1. NOVOTEL ‘Back to the future’
June 2015

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

3. The Accor Group…. 3

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

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

6. Brand Portfolio 6 6

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

8. The Early Years of Novotel….8

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

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

11. : Signs of crisis …. 11

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

13. 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 13

14. Planning the new strategy ….14

15. Planning the new strategy
Set new values
▪ Clients (guests)
▪ Personnel (staff)
▪ Gestion (administration)
Change strategic position
▪ Customer is more important than product
▪ Change logo and brand-identity
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 15

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

17. Building a New Team…. 17

18. McKinsey 7S Change Model
Strategy
Structure
Systems
Skills
Shared Value
Style
Staff 18 18

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

20. Changes in 7S Shared Values Staff Skills
“New” company culture based on NOVOTEL genes, customer not product oriented
Staff
• Multi-Functional Training to increase flexibility
• More autonomy and responsibility to staff
• Hotel teams (empathy for colleagues’ work)
• Reflective clubs
Skills
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 20

21. Project Organization Highlights
Anthropologists’ 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
The 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 21

22. 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 22

23. Communication of change -Vertical
2 Co-Presidents
Directors of Operations
General Managers
3-Day Convention
378 attendants
Discussions/ debates
Examined/Reviewed proposed changes & future directions
New Logo was unveiled
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 23

24. 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
Reflective Clubs
Progress Groups
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 24

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

26. 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 26

27. Kotter’s 8 Step Change Model
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
Formulation of a clear, simple and concise vision.
Share the Vision
Continuous activities/actions to convey the vision to the executives and the employees with the contribution of the management team 27 27

28. Kotter’s 8 Step Change Model
NOVOTEL
Empower People
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 28

29. ….NOVOTEL today – new strategic changes..29

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

31. The Digital Era Novotel Virtual Concierge
Voice of the Guest (VOG) program
Customer feedback
Customer satisfaction surveys
B2B clients
Online booking of meeting rooms
Negotiated rates and conditions
Connect Staff mobile app
Send offers via app
Streamline processes with real-time status updates on all rooms 31 31

32. 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

33. Earth Guest Program
8 priorities divided into 2 projects 33 33

34. Planet 21 7 Pillars 21 Commitments for 2015 Achievements 34
97% of hotels use eco-labeled products
74% of hotels organize disease prevention training for employees
97% of hotels promote balanced dishes
Ensure healthy interiors(85%)
Prevent diseases(95%)
Promote responsible eating(80%)
Reduce our water use(15%)
Expand waste recycling(85%)
Protect biodiversity(60%)
5,6% % change between 2011 and 2014
88% of hotels recycle their waste
41% participate in the Plant for the Planet reforestation project
Reduce our energy use(10%)
Reduce our CO2 emissions (10%)
Increase the use of renewable energy(10%)
4,5% reduction between 2011 and 2015
3.8% reduction between 2011 and 2015
9% of hotels use renewable energy
Encourage eco-design(40%)
Promote sustainable building(21)
Introduce sustainable offers and technologies. (20%)
40% of hotels have at least three eco-designed room components.
13 hotels are certified as sustainable buildings
- LED-based lighting solutions are being tested
- Filtered instead of bottled water for meetings are being tested 34

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

36. 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 36

37. Asset Light Strategy Focus on hotel business
Sells non-strategic assets
2010
Compagnie des Wagons – Lits (40%): catering on trains
Groupe Lucien Barriere (49%): cazino
450 hotels, worth € 2 million, sold
49 hotels in France, Belgium and Germany worth €388.4m
18 hotels in Sweden( franchise )
5 in other EU countries for €154m
Sells 175 hotels so as to reduce the adjusted net debt by €1.0 billion. 37 37

38. NOVOTEL into the Future….38

39. 2016 Action plan Branding Expansion Asset Management
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 39

40. NOVOTEL in 2020….