Europe based Accor group is planning to open 57 hotels in India in next five years. The company is expanding across five brands from its budget brand Formule1 and economy hotel Ibis to upmarket brands Novotel, Sofitel and Pullman.
Accor group has invested $250 million in its expansion through various joint ventures including its partnership with Interglobe for opening Ibis hotels. Beside China and Brazil, India is the only other country outside Europe, where Accor has put in money. “Accor has been coming in India, in and out for the last 20 years with mitigated success or failure. We realized that we will be taken seriously only when we invest money,” Casse added. He also said that India is the top most market among the three countries Accor has invested in.
Accor’s strategy is to establish a benchmark for its brands and after it has reached a significant number of hotels, it will divest provided it has the guarantee of retaining the management contract. The company will continue to invest in India.
“We are confident that even if there are delays, by 2015 we will have no less than 50 hotels in operation. We see a lot of opportunity and our strengths in three distinct segments - upper midscale, economy and budget,” said Jean-Michel Casse, Senior Vice-President Operations Accor India.
In India, the growth drivers of the company are Novotel and Ibis. The company has customized Ibis to Indian market in several aspects, including adding food and beverage options. In several cases, the hotels have created a link with third party restaurants. The hotel chain is conducting a similar exercise for its budget hotel brand Formule1. “We keep on customizing by keeping a close look on the guest comments to improve the product,” Casse said.
While India is not a significant revenue source for the company globally, the market is expected to have larger share by 2015 with a strong pipeline. Globally out of 3,500 hotels of Accor, 553 are in Asia Pacific.
With economic slowdown casting its shadow on the expansion plans of many hospitality chains, Accor is witnessing some of its expansion taking longer than usual. The company therefore is doing “a lot more due diligence” in signing management agreements to ensure that developers have sufficient funds in place. “On the whole we are seeing project becoming slower or owners trying to rework the facilities. We are working closely to understand their budgets,” said Lokesh Sabharwal, Vice President - Development, India, Nepal, Bangladesh and Sri Lanka – Accor.
