Feb 24, 2017 - The most impactful brand sponsorship strategy of 2016 was what and why? .... connected venue and increasing traffic on social media before, ...
Edouard JOSSET University of Exeter The Business of Events 24.02.2017
The most impactful brand sponsorship strategy of 2016 was what and why?
Introduction AccorHotels Group is a French multinational hotel group. With 240,000 employees worldwide, 4,100 hotels and a sales revenue of 5,6 billion euros in 2015 (AccorHotels Group, 2017), AccorHotels is today part of the greatest leaders in its business line. In September 2015, the firm has established the most significant naming sponsorship ever in France with the Palais Omnisports de Paris Bercy (Denis & Vidalon, 2015). After being renovated for 150 million euros and rebranded in 2015, the AccorHotels Arena has become the second largest arena in the world: 20,300 seats, 1,5 million visitors and 140 events every year in 30 configuration possibilities (AccorHotels Group, 2017). This 41,5 million euros partnership of 10 years (Denis & Vidalon, 2015) has been firstly set to enable the hotel company to raise its brand awareness, and secondly to deal within the framework of the new global strategy of the group, symbolised by a 5-year and 225 million euros investment plan (AccorHotels Group, 2014). The purpose of this study is to demonstrate why the AccorHotels Arena project is the most impactful brand sponsorship strategy of 2016 ; that is to say to what extent this partnership enabled AccorHotels to build an affinity with customers and to differentiate from competitors (Blake, 2017).
2 First, going for rebranding the Palais Omnisports de Paris Bercy has been a model of its kind in France. Indeed, naming rights deals are underutilised in France since they are very difficult to handle there, unlike in other countries such as the United States or Germany (Brigand, 2015). In other words, the successive choices made by AccorHotels to bypass local economic, cultural and political difficulties related to naming turned out to be crucial and have to be taken into account. Then, the relevance of this partnership from a business point of view appears to be completely legitimate regarding the new strategy plan for 2020: the AccorHotels Arena project is not self standing but deeply ingrained in the group rebranding and customer engagement strategy (Visseyrias, 2015).
3 1. AccorHotels’ partnership is impactful because it is the only one that succeeded in bypassing the difficulties of naming in France In 2016 in France, only six naming partnerships have been made between brands and sports venues – the first started in 2004 with the MMArena at Le Mans – which is very poor for such a country where sports are an integral part of its culture (Brigand, 2015) and where almost thirty stadiums can host more than 20,000 fans. In point of fact, many construction programs and stadiums wish to partner with brands as part of a naming contract, but very few companies go for it because the cultural, political and economic context make it harder to succeed than elsewhere (Izambard, 2015). Consequently, taking into account this issues is crucial to appropriately measure the impact of such a deal.
1.1. The cultural disincentive related to naming rights deals is particularly strong in France, but AccorHotels made the right choices to avoid it This lagging of naming in France is mostly due to cultural facts: examples of it are the question asked by a deputy at the Assemblée Nationale denouncing the abuses of sports commoditisation (Loncle, 2013) and the interview of Vincent Chaudel, a Kurt Salmon consultant: ‘The main reason of this delay is historical. France has always had a complex relationship with money, and even more when it comes to sports.’ (Brigand, 2015) A similar point of view can be observed in the United States, yet a pioneer country in terms of naming rights deals, concerning commoditisation in college sports (Eddy, 2013). However, according to a study, 88% of French people approve the fact that a brand would partner with a sports venue so as to help its funding (Kantar TNS, 2014).
