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Following is the transcript of an First On CNBC interview with Michael Issenberg,Chairman and CEO of AccorHotels Asia. The interview was broadcast on CNBC on 18 October 2016 at 11:30AM SG/HK Time.
All references must be sourced to a "CNBC Interview'
Interviewed by Martin Soong, Anchor, CNBC with guest Kieran Calder, Head of Equity Research Asia at Union Bancaire Privée.
Martin Soong: How did the bunch of boomers come up with this Jo&Joe brand idea, which is for millennials?
Michael Issenberg: Well,we actually have what we call a shadow COMEX, COMEX being a French term for executive committee, we have a shadow based in Jakarta, and that shadow comex get together and they have to be millennials and be under 35 years, and they were the drivers for the concept. So well of course boomers matter because we came up with the idea that we need to change, we need to come up with a new concept; it was completely conceived by millennials for, I wouldn't say for millennials, not just for millennials, but again, for the baby boomers we all know we aspire to be a bit more young, a bit more experiential… so while we actually target the millennials, they might let you and I in (laughs)…
Martin Soong: We were talking to a VC guy earlier this morning on the show, and he invest specifically in travel and travel-related start-ups right, and I asked him about your idea and he said, look, great potential, I mean who doesn't see potential in the millennial market right, but as far as hospitality concern.. is concerned, he thinks it's an idea which is a little bit ahead of his time, and it's… i mean, the jury is out right now, or rather, it is not in yet on whether or not you can monetize that?
Michael Issenberg: Oh look I mean, millennials love travelling, right. And the whole idea when you think about millennials, one that that's really changed about this generation compared to the others is sharing. They would love to share, whether it's Facebook, Instagram, Snapchat, sharing. So really the real heart of Jo&Joe is sharing, that whether you're sharing communal space for a drink, to watching games, to watching a concert, to participating in something… and then the rooms can be either even more traditional it can be a room for just two, they can also be for sharing, they're travelling together; 4, 6, 8 people can share a room and not just a room but a communal space, so it is building on their interests.
Martin Soong: So you can have a bunch of sleeping bags around a fireplace or something…
Michael Issenberg: No, i think a bit more than that, but yes, around the communal area, and in fact we designed the sleeping area so that they can also be privatised, so that occasionally… might be a group of people that know each other, or might be themselves… so Jo&Joe is designed to bring the community in, so you've had a great time you've had a great night you don't want to go home, 25 Euros for a bed, but you can also close it off so you feel that you have your own space.
Martin Soong: It's really flexible..
Michael Issenberg: Very, very Martin…
Martin Soong: Interesting, interesting, Kieran?
Kieran Calder: I think the other aspect of millennials is not about sharing but also the amateurization of many industries like taxis and like hotels through airbnb and obviously this is an approach to try to address what airbnb has kind of captured in a broad sense.
Michael Issenberg: Well I actually see airbnb utilising under-utilised assets. They started off as sharing hosting, but now airbnb is much more about just inexpensive accommodations, and in fact Jo&Joe would be much more of an experience than Airbnb. I'm not saying it's directly competitive, it's different. But to create experience I think we, those who are in the hotel industry, have a lot more experience in providing that than just an apartment.
Kieran Calder: Do you think that I mean, the share prices are down since the announcement and there hasn't been a very good year for Accor… what I guess… time do you expect something like this might be an actual positive contribution to the earnings or…
Martin Soong: I mean Jo&Joe that brand, do you see it as a margin basis or a volume basis?
Michael Issenberg: Again, the great thing about Accor, we go from the economy to the luxury, we have about 4000 hotels around the world, and it's important to continue to innovate. And whilst we see this as an important opportunity, and we see that there's some growth that doesn't have an immediate impact on our earnings, but what is important is that the innovation will spread to the rest of our brands, and being innovative is key to being successful.