‘Our Hotel Count In India Will Be Same As China Soon

© Provided by The Financial Express Andrew Langdon, senior vice-president development Asia, Accor

Accor, Europe’s biggest hotel group which entered India almost two decades ago in 2004, has 56 operating hotels in the country. It includes brands such as Fairmont, Raffles, Mercure, Grand Mercure, Ibis, Ibis Styles, Sofitel, Pullman, and Novotel across economy, mid-scale, premium, luxury, and ultra-luxury segments. “Let me put this in comparison. Indonesia has a population of 280 million people compared to India’s 1.4 billion. While we have 140 operating hotels in Indonesia, there are 56 in India,” says Andrew Langdon, senior vice-president development Asia, Accor. “Two-hundred operating hotels in five years’ time, that’s the vision,” he adds.

In an exclusive interview with FE, Langdon talks about the group’s performance in the Indian market after the Covid-19 pandemic, expectations for the new year and expansion plans for the country, among many others. Here are the edited excerpts from the interview:

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Covid was harsh for the hospitality sector. How has the India market performed post-Covid?

It has been extremely well. The Indian market has experienced the same kind of rebound that we have seen in West Asia. The bounce back was far quicker, far stronger than any of us had anticipated. The experience across Asia has been pretty similar, whether they are city hotels or resorts. December and January were the best months for many of our hotels in their history. The room rates were 20-30% higher than what they were pre-Covid. We not only recovered but exceeded our occupancy levels.

The revenue in many of our hotels across Asia was record high, and so was the gross operating profit.

This happened because I spoke about the revenue but there is also cost, which was at one of the lowest levels. It is because our biggest expense in hotels is labour. But because of Covid, many hotels had to reduce their staff by 50%. However, when things recovered, they couldn’t find staff to hire. So, come December and January, hotels were running with 20-50% less staff.

In the last quarter of 2022, the regional division comprising India, Africa, Middle-East and Turkey witnessed a 73% rise in RevPAR compared to 2019. What are your expectations for the India market in 2023?

In Asia at large, a lot of travel in Q4 last year was from Asians. So, the domestic market remained strong, and then there was Asian travel, such as Singaporeans travelling to Thailand, or Malaysians travelling to Vietnam, etc. We also saw international travel.

Another interesting thing was that the demand was coming from ‘FIT’ (free independent traveller).

The experience was similar in India, with people having mostly travelled domestically. The corporate market bounced back, and so did the FIT leisure market, but the MICE market not yet. We expect the tour leisure market to pick up from the second half of this year.

The Chinese tourists comprise a significant market in India, as they do in Asia in general. Although they are not travelling yet, we expect them to start to travel at some time later this year.

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What are Accor’s expansion plans for India?

We, at Accor, are very excited with the opportunities that India offers. The infrastructure, the over 200 hotels that are being built, increased connectivity and cheaper tickets—all of these promote travel, whether for work and meetings or holidays. On top of that, there is the rapidly expanding middle-class. So, the demand for hotels in India is finally going to fulfill its potential which we always knew the country had.

We, at Accor, have identified India as one of our key growth countries. So, we are going to increasingly focus on our development here. It means that we are going to be more aggressive in offering franchises, for our economy and mid-scale brands—Novotel, Mercure, Ibis—particularly in tier-II and III cities. For our premium brands, the focus will be on tier-I and II cities, principally under management contracts. However, we may consider franchises for those premium brands on a highly strategic basis.

India should be equal to China in terms of the number of hotels we operate whether it’s through management or franchise. So, we have very big plans, and we would do this by being flexible, aggressive, open to franchise, expanding to tier-II and III cities, and also very focused on what we call instant noodles. They are existing hotels on which we can put our name on. The market is really fragmented here. There is a high proportion of mom-and-pop hotels. We can look at the bigger ones, ideally over 100 rooms which we can partner with, potentially give them a franchise, so they operate the hotels themselves, but they have all the support of Accor, as we think, franchise is a very good model and is win-win for both.

Are there any bottlenecks you face in the India market?

The issues or bottlenecks are the ones that we create. These are also the easiest to fix. For example, we were always careful in doing franchises, careful in going to tier-II and III cities. But our strategy is changing to align with the changes in the market.

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