4 Consequently, rather than focusing only on financial issues, the cultural wall to naming involves the studying of other aspects, that AccorHotels has anticipated. The risk of non-utilisation of the new name by the media and fan’s resistance has been identified in naming partnerships main issues (Delattre & Aimé, 2010, pp. 59-61). Concerning the AccorHotels Arena, though the historic name is sometimes still used by the journalists, the new one has become prevailing according to Fabien Gavard, the firm’s sponsorship director: ‘The media reporting rate has exceeded 70% which is great. 29% of French people associate our name with the venue. Only the Allianz Arena in Munich (36%) and the Emirates Stadium (34%) do better.’ (Fraioli, 2017) In addition, as the arena is not directly linked to a club, AccorHotels did not suffer from fans lobbying trying to prevent the naming, which often happens when the identity of the club is deeply ingrained in the stadium name and that fans feel like they had no say on the matter (Woisetschläger, Haselhoff, & Backhaus, 2013, pp. 59). Choosing an arena hosting many kinds of events is definitively safer than choosing a stadium regarding the cultural issue of naming rights. Furthermore, the geographical location of the venue plays an important role in a naming rights deal (Woisetschläger, Haselhoff, & Backhaus, 2013, p. 9). In order to be impactful, the naming partnership has to tell a story to customers (Cimelière, 2016). Choosing the Palais Omnisports de Paris Bercy was a strategic move from AccorHotels since both Paris and the firm are flagships of French tourism and hospitality. A deal with a financial company would not have had the same impact in the eyes of fans. Besides, the participation of the group in the funding of the venue renovation has been perceived as a public interest action by both the authorities and the fans for whom the venue is symbolic, as stated by the Sports and Tourism deputy of the Town Hall of Paris Jean François Martins:
5 ‘We had a public service mission in an extremely modern venue and we wanted a partnership-based approach. AccorHotels was, for us, the most logical choice.’ (Brigand, 2015) Eventually, the AccorHotels Arena deal could have been a failure in terms of brand awareness and opinion if the firm had not picked a multimodal arena in a place like Paris.
1.2 Choosing the AccorHotels Arena turned out to pay off on both political and economic fields AccorHotels succeeded in anticipating political issues set by international sports organisations by choosing an arena rather than a stadium. Indeed, the brand awareness would have suffered during major events such as the Euro 2016 because the UEFA prevents the venues from using a brand in their name during the Euro (Harbottle and Lewis, 2012). Moreover, choosing an arena rather than a stadium is also a great move on the economic field: the multimodality of the AccorHotels Arena will enable to host much more events (almost 150 per year) than a football stadium for example. Besides, the sports risk (Delattre & Aimé, 2010, p. 60) for a naming rights deal is stronger in France where the sports league are based on a promotion and relegation system, than in the United States (franchise system): if the team that usually plays in the stadium fails, the deal becomes useless for the brand since its public exposure is threatened. That is what happened for the French insurance company MMA, since the club of Le Mans has been dissolved only two years after the construction of the MMArena and only two games in Ligue 1. AccorHotels successfully avoided this risk. Eventually, the firm respected 6 key aspects of a naming rights deal to generate revenues and increase brand awareness:
6 •
Successful teams and events (Kalb, 2013): the AccorHotels Arena hosts the most important indoor events in France (AccorHotels Arena, 2017) such as the BNP Paribas Masters, the National Basketball League finals, the World Championships in different sports (handball, ice hockey, table tennis, etc.) and the major concerts (RHCP, Adele, Supertramp, Lady Gaga, Muse, etc.).
•
Traffic (Kalb, 2013): the Paris agglomeration is one the most dynamic worldwide hosting 10,6 million inhabitants. 65% of spectators at the AccorHotels Arena are not French (Denis & Vidalon, 2015). However, the recent terrorist attacks that occurred during cultural and sports events may hurt the financial condition of the venue because the city has suffered from a decrease of tourists and events hosts had to increase their security budgets (Maviel, 2017).
•
Media Attention (Kalb, 2013): as seen before, journalists and fans have accepted the new naming.
•
Performing facilities (Delattre & Aimé, 2010, p. 64): the arena has been renovated in 2015 for 150 million euros and has 30 configuration possibilities.
•
Variable component of the deal (Delattre & Aimé, 2010, pp. 64-65) : there is a 21,7% variable part in the deal (Denis & Vidalon, 2015) that enables AccorHotels to find a better way to exit the sponsorship in case of failure (Blake, 2017).
•
Long-term deal (Delattre & Aimé, 2010, pp. 64-65): the contract has been signed for ten years (Denis & Vidalon, 2015) which improves the customer engagement on a long period and makes the sponsorship impactful (Blake, 2017). Nevertheless, the naming rights deal for the AccorHotels Arena being very
recent, no ROI program has yet be implemented, which is risky (Blake, 2017).
7 2. The AccorHotels Arena deal is the symbol of the new strategy of the group Naming rights deals are of major strategic significance for a firm since, unlike basic communication plans, they raise questions such as: ‘Will the company need this communication scheme within ten years? Will it be able to pay the money provided for under the end of the contract without threatening its satisfactory financial condition?’ (Marouseau, 2009) AccorHotels is currently facing the rise of new competitors such as Airbnb or Booking.com that work up the value chain in the hospitality industry and the tourism experience (AFP, 2014). The group decided to change its strategy (Visseyrias, 2015), in particular when it comes to communication: a new name (from Accor to AccorHotels) and a new tagline (‘Feel Welcome’). A successful naming rights deal seems relevant to make the new name of the firm known, to raise its brand perception, to differentiate from competitors, and to be in line with the new mission statement of the company: ‘Feel Welcome’. The AccorHotels Arena is also an additional building block in the construction of the new customer experience driven by digital services and the loyalty program, Le Club AccorHotels (AccorHotels Group, 2014).
