Investment In India | "Accor eyes opportunities in India"

By : Kanupriya Kapoor
Source : http://blogs.ft.com
Category : Investment In India

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Accor, Europe’s biggest hotel chain by number of rooms, has joined the ranks of those looking east as a strategy for growth.

The group hopes to tap into the swelling number of business and leisure travelers to and within Asia – which after having hit 650m in 2011, is expected to account for 30 per cent of global traffic by 2014, according to aviation body IATA.

The group, which reported higher-than-expected profits of $697m earlier this year, says it wants to further accelerate its presence in Asia. The region accounts for nearly half of its growth last year.

Accor’s push, particularly its $223m investment in India, comes at a time of rising demand for good hotel rooms and services in Asia’s third largest economy. Even with homegrown luxury chains like the Taj group diversifying into the economy sector, India currently has a total of less than 150,000 hotel rooms – compared to the 5.58m foreign visitors who went to India in 2010 - leaving ample space in the industry for foreign players.

Though this presents irresistible expansion opportunities for groups like Accor and Swiss International, bureaucratic and logistical challenges often slow down the process, according to Michael Issenberg, the group’s Asia-Pacific CEO.

“It took us seven years to build our first thirteen hotels here (…),” he told beyondbrics, “because of the number of permits and approvals we had to get. The infrastructure here, electricity, security issues, water issues all add to the complexity, cost and time.”

“Growth in India isn’t going to be exponentially as big as in a place like China [where Accor runs 121 properties] but there are good opportunities for profitability here,” he said. “We’re definitely accelerating our presence here but it will take time for it to catch up to somewhere like Indonesia…where we’re by far the biggest international operator.”

The group currently owns or manages thirteen hotels in India and aims to nearly double that count by the end of the year, and open up to 90 by 2015.

Source : http://blogs.ft.com/beyond-brics/2012/04/05/accor-set-to-expand-in-india/#axzz1r9rzHTDZ