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European hotel chain Accor’s luxury brand Sofitel debuted in Mumbai last year. With two more hotels in the pipeline, the luxury brand is looking for more partners and properties to expand. In conversation with Ruchika Chitravanshi, Markland Blaiklock, Senior Vice President and Head of the Asia Pacific region for Sofitel Luxury Hotels is expecting a slow but steady growth in Sofitel’s India portfolio. Excerpts:
Having opened one Sofitel hotel in Mumbai, how has the experience been so far and how is the pipeline looking?
From the point of view of everything except our hotel rooms, we hoped for a better response. Currently, we are in the Bandra Kurla centre where demand is outpacing the new supply. We are happy with our first year. But, we are not as happy with our development as we would have liked to have. The brand has succeeded in garnering a lot of interest. Two more hotels are under development in Mumbai. . Development is slower than anticipated. We are okay with it because the development of the area will take some time as well. We are interested in Delhi, Bangalore and resort destination like Goa. No firm agreements at this point.
What was the ideal plan?
Ideal plan was to sign two or three agreements, following this hotel and take it to ten properties in the next two years. Because of the current slower economy and issues with the cost of borrowing we have not been able to sign more agreements. This country has a cycle just like every country. And we are on the soft part of the cycle. We are very confident that in the years to come that will change. Availability of hotel rooms as compared to the population is very low here as compared to the other markets.
How do you compare India with the other markets in Asia Pacific?
The area of most dynamic growth is China as it represents 50% of APAC network and 20% of our global network. We have strong presence in Thailand, Vietnam. In this region India and China are slower than the other parts of this region. In India, Delhi is our primary target. We have a strong and growing Accor presence in Delhi. We are chasing down any opportunities there.
You must have heard about the Taj Mansingh auction. Do you see it as an opportunity for Sofitel?
If it requires direct investment that would not be something we would do. But if we are able to partner with somebody that would be interested in making that investment and giving the management of the property to us, it could be very interesting. I am not familiar with the property (Taj Mansingh) itself. In our brand architecture, we have Sofitel Luxury and Sofitel Legend, which are heritage hotels with deep history of hosting celebrities and dignitaries. It’s a destination within the city. There could be great opportunity for Sofitel Legend, for properties in India. You have beautiful palace hotels. That has been an area of focus. We are not keen on leases, but we are keen on an existing property that can easily be adapted to our branding.
With occupancies and average rates under pressure, how are you coping with the current market conditions?
I would agree that rates have dropped from the peak from pre-2008 level. It will time for rates to come back up. Today we have only one property in BKC and this place is experiencing growth in demand more than any other market in India. On the demand side we are happy.
What are the three key challenges for you in India?
Rates in general for the market have come off their peak. We need to push them back up. The cost structures are going up. We have to manage very our energy consumption carefully. We have commissioned an audit by Accor to reduce our consumption and reduce our costs. We are a people business and scouting for the best talent, training and retaining them is also a challenge.
