India is a priority market for French hospitality group Accor SA that runs hotels under brands such as Novotel, Ibis, Pullman and Grand Mercure.
Sebastien Bazin, Chairman and CEO of Accor, who was in India on his first visit, believes the country’s hotel industry has immense growth potential, despite the short-term challenges.
The company has 25 operational hotels in India and has plans to double the number in two years.
“In the past eight years, we have opened 25 hotels in India and we will open another 25 in the next two years, taking the number of operational hotels to 50 by the end of 2015. Our development pipeline remains robust,” Bazin told
Out of the 25 hotels, the company has invested in 15 and 10 are on management contracts. “Depending on the segment, we will continue to invest in India. Accor is investing the most in the economy and budget segment and in large capacity mid-scale hotels, and investing very little in the luxury and upscale segments,” he said.
The country has been facing supply demand imbalances in several cities that have put pressure on the industry, but the hotel group believes that given India’s size it remains under-served and the demand for hotel rooms will continue to grow in the long-term.
Though he is encouraged and very positive about India’s growth potential, he is also cautious. “You have to be a long-term investor because you know you are going to have some ups and downs.” Accor is one of the few hotel companies in India that has not only been a hotel operator but is also investing in building hotels in collaboration with partners. The company, which has 14 brands globally, has so far introduced seven brands in India.
Additional brands Asked if the company is looking at bringing in additional brands, he said all the segments are being covered by the existing brands and for now the focus is on strengthening their presence across the tier1 and tier2 markets.
Bazin added he sees potential for growing brand MGallery in India in the next three years, given that there are many Palaces and unique heritage hotels in the country. MGallery is a collection of high-end boutique hotels.
The company is also open for acquisitions if the assets fit its brand portfolio. “There is opportunity today. There are 60-70 hotels on the market that one can buy. The problem is that they are asking for too much money. Is that a necessity for us? No. Should we be opportunistic, the answer is yes as acquiring has lesser risk than doing development. But it is not indispensable and we need to be careful and ensure that quality of any such hotel fits Accor’s impeccable standards,” he added.