Accor bullish on luxury hotels

Global hospitality brand Accor Hotels has been largely growing its portfolio of economy and mid-scale hotels till now as it had found these categories doing well in India. Accor thinks the time is right to expand its luxury brands as the market is ready.

Accor has 53 properties under 10 brands. Of these, a major chunk of properties are under economy brands Ibis and midscale brand Novotel. Ibis and Ibis Style have 18 properties, whereas 15 properties come under brand Novotel.

Most of the domestic and global hospitality chains have been growing the economy and midscale brands as they saw a big opportunity to cater to the increasing number of domestic travelers and the growing middle class customers. Lower occupancies and stagnant room rates also had deterred the industry to invest in luxury hotels. 

However, Accor now has started expanding its portfolio of luxury and upscale brands. It has opened one property each under Swissotel, Sofitel, Fairmount and Pullman. It currently has a pipeline of 30 properties and half of them are being designed and constructed for these luxury and upscale brands. That will add 15 more properties under these categories.

“The Indian market is now mature enough for luxury hotels. Luxury hotels have been there in the Indian market, but they been a niche category. In the past few years the

occupancies have been down for most of the hotels. But things are changing,’ said Jean-Michel Cassé, Chief Operating Officer, India & South Asia, AccorHotels.

In the recent times some of the brands in the luxury space like the Oberoi, Marriot and Starwood have seen occupancies going up.

Even globally, occupancies and average room rates of luxury hotels are improving.

Moreover, in the Indian scenario, most of the inventory was being added up in the midscale and economy categories. In the luxury space while the supply is growing at around 6 to 7 per cent, the demand is growing faster at 10 to 11 per cent.

Casse also finds GST to be beneficial for the organised hospitality sector. The tax structure has become simpler and the rates too are better compared to the total tax incidence during the pre-GST times.

Once the properties in pipeline become operational, Accor will have a total 15,000 keys. It currently has 9,700 rooms in 53 properties.

Sangeetha G.