New Delhi: Accor SA, one of the world’s largest hotel companies, said it has reached a deal to build two hotels on 18,000 square yards of land in Ahmedabad as part of its rapid expansion strategy in India.
Accor has a 40% stake in a joint venture with InterGlobe Enterprises Ltd, which has acquired the property. The venture will develop the two hotels—the five-star Novotel and the mid-range Ibis—at a cost of more than Rs100 crore, which includes land costs. The hotels are likely to be operational by 2010 and Accor said it expects to recoup the investment by 2017.
“We think that Ahmedabad has a great future from a standpoint of economic development,” said Accor’s India head Uttam Dave, who said the city is the last of the seven Indian metros that Accor wanted to enter with the Ibis brand.
He added that through a separate 50-50 joint venture with developer Emaar-MGF Land Private Ltd, Accor SA will be expanding its budget Formule-1 chain to multiple cities in Gujarat.
Accor had signed its first deal in India with InterGlobe in 2005, and has pledged close to $300 million (Rs1,320 crore) to the country’s hotel sector over the next 10 years. The French firm plans to have 50 hotels operational by 2010.
It both develops its own hotels through its two joint ventures in the country and also manages hotels built by partners such as Hindustan Construction Company Ltd. Accor owns or manages about 4,500 hotels in 90 countries, said Dave.
The estimated shortage of 1.5 lakh rooms in India has fuelled high occupancy rates and tarriffs as high as Rs18,000 per night in some cities.
As a result, revenues per room in Indian hotels have more than doubled to Rs3,764 from fiscal 2002 to fiscal 2006, according to a report by hospitaltiy industry consultants HVS International.
Sensing the opportunity, foreign and domestic companies such as Accor, Hilton Hotels Corp., and ITC Ltd, among others, have decided to invest heavily in India in recent years.