’Demand for hotels, travel in India, quite incredible’

  • Accor will focus on its core brands—Novotel, Pullman and Ibis, which constitute about 70% of its entire business

Varuni Khosla
First Published7 Mar 2024
Accor chief operating officer for Asia Garth Simmons.
Accor chief operating officer for Asia Garth Simmons.

New Delhi: French hospitality major Accor, which operates brands such as Ibis and Pullman, aims to open a hotel every week this year in the Asia region, driven by what it calls incredible demand.

Accor, which announced the signing of 11 new properties and opened 20 in 2023 in India, will focus on its core brands—Novotel, Pullman and Ibis, which constitute about 70% of its entire business—in its expansion drive this year, a senior company executive told Mint. Among its notable signings last year were the Fairmont Agra, a Pullman in Amritsar, Novotel at the Bengaluru Airport and a Grand Mercure at Jaipur.

Garth Simmons, the company's chief operating officer for Asia for its premium, mid-scale and economy division, who was recently in India, said there was no stopping India's hospitality sector, despite the room rates being high. They are based on demand and supply dynamics and demand levels are “quite incredible right now”.

Accor also develops the Ibis properties in partnership with InterGlobe Hotels in India. "We know the largest plane order in the world is out of India. Our JV partner is IndiGo airline's InterGlobe, so we know this first hand that demand for travel is not going down and we are excited about it," he added.

Tata Group-owned Air India has ordered 470 planes at $70 billion, while IndiGo is buying 500 narrow-body planes. India’s fleet is expected to go up to about 2,000 planes in 2030, from 730 aircraft currently, as rising prosperity buoys the country's aviation sector.

“We cannot look at hotel rates increasing in isolation. It's not just that hotels have become expensive but that economies overall have changed. This includes everything from transport to food to other expenses. If people are building homes around the world, it will cost them much more than what it did before the pandemic too,” said Simmons.

He emphasized that India is doing well, while some other markets in Asia are still in a recovery mode. One of those is Vietnam. For them, the last two years have been more difficult because of the absence of China from the global travel market. China was also one of its biggest source markets. Indonesia, on the other hand, was a bit like India and was very resilient because of its domestic market.

Encouraged by the boom in hospitality in most places, especially in “new world” or emerging markets like India, Vietnam, Indonesia and others, he said, the company has seen a lot of interest from developers to build hotels, whereas in the more developed markets, this is not the case and there are “refixes” of hotels, by either knocking down and rebuilding or adding more space to existing hotels. All of these factors put together are what are driving growth for the hospitality management firm.

Last year, the company signed 65 hotels in Asia. “Asia is the new world, and India is a huge part of the hospitality industry’s growth. Not just by contributing more hotels, but also human capital. The excitement of the population base to travel abroad is also very strong,” he added. This year, the company plans to open a 60-key hotel in Chandigarh, add 230 rooms in two hotels in Goa, and another 125 rooms in Delhi. It will also open one Novotel in Bhubaneswar with 117 rooms and one Ibis Styles in Mysuru with 142 rooms.

According to a report by property consultancy JLL India that was released in September 2023, India's hospitality sector is poised for strong growth in the coming years. While major cities (tier-I) are approaching market saturation, smaller cities (tier-II and III) are experiencing a boom. This trend is expected to continue in the medium term, with demand for hotel rooms outpacing supply.

Looking back at the past year-and-a-half, tier-I cities witnessed a significant increase in the development of upscale hotels, accounting for 60% of all new branded hotels. The remaining 40% belonged to the mid-scale category. In contrast, tier-II and III cities saw a different trend, with around 70% of their new hotel inventory falling into the mid-scale segment. This, JLL India had said, reflects the growing demand for affordable accommodations in these developing markets.

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