NOVOTEL ‘Back to the future’

1. NOVOTEL ‘Back to the future’ June 2015

2. Agenda 2 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

3. 3 The Accor Group….

4. Accor Group Presentation 4 • 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

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

6. Brand Portfolio 6

7. Timeline Accor becomes Accorhotels and asserts its desire to make everyone feel welcome Opening of the 100th NOVOTEL, in Amsterdam Creation of NOVOTEL- 1st NOVOTEL opens near Lille’s airport 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 Accor rewarded for its commitment to sustainable development The group is renamed to ACCOR 1st NOVOTEL outside France 280 NOVOTEL in 46 countries Approved demerger in HotelServices and Hotellnvest

8. 8 The Early Years of Novotel….

9. NOVOTEL Competitive Advantages • • Consistency at the different touch points • • Easy to monitor and manage behaviors 9

10. NOVOTEL 9-level Management Structure Head Office NOVOTEL Hotel Units 10

11. 11 1990-1992: Signs of crisis ….

12. External Analysis 12

13. Internal Analysis 13

14. 14 Planning the new strategy ….

15. Planning the new strategy 15

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

17. 17 Building a New Team….

18. McKinsey 7S Change Model 18

19. Changes in 7S Strategy • 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

20. Changes in 7S Shared Values “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

21. Project Organization Highlights 21 • 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.

22. Progres Novotel 22 • 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

23. Communication of change -Vertical 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 3-Day Convention • 378 attendants • Discussions/ debates • Examined/Reviewed proposed changes & future directions • New Logo was unveiled

24. Communication of change -Horizontal Reflective Clubs 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 The 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

25. The New Behaviors 25 • 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

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

27. Kotter’s 8 Step Change Model NOVOTEL Kotter 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

28. Kotter’s 8 Step Change Model Kotter 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

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

30. The Digital Era 30

31. The Digital Era 31

32. A Sustainable Future 32 • 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.

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

34. Planet 21 21 Commitmentsfor 2015 7 Pillars Achievements 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 • Reduceourenergy use(10%) • Reduceour CO2 emissions(10%) • Increase the use of renewable energy(10%) 4,5%reduction between 2011 and 2015 3.8%reductionbetween 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. 13hotels 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 21 Commitmentsfor 2015 7 Pillars Achievements • 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 • countriesorganize an employee opinion survey every • two years and 613 hotelshad 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 areISO 14001-certified 80%of purchasing contracts are in compliance with our Procurement Charter 21 35

36. Asset Light Strategy 36 “Asset-light” business model A business model focusing on minimizing “in-house” resources and maximizing usage of outsourcing opportunities.

37. Asset Light Strategy • Compagnie des Wagons –Lits (40%): catering on trains • Groupe Lucien Barriere (49%): cazino • Focusonhotelbusiness • Sells non-strategicassets • 450 hotels, worth € 2 million, sold • Sells 175 hotels so as to reduce the adjusted net debt by€1.0 billion. 2013-2015 2010 2010- 2013 • 49 hotels in France, Belgium and Germany worth €388.4m • 18 hotels in Sweden(franchise ) • 5 in other EU countries for €154m 37

38. 38 NOVOTEL into the Future….

39. 2016 Action plan 39

40. NOVOTEL in 2020…. https://www.youtube.com/watch?v=-_kIelTxEus