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1Accor has redefined its business model around two core areas: ownership and investment (HotelInvest), and operation and franchising (HotelServices). Such a shift allowed to simplify the internal structure and focus on strategic revenue streams, with a geographically segmented hierarchy and synergies stemming from unified brand resources (Accor, 2013). 
2Sofitel is the biggest luxury brand of AccorHotels and its privately held subsidiary, with properties across five continents. It is older than Accor itself: founded in 1964 with the opening of the first property in Strasbourg, France, it has gone on to join the Accor group in 1980 and become an independent unit in 2008. International expansion of the brand began with a US property opening in 1974. 
3Attributes
4Properties under the Sofitel brand are classified as "Authentic Luxury", as compared to Lifestyle or Historical Luxury. Various brand guidelines allow Accor to limit brand devaluation and control uniformity, while still allowing operators to be creative and flexible, adapting properties to local markets and demands. Accor has made sure Sofitel retains and puts an accent on the French roots and heritage of the mother company, with it offering arguably the most "French" hotel experience out of all Accor brands, as evidenced by the brand standards, given in Appendix M.
5Company Background - Arora
6Business model and Activities
7Arora Hotels Limited is the biggest family-owned hotel companies in the UK (Arora International Hotels via LSC/Investegate, 2008), tracing its history to the 1990-s (Appendix O). Arora Holdings Limited is the umbrella company for enterprises established by Surinder Arora.
8Arora Hotels' business model is focused on efficiently managing existing assets to generate profit levels high enough to sustain growth and expansion. This means operational control over premium-value and high-return assets, such as Sofitel properties, and investment in high-growth areas.
9In general, the business model follows the Ownership type, which is a part of an asset-heavy strategy, with the operator controlling both assets and operations. Such a model is capital intensive, and also exposes the owner-operator to high gearing of operational costs and freehold property value fluctuations. There are advantages, too. Most importantly, it allows for total, or close-to-total with franchises, control of all aspects of the building, land and operations. 
10People
11While Arora used to be a family company, with growth came the need for external expertise. Every business division is being run separately by a set of managing directors (Appendix A); however, Surinder Arora oversees main business activities as well as key decisions, being the chief executive officer of the company. Athos Yiannis is director of Arora Holdings, also being the group head for tax and finance (Arora Group, 2016). He is assisted by Carlton Brown, Chief Financial Officer. Operations are run by Vincent Madden, a veteran of the company. 
12The corporate part, Arora Hotels follows a functional organisational structure, segmenting employees by the business task, such as Accounting and Marketing. A high-level model of this structure is found in Appendix A. This, while allows specialisation and focused learning, is bound to stifle inter-communication Hotels within the group follow a divisional structure, each being a separate entity. 
13Going over to personalities more closely tied to the Gatwick property, it is clear that higher positions are mostly open to Arora veterans, such as James Berry and Globy Ouseph – previous and current General Managers (GM). Internal mobility for management is good, although it did not assist with recruitment of Aflal Jabir for the Front Office Manager (FOM) position. 
14With regards to managing human resources, Arora Hotels is fairly similar in its efforts to other hospitality companies of that scale. While the corporate website speaks of empowering employees and job descriptions describe the staff as the company's greatest asset, much is still to be done. While corporate jobs are relatively stable, operational roles constantly require new recruits, pointing to a potential problem.
15Brand Environment – Sofitel and Accor
16Historically Accor's main competition was not only companies headquartered in Europe but primarily US-based chains. Managing and owning properties in different price segments has led to Accor being in direct competition with most groups, and even to a slight overlap between own brands. In Europe, AccorHotels has to compete with the luxury Kempinski chain, which predates the French company by more than half a century, but is smaller and only focuses on the premium price band. Then there is Dunstable-based Whitbread and its Premier Inn brand, which battles for market share with ibis on the budget spectrum. 
17Accor and Arora
18Arora was first in Europe to win Sofitel franchise rights for 15 years, proving to be a successful operator of luxury-branded properties. The reasoning behind the long-term contract could also be due to Accor seeing the strategic opportunity Arora and its exclusive airport development presented.
19Sofitel Gatwick has born flagship Accor branding for ten years. Throughout this period Arora and Accor worked to establish the property as the top hotel in Gatwick and the surrounding area. With little direct competition and Gatwick growing in importance, AccorHotels would certainly be interested in maintaining a presence in one of the busiest European airports.
