[SINGAPORE] Europe- based Accor will scale up its presence in the Asia-Pacific over the next three years growing from 550 hotels to 700, focusing largely on management contracts and franchise agreements as part of its efforts to remain asset-light.
The hotel operator, which first established a presence in Singapore 30 years ago, is opening 110 properties this year across its various hotel brands, which brings the number of hotels in its Asia-Pacific network to 550 by the end of this year.
Worldwide, Accor has nearly 3,500 hotels in 92 countries. Of the 110,000 rooms in the pipeline set to come onstream in the next three to four years, half are in the Asia-Pacific, while 70 per cent are outside its Europe homeground. In general, 10 per cent of the pipeline usually fails to materialise for various reasons.
Currently, 40 per cent of all Accor's properties are owned and operated by the group - though it aims to bring this number down to 20 per cent - while 30 per cent are management contracts and the remaining 30 per cent are franchised. As part of its mid-term targets, the latter two are both expected to grow to 40 per cent.
"That's the transformation of the Accor model - to remain a strong operator, to reduce the exposure of the owned and leased hotels," said chairman and chief executive Denis Hennequin, adding that different regions work better on different models.
For instance, within the Asia-Pacific, over 80 per cent of its properties are either franchised or managed hotels.
"Asia is the engine of growth in the world today and that is reflected...in the pipeline that we have," Mr Hennequin highlighted, noting that Africa could be a promising area for growth in the long run.
The group sees growth potential in the three key markets of China, Indonesia and India. It is looking to expand in China from 126 hotels to over 200, scale up from 18 hotels to 90 in India and nearly double its network of 52 hotels in Indonesia.
China, in particular, holds promise, notes Mr Hennequin. To cater to Chinese travellers, it launched the Mei Jue brand in February - an upscale version of its Grand Mercure brand - and is aiming to have 60 such properties under its belt by 2015. Close to 20 per cent of its pipeline under development in China will run under the Mei Jue banner.
Commenting on whether the global economy could stop upcoming projects from coming to fruition, Accor's management said that projects in Asia typically get delayed as opposed to being shelved when times are tough.
This year, the group invested 330 million euros (S$524 million) towards maintenance and renovation, while 250 million euros went towards development. By 2017, it is looking to bring these numbers down to 200-250 million euros for maintenance expenditure and 100-150 million euros for expansion capex.
In Singapore, Accor has four hotels - Novotel Clarke Quay, Grand Mercure Roxy and two of its economy brand ibis hotels at Bencoolen and Novena - with a fifth under its luxury Sofitel So brand set to open its doors in 2H2013.
"Singapore is one of the strongest markets probably in the world, certainly in the region," said Michael Issenberg, chairman and chief operating officer of Accor (Asia-Pacific). But the group's performance here this year was not too robust, likely due to the weaker economy.
Revenue per available room and average room rate across its four properties here were both up 4 per cent year on year for the nine months spanning January to September, while occupancies were trending at over 90 per cent.