Asia and the Pacific Hotel Industry Trend
Accor remains confident on Asia and the Pacific amid global financial crisis
Accor is Asia and the Pacific region’s largest hotel group with a portfolio of 374 hotels and 72,431 rooms in 16 countries. The group offers 10 brands in Asia and the Pacific from the exclusive Sofitel or MGallery to budget accommodation such as F1 or Base Backpackers (only operating in Australia and New Zealand). Accor is also the fastest-growing hotel company in the region with some 88 hotels due to open over the next two years. Michael Issenberg, the chairman and CEO of Accor Asia Pacific, tells eTN in today’s Executive Talk why the group remains confident on the region’s future.
eTN: Why do you have such an ambitious development program in such a rough time for the hotel industry?
Michael Issenberg: Let’s say that we are getting used to operat[ing] in a challenging time. We went in Asia through many crises during the last decade, from 9/11 to SARS, bombs in Bali or the tsunami. The current crisis does not indeed change Asia tourism strength and assets: wonderful landscapes, diversified cultures, a high sense of welcome, good service, and excellent value for money.
eTN: Is the current world financial crisis an opportunity for Accor Asia Pacific?
Issenberg: From a business point of view, some hotel operators approach us now to look at synergies with our group. We also see, for example, more opportunities to develop our mid-price brands such as Mercure, All Seasons, or Ibis.
eTN: Which countries in Asia offer the best prospect of growth?
Issenberg: Most countries in Asia Pacific have been seriously affected by the economic crisis with some, such as Singapore, being more exposed due to their role as a financial hub. I believe, however, that the growth potential of Indonesia – and especially Bali - remains intact. It is a huge country with a big population and many places still lacking proper hotel infrastructures. Indonesia is politically stable and its economy seems more resilient as it is less exposed to international activities. We are already Indonesia’s largest chain with some 40 hotels and more to come over the next two years. India’s tourism potential remains also highly attractive as there is a shortage of rooms in most cities.
eTN: How do you evaluate Thailand, where you have one of your strongest presences in Asia?
Issenberg: Thailand’s recent political turmoil definitely has an impact. In the world view, any instability affects immediately the image of a country. However, Thailand’s strong tourism brand, its excellent service and its large selection of quality destinations can more than offset some negative perceptions. You will not be surprised to hear then that Thailand is not much worse off when compared to other countries in the region. We felt, in fact, that the decline is more due to the global financial crisis than the recent political turmoil. We recently organized a super-sale in Thailand and had 85,000 rooms sold during those special promotional days.
eTN: Could you, however, slow down your expansion in the Thai market because of the recent political turbulences?
Issenberg: We remain fully committed to the kingdom and even see more opportunities for developments. We are currently planning the opening of 11 more properties until 2011, which will be added to our portfolio of 39 hotels.
eTN: How about the evolution in demand in other countries?
Issenberg: China has been hit quite hard due to an oversupply of hotels after the Olympics Games. We feel then more cautious in our development despite the fact that we see a lot of potential for new hotels in the budget to moderate segment. Vietnam currently experiences some difficulties as tourism strategies [have] been too much focused on overseas markets, especially in Europe and the United States. And we know that long-haul travel is the segment which will suffer the most in the current crisis. The Philippines is not such an easy market to operate, but we are looking for new hotels in both Manila and Cebu. We also continue to forecast good growth perspectives in Malaysia as we continue to be underrepresented with only six properties.