20Company Environment – Arora
21With the UK hotel segment being highly saturated, it is virtually impossible for a company to be isolated from competitors or allies.
22Brands
23With brands, franchising opportunities are usually the initial step and the main reason for establishing a relationship. Private owners and investors prefer a branded property on the same grounds as customers: perceived value, benefits and higher returns it offers compared to building an independent brand in-house. Mr Arora started out deciding to invest in his own brand, Arora Hotels, undertaking a substantial risk. However, as the company expanded through acquisitions of already branded properties, it was realised that an independent brand would be meaningless and adding little to no value for the luxury segment of the market, while a branded property has a higher market weight and better marketing prospects.
24If only properties managed and operated by Arora are taken into account, those are most closely connected to Accor and its family of brands, from mid-low Mercure to upscale Sofitel. This connection is examined in more detail in the respective part of this work. Apart from Arora and Accor, the company manages other own-brand properties, such as Savill Court. 
25The wide variety of brands allows Arora to monitor respective demand for each segment and demographic, while also getting access to resources and support regarding training and technology. 
26While the benefits of working with brands and franchisors are numerous, there also exist difficulties in maintaining such a strategy throughout the portfolio of medium to high size and different brands. With brands trying to differentiate, there arise incompatibilities in approaches to training, standards and equipment. Internal mobility could be impeded by the resources required for each employee transferring from one branded property to another. New Human Resource Management (HRM) techniques presumably allow to smooth over the transition, and some Sofitel Gatwick personnel have transferred to Intercontinental O2. 
27Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis
28With regards to company connections and its external environment, SWOT analysis provides a useful and concise snapshot of the current operational situation for a company. With Arora, strengths in asset management and development in its group subsidiaries could be paths to potential opportunities, while weaknesses in liabilities and financing showcase financial threats of the current economy. The analysis table is below:
29Arora Hotels - SWOT
30Strengths	•	extensive development pipeline,
31•	recovering national and international demand,
32•	brand franchising agreements,
33Weaknesses	•	rising employment and supplemental costs,
34•	financing agreements complicated,
35•	city location properties a small proportion of portfolio,.
36Opportunities	•	growth in metropolitan locations,
37•	acquisition of industry competitors,
38Threats	•	competition expanding and merging for synergy,
39•	political environment unstable and unpredictable,
40•	demand for innovation and adoption of it in the industry,
41•	economy risks leading to lower demand for premium products.
42Considering how rapidly Arora is expanding, there must be a strong case for a supportive external environment. Despite headwinds, the company maintains its positive outlook for the UK hotel sector. While some environments remain challenging, economic and social segments show signs of recovery. 
43Sofitel Gatwick – Marketing Environment
44One of the ways to reach actual and potential customers is by marketing to them. Marketing allows hotels to attract guests, learn more about them, and possibly make them stay loyal as a result. Sofitel Gatwick, as well as other Arora Hotels properties, resorts to the services of Davies Tanner PR. To understand and determine Sofitel Gatwick’s environment, marketing models can be used.
45Sofitel Gatwick has segmented the market into business and leisure, as well as a number of niches from M&E to aircrew. A differentiated targeted strategy is used for most segments, based mostly on pricing control, to maximise revenue. Positioned as a premium offering, Sofitel justifies higher prices with its product proposition, successfully doing so in the absence of direct competition.
46Operation - Sofitel Gatwick
47Operating Principles 
48Basic operational notions of Sofitel Gatwick are similar to those of most other airport hotels. While revenue from regular guests needs to be maximised, this is usually done via rate management. However, the biggest, although occasional, revenue generators are delayed or cancelled flights. Airlines and flight support providers are quoted the Best Available Rate (BAR) for the day, allowing to not only fill the hotel but also sell a block of rooms at a relative premium. Additionally, higher management receives a bonus if occupancy reaches 100%, and the easiest and most common way to fill the hotel is to accept a flight block. This usually leads to overbooking and puts a strain on the understaffed night shift.
49Front Office
50Overview and Current Issues
51The Front Office department of Arora's flagship Gatwick property plays a major role in day to day operations, being, as with most hotels, a hub for most guest contact and activity. Working closely with housekeeping, a particularly busy and important department at an airport hotel, as evidenced by James Berry in an interview to Garraha, FO controls multiple aspects from reservations to transactions and guest relations. This puts a strain on personnel and also impacts performance.