2.1. With the AccorHotels Arena, the group now has a great asset to make customers aware of the new strategy First, this deal is impactful considering the fact that the AccorHotels Arena is a way for the firm to develop its prestige to a very large market: the diversity and multitude of events hosted, the international aspect of its customer base and the kind of spectators attending the events (families, businessmen, friends, etc.) make the AccorHotels Arena deal the best structure to maximise the income potential in France (Marouseau, 2009). Indeed, unlike a women’s golf tournament such as the Evian Championship, the market shares of a naming rights deal lead to a wider media
8 exposure to the brand: as well for trend positives, as for game experts or for connection fans (Repucom, 2015). Likewise, other sponsorship schemes such as shirt sponsorships would have been less impactful than a naming rights deal (Marouseau, 2009) because many sponsors notice that their brand can be seen on TV or on photos but is not often cited: the communication is only visual whereas in a naming rights deal the brand awareness is also verbal which make the memorisation of its name easier for customers. Moreover, the declination of a naming rights deal is crucial to make the sponsorship successful (Delattre & Aimé, 2010, pp. 66-67). AccorHotels has made the arena the host of its brand emotion, and a lever to increase sales revenue as another consumer touch point in the whole AccorHotels customer experience: reaching new customers by showing the group’s expertise in hospitality, offering exclusive experiences to loyalty program members, targeting specific audiences with a deeply connected venue and increasing traffic on social media before, during and after events (AccorHotels Arena, 2015).
2.2. The business aspects of the AccorHotels Arena deal are even wider than customer issues Indeed, the declination of a sponsorship is also efficient in terms of internal communication and corporate communication, as Delattre & Aimé (2010, p. 67) demonstrate it in the following chart:
Corporate communication
Goals
Internal communication
•
Relationships
•
Motivation
•
Perception of the brand
•
Team building
•
Reputation of the brand
•
Corporate culture
9
Targets
•
Recruiting
•
Perception of the brand
•
Broad public
•
Employees
•
Suppliers
•
Customers,
•
Partners
•
Media
•
Free places
•
Visits, open days,
•
Conferences, business
Resources
invitations •
Conferences, fairs, etc.
seminars, etc. •
Use of the facilities
•
Incentive operations
In the AccorHotels Arena deal, the American entertainment group AEG holds 35% of the exploitation of the venue. Thanks to this partnership, AccorHotels hopes to take advantage of the resources of its partner (Brigand, 2015): a gigantic customer database, the promotion of AccorHotels’ services to AEG’s clients by combining events tickets with hotel nights. Sebastien Bazin, CEO of AccorHotels Group, has declared: ‘AccorHotels has hotels in 80% of the cities where AEG has facilities’ (Denis & Vidalon, 2015) In addition, AccorHotels has entered into partnerships with other brands so as to enable these companies to have commercial spaces within the arena. As an example, an American Express bar has been built and customers from the financial firm can enjoy a better experience (AccorHotels Group, 2017). This is also a way for AccorHotels to develop its customer database. Sponsorships like this one have been made by other hotel groups such as Marriott with the NBA and Hilton with the Grammy Awards (IEG, 2015), but the naming rights deal made by AccorHotels remains unparalleled.
10 Conclusion Communication had a key role to play in the new strategy of AccorHotels since the brand changed in 2015. A naming rights deal appeared to be more relevant than other types of sponsorship to raise the new brand awareness to a large audience in a quick amount of time and then generate sales revenue. AccorHotels has entered into an impactful sponsorship since it succeeded in dealing with the context of naming rights deals in France (culture, politics and economics) and making such a partnership successful for the first time in this country. Otherwise, the AccorHotels Arena led to the the development of new business opportunities with different kinds of target audience (whether internal, corporate or public) for the group. However, a very important aspect has not been taken into account yet: the ROI of the deal. Indeed, ‘companies who do implement a comprehensive process to evaluate the impact of their sponsorship during its lifetime can increase returns by up to 30%’ (Blake, 2017). Here is the main issue AccorHotels Group has to work on.
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