As the hospitality sector in India revives post the pandemic, hoteliers are betting big on expanding their presence in the Indian market, largely aided by a strong revival in domestic travel. One such company is Accor, which runs brands such as Novotel, Ibis, and Raffles, among others.
Speaking to CNBC-TV18, Puneet Dhawan, Senior Vice President - India & South Asia for Accor says that the company signed 10 hotels in 2022, which will open over the next couple of years and of this, it has already opened 3 properties so far in India in 2023, and is set to open three more this year.
“We opened another new Novotel in Mumbai close to the International Airport. We opened Ibis in Thane and Novotel in Jodhpur. For the remainder of the year, we're looking at at least three new openings IBIS in Wagator, the second in Goa, a
Novotel in Jaipur, and the grand Mercure in Agra. We are also looking at a few other