Accor expands in China as it seeks to exit hotel assets in Asia Pacific

Head of hotel operator's Asia-Pacific arm is upbeat about the mainland economy's prospects

PUBLISHED : Wednesday, 12 November, 2014, 7:13am
UPDATED : Wednesday, 12 November, 2014, 7:13am

China's transformation towards an economy driven by consumption and services will stimulate travel, and mainland firms' hotel investment outside the country will give Accor an opportunity to exit while retaining management agreements, the global hotel operator's Asia-Pacific chairman and chief executive Michael Issenberg said.

Accor, which operates about 3,600 hotels globally, is also on the lookout to add a Sofitel brand hotel in Hong Kong. It now has three midscale-brand Novotel hotels and two economy-class ibis hotels in the city.

"We are working on one or two other things [in Hong Kong]. But they are new projects and haven't started," Issenberg told the South China Morning Post.

Accor will rebrand the Park Lane Hotel in Causeway Bay in January to introduce its luxury-upscale brand Pullman. That will be its 50th Pullman hotel in Asia and the 600th operated by Accor in the region, including 143 in Taiwan, Hong Kong and on the mainland.

"Slowdown in China is a relative term," Issenberg said. "Travel in China will grow faster than the economy - no question about it.

"We are still getting a very high level of inquiries about opening new hotels," he added. "Sometimes, projects might get delayed a little bit, but there is still a lot of conferencing in the hotel sector in China."

Mainland policymakers are shifting the economy more towards consumption and services, away from exports and investment. The State Council last month singled out travel and tourism as one of the six key areas that would stimulate domestic consumption.

Last year the number of mainlanders who took domestic trips grew 10.3 per cent to 3.2 billion, generating 15.7 per cent growth in travel revenues to 2.6 trillion yuan (HK$3.28 trillion), official data showed.

This year, Accor has opened 15 hotels on the mainland and several more are in the pipeline for the rest of the year, with this pace of expansion to be maintained over the next three to four years, Issenberg said.

He said a slowdown in the luxury-end of the hotel market in China, partly due to Beijing's anti-corruption campaign, is conducive for the long-term health of the industry, which is seeing improved occupancy rates but the demand is not yet strong enough to drive up room rates.

As its brands get established in Asia, Accor will gradually sell off its hotels in Asia-Pacific to take advantage of Chinese investor enthusiasm for foreign hotel assets, while retaining hotel management agreements .

"Our Sofitel hotel in the Gold Coast of Australia is likely to be sold to a Chinese investor," Issenberg said. "We are in discussions to continue the hotel management on their behalf."

He added: "In Europe, we tend to be a long-term holder. But in Asia-Pacific, we traditionally put capital in and then cycle it out."