AccorHotels to manage Orient Express brand

The Orient Express brand will now depart from Platform A(ccor)

BY Piers Schmidt

AccorHotels, on a roll of late, has done it again as news came last week, announced 134 years to the day after the first Orient Express trip between Paris and Constantinople, that Accor will now develop and manage the Orient Express brand within the luxury hospitality sector globally. So begins a new chapter in the tangled history of this iconic mark.

Unlike the previous licensing relationship between SNCF and Orient-Express Hotels Ltd, the company founded in 1976 by James Sherwood and rebranded in February 2014 as Belmond, this new partnership will see Accor taking a 50% stake in Orient Express, closely aligning the two French partners, their common nationality not being without significance. The terms of the old licence were a key area of contention between the former parties.

The press release, jointly issued by Accor and SNCF, makes clear the new venture’s ambition to develop a new collection of prestigious hotels under the Orient Express banner. Described as the “very epitome of the art of travel, (the collection) will offer a unique experience steeped in history that combines the luxury, exoticism and sophistication of East and West in iconic locations.” The brand will also operate the seven SNCF-owned vintage cars from the Pullman-Orient-Express (shown above), albeit for private journeys rather than public itineraries.

The deal presents the intriguing prospect of a new branded collection of Orient Express hotels and trains, which may look very similar to the previous incarnation and that will compete directly with Belmond’s own hotels, trains and cruises. It is to be hoped, however, that AccorHotels will not fall prey to the temptation of ‘hard branding’ their collection in the manner of Rosewood and Belmond. This is an opportunity to prove their claimed savoir-faire by employing a more sympathetic and flexible application of corporate brand endorsement; one that is more respectful to the equity of the hotel assets that will be presented as part of the collection.

This new deal is fascinating in many respects but not least because it highlights the intriguing distinction between the value of tangible assets and the intangible value of brands.

On the face of it, Belmond enters the ring 49 assets heavier than Accor and a clear favourite to win any bout between the two Orient Express half-brothers. After all, its stellar portfolio of trophy assets, painstakingly assembled by Sherwood and his successors over forty years, is almost as difficult to emulate as it would be impossible to replicate. Equally, as Bob Lovejoy, John Scott and, most recently, Roland Vos have all discovered, it’s harder than it looks to acquire hotels and management contracts of an equivalent calibre to augment the Belmond portfolio without dilution.

Added to which, Accor’s owner pitch is surely more commercially compelling than Belmond’s and that’s before we discover if Accor plans to transfer some of its historic luxury properties, currently flagged under the Raffles, Fairmont or Sofitel Legend brands, to the Orient Express stable. If that’s the case, Belmond’s asset advantage may only be short-lived.

On the other hand, it is widely acknowledged that the Belmond brand and the manner of its initial application were botched. The current team in London are working to remedy this false start but it’s going to take years to get back to where they were, which is precisely the point from which the new venture can set off.

Apocryphally, it was John Stuart, the former CEO of Quaker Oats, which is now owned by PepsiCo, that once said: “If this business were to be split up, I would be glad to take the brands, trademarks and goodwill, and you could have all the bricks and mortar–and I would fare better than you.”

Orient Express is world-renowned: the release even references, “thanks to its history,” the brand’s “place in the popular imagination”. That goodwill is priceless and both Accor and SNCF know it. They must be smiling wryly at the significant role and contribution that their erstwhile namesake and new competitor, Belmond, has played in building equity, which they alone are now free to leverage.

Not that the route ahead is without “leaves on the line” for Accor. Attaining the “very epitome of… luxury, exoticism and sophistication” is not easy for the leading luxury operators and although Accor formed a new Luxury Group under Chris Cahill in the middle of last year, it is not a group with the luxury experience of, say, a Marriott or Starwood, yet alone the burnished credentials of pure play luxury operators such as Four Seasons and Mandarin Oriental.

I’m going to keep a close eye on how this one develops but I wouldn’t bet against Accor in what’s shaping up to be a very interesting battle between brute asset strength and deeply cherished brand equity.

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