52Hierarchically the department is made up of three divisions: reception, concierge and guest relations. Each division has an appointed manager to deal with workload organisation and shift management, all reporting to Assistant FOM and FOM. Some redundancy exists in management, as demonstrated by multiple cases of conflicting views from department and division managers. 
53Understandably, some issues exist within the department, relating to workload, management and external factors. Issues mentioned in the section have been selected based on employee feedback and personal observation.
54Among the biggest problems, there is one that is attributable to the whole industry and describes the job market in hospitality quite well - staff turnover. Complete data is unavailable on other departments; however, Reception personnel turnover was higher than would be expected based on industry data. The main causes of high turnover are, as per employees, inadequate compensation, unoptimised workload and shift pattern, as well as managerial issues and office politics affecting promotion and hiring. This largely follows the industry theme for turnover reasons. It is understandable that higher-paying job openings of a comparable level in the London area seem more attractive as well - multiple transfers to Intercontinental O2 further support this view. 
55Other, managerial issues include questionable prioritisation of issues and limited interest in implementing new workflows and improvements suggested by team members. Questionable promotion decisions stifle development and enable a sense of unhealthy rivalry among some of the staff members, lowering overall productivity. To counter issues, a feedback element was introduced, with monthly meetings for voicing concerns or suggestions.
56Not surprisingly, management at all levels is looking to quantify performance and changes in it, monitoring the influence of various measures. The current FOM has made TripAdvisor his preferred metric. That is despite its value in measuring performance being disputed and questioned. Moreover, the comparative set of the property is not valid due to differences in segmentation, positioning and scale.
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58Interaction with other departments
59As could be expected at a property of that size, the various departments do not always integrate well - something that has been theorised upon. Those conflicts and issues impact overall productivity and morale. While FO maintains a positive relationship with Housekeeping (which is to be expected considering the reliance), there is sometimes hostility towards Reservations and Accounts departments. Some operational and managerial issues exist within departments, ranging from understaffing to poor communication. 
60 Recommendations
61One of the top priorities on the list of issues would have to be turnover and performance. As with most internal issues, the key is to employ efficient and progressive HRM strategies, with full commitment from management and monitoring of results. Despite additional hiring in the HR department, it is still mostly concerned with training rather than employee wellbeing. While it could be argued that an HRM model for a service shop-type of hospitality operation should focus on cost-saving, there is a strong argument for a quality-enhancement model (Timo, 1999), more suitable for a professional-service-model business. Considering how service is reliant on human wellbeing and emotion (Brotheridge and Grandey, 2002), it is logical to assume that coaching, management and treatment of employees need to account for personal state, character traits and workloads (Kusluvan et al., 2010). Moreover, with appropriate management of interdepartmental relations, e.g. staff parties and picnics, cross-training; the number of conflicts would come down as well. 
62While there is no universal fix for all departmental issues at present, improvements can certainly be made. FO has already taken the step in the right direction with feedback meetings and quality-of-life adjustments in the department, such as coffee and tea facilities, staff taxis and printing equipment overhaul - all suggested and requested by the staff. Recommendation for other departments can be found in Appendix K.
63Numbers – Arora
64As with most data, numbers do not tell the whole story on their own; however, they help to illustrate the situation and developments. Admittedly, data can be manipulated on the operational (through PMS tweaking and occupancy inflation) and company level (through the usage of GAAP or Non-GAAP reporting). No evidence of the former being widely used or having a more-than-marginal effect has been spotted during the year. It will also be assumed, that financial data is accurate and representative of overall performance. Some of it is related to Arora as a company, and is analysed below, and some – to Sofitel Gatwick, is more operational in nature and can be found in the next chapter.
65Financials 
66While being one of the fastest growing UK companies, Arora Hotels could experience difficulties in funding expansion and servicing current and non-current liabilities. While the hotel division of Arora Group is generating enough revenue to turn a profit and reinvest some of it internally, other divisions are facing challenges connected with a number of internal and external factors (Appendix U). 
67As for financial metrics, they mostly support conclusions made in this report regarding significant liabilities and profitability of the hotel division.
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69Still, it should be noted that due to the operating strategy, Arora is an asset-heavy company, with £362.07 million of tangible assets (out of £387.42 million total), with £353 million of them being long-term leasehold property, depreciating fairly slowly. While not very liquid, they can still be used as a financing instrument, and ultimately can be sold. One of Arora’s biggest competitors, Redefine International, reported valuation of its properties at £740 million in 1H16, with hotels amounting to £235 million. 
70Return on capital reflects this point, with a 16,9% ratio. This is considered healthy and is generally viewed favourably by industry investors. A sizable increase from the previous figure of 13,2%, if Arora manages to maintain this level of capital utilisation, it will improve financing options and generate returns for further expansion.
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73Financial metrics
74Financial data is no less important and widely used in daily and monthly reports from properties, as well as company reporting. 
75At the end of 2015 Accor reported Average Room Rate (ARR) for luxury-tier properties of €157 for the Northern, Central and Eastern Europe (NCCE) region. A change of +4.2 points over 2014 figures, it was a sign of increasing business activity and growing luxury travel demand in NCCE. Revenue per Available Room (RevPAR) was also improved at €116, +6.3 points. (AccorHotels Group, 2016).
76Turning to Sofitel Gatwick, its ARR for the placement year (08.06.2015-08.06.2016) was £84.41, or €100.86. The difference between regional and Sofitel Gatwick figures could be explained by British pound devaluation and different market positioning, as well as aircrew contracted rates being significantly lower than the market average. 
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78RevPAR for the year amounted to £68.34. During one of the staff meetings in 2015, James Berry, then GM, reported that RevPAR had improved 8% over the previous year (2014), while the local area has only recorded 6% growth (Smith via AlixPartners, 2015). Sofitel Gatwick remained the leader for both RevPAR and ADR (Appendix L supports this claim). Occupancy topped 80%, with the 80.6% figure being largely in line with local competition (Garcia via BDO, 2016), despite higher prices at Sofitel. This data points to a strong operational performance of Sofitel Gatwick, regardless of seasonal setbacks. It was echoed by occasional management celebrations and budgeting data showing the property on track and outperforming figures forecasted based on previous-year results.
79Outlook - Sofitel and Accor
80With Starwood being bought by Marriott, the competition in the premium and upscale brand segments will certainly become more intense. Pressured by intensifying consolidation in the industry, as well as pursuit of further cost-cutting measures, Accor acquired Fairmont Raffles Hotels International (FRHI) for $ 2.9 billion, giving prominent industry investors, Qatar Investment Authority and Kingdom Holdings, control over 10.5% and 5.8% of Accor shares. Having two of the largest hotel investment institutions among shareholders widens the scope of merger and acquisition opportunities that could be pursued by Accor. Financial synergies from the deal are expected to increase earnings after two years, with €65 million in revenue and cost trim forecasted to be achieved by the third year. 
81With FRHI come the rights to three famous brands - Swissôtel, Fairmont and Raffles, - and standout properties around the world, counting more than 100, with 40 in the pipeline. FRHI has a sizable portfolio of North American locations, certainly a major factor for Accor, whose presence on the continent still pales in comparison to competitors. This applies to the Sofitel brand as well, which is expected to develop in key locations. Naturally, some of these sites also feature an FRHI property. This presents a marketing and operational challenge. 
82It is not yet clear how, if at all, FRHI would be integrated into Accor, its corporate network, loyalty system and the French company's vision of providing an infrastructure for reservations that can be used by independent hotels. The latter has been introduced in 2015 and keeps growing in popularity.
83Having mentioned the initiative, it is worth examining in more detail with relation to outlook for Accor and the industry in general. This is not the first time a proprietary distribution system has been made available to other users. However, this is the only time a major industry player offered access to non-affiliated, in the usual sort of way, hotels and resorts. Despite brand dilution that could occur as a result of using such a system on a wider scale, Accor's entry into the market still largely controlled and dominated by distribution system firms and Online Travel Agents (OTAs) is a sign of looming change. Possibly, even an industry trend of unifying ecosystems to provide a complete solution for consumers. Accor itself refuses to liken the system to OTAs, with Jean-Luc Chretien, executive VP of distribution, saying that independents are interested in such systems and that it is an effort to control the value chain for Accor distribution, not fight the OTA model. With the industry consolidating, the scale of hotel infrastructure would be a major strength in cost management and battling new entrants and industry disrupters. Considering the aim to create a balanced mix of independent properties, including upper-scale, it is, nevertheless, expected that the new system would complement, rather than compete with Accor properties. This could be achieved by curation and differentiated offerings on the platform.  
84Still, infrastructure and distribution advancements are not always enough to sway undecided consumers and keep the loyal ones. Reportedly having regretted not investing in Airbnb, Accor is actively seeking talent and potential breakthrough innovations through acquisitions. Having bought 30% of a curated rental company Oasis Collection, 49% of Squarebreak, an upscale, resort-centered Airbnb competitor, and most recently acquired a loss-making onefinestay, a serviced home rental startup (Vidalon via Reuters, 2016); the group is trying to better understand the market before potentially entering it.
85Outlook - Arora
86With the UK exiting the European Union, uncertainty damages the outlook throughout the hospitality industry. Not only does the decision impact costs that will rise in the short run due to pound devaluation and duty barriers. In addition to that, the supply of skilled and semi-skilled labour would be reduced after promised immigration reform is implemented. Needless to say, the long-term effects of this decision are still to be seen. However, the author supports the consensus of negative impact on Great Britain, the EU and the global economy. Travel and hospitality industries have always been understandably sensitive to such changes. 
87Also cannot be overlooked the new development in Arora's recruitment processes, such as more careful screening and contacts with universities. In addition to that, Arora has started a graduate programme within the group. The focus is on operational roles, as those are in higher demand, with graduates expected to progress on to managerial positions. If successful, this would secure qualified labour for the company, one of the key issues in the current environment.
88The overall outlook for Arora appears positive, with the latest figures showing modest, although steady economic recovery throughout the UK and the European Union. This is expected to bring about higher levels of activity and, consequently, increase travel demand, both for leisure and business reasons. Some of this demand would be satisfied by airline and hotel industries, with airlines also benefitting from lower than usual oil prices. Also directly connected to the profitability of airlines is crew accommodation, as well as airport development. Thus, macroeconomic factors, if stable in the near term, would appear to signal further growth for passenger traffic being possible. As noted by Bachman, post-recession markets are expecting nicer travel facilities, bringing more discerning customers to airports and airport hotels. Not only that but business customers are supporting the idea of organising meeting at airports, cutting down on transportation costs and time. Physical connection to the airport, plush rooms and higher-end facilities all combine to form a product for the higher-value, modern traveller, not only disgruntled passengers from a delayed flight. 
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90Outlook – SLG
91Turning to Sofitel Gatwick specifically, its future would largely depend on how Gatwick and the associated business area develops. The airport itself is expecting major changes and overhauls, while it competes with Heathrow for expansion permission. New Mayor of London, Sadiq Khan, has spoken in favour of Gatwick expansion, with it having a record summer and recognised as the world's busiest single-runway airport. Moreover, Gatwick remains the airport of choice for the Caribbean, Central America, and Africa, with predominantly leisure travel - an important source of hotel demand. 
92In a major shift, British Airways will be moving all flights to the South Terminal, swapping with EasyJet. It is problematic to assess and forecast the exact implications of this move on the hotel, however, they could well be negative. With British Airways attracting premium-paying customers, EasyJet passengers are perceived as lower spenders, although that is debatable (Mugera, 2015). Still, a drop in direct bookings, as well as F&B revenue might be expected. It remains to be seen how the market mix of Sofitel would be affected. A sizable proportion of current guests is travelling with the low-cost airline. Most loyal customers and those on corporate contracts are expected to continue choosing Sofitel at least in the short-to-medium term, even if flying from the different terminal.
93With the airport renovated and expanded, Sofitel Gatwick should follow suit and redevelop facilities by brand guidelines, but also client needs and demands. Some action is already taken, primarily on executive rooms. It remains to be seen whether a wider initiative is implemented to update the property.
94Conclusion
95With the information presented, it is safe to conclude that Sofitel Gatwick will remain one of the best-performing properties in the Gatwick market over the short-to-medium term perspective. While some demand shifts could occur, repeat guests and business partners are likely to stay loyal. Premium rates and relatively cheap labour allow for a healthy operational margin, further increased by group and flight blocks of high profitability. Moreover, with traffic increase and fairly resilient business conditions, Gatwick remains a lucrative location.
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97Constant improvement is needed at Sofitel Gatwick and throughout the group to stay relevant and evolve in the long term. From investment in staff and training to facilities and services, the property is capable of operating better and more efficiently, while offering superior service. Parking facilities should not be overlooked, as they are an important part of the service offering. Interdepartmental communication could be improved, while staff should be cross-trained, and, most importantly, retained. Failure to counter managerial and recruitment issues, as well as develop and evolve with the times and changing consumer trends, could put sustainable premium rates at risk.