usually underperform with regards the dominant products key features but often it is cheaper and with new benefits Guttentag 2013 In the case of Airbnb its offered accommodation is typically cheaper than traditional hotels and Airbnb accommodation brings additional benefits such as more unique and authentic experience and household amenities that are the main motives for using Airbnb services Guttentag 2013 Nowak et al 2015 Although the Airbnb is challenging the traditional hospitality approach AccorHotels initially showed reaction by creating new brand Jo Joe See Appendix 1 with the aim to change legacy culture at Accor and disrupt traditional concept of hotel keeping Hamdi 2016 Jo Joe is an open house with combination of the traditional hotel disruptive hostel and private rental formats Thompson 2016 The concept of Jo Joe was created to meet the needs of millennial minded trendsetters that are vast international community transforming the market Thompson 2016 Moreover the brand targets people living nearby not only travellers Otley 2016 By doing so AccorHotels enters co living concept and develops connections among people Ting 2016 Jo Joe is about building a community driven communal travel experience available for people traveling alone couples family and groups with rates starting from 25 a night Ting 2016 For instance Jo Joe in Hossegor brings together travellers and locals around well being good food and surfing Ting 2016 Concerts yoga classes collaborative kitchen allowing guests to share their cooking talents also bar and restaurant are some of the services offered at Jo Joe Thompson 2016 According to AccorHotels Jo Joe is not a direct competitor to Airbnb because it functions on a different model instead they are an alternative to Airbnb offering totally reinvented and disruptive experience in terms of design approach catering service and customer journey Ting 2016 Moreover Jo Joe offers a mobile app that enables guests staff members and locals to connect meet share tips or initiate events Ting 2016 The decision to launch a new hospitality model Jo Joe can be considered as a strategic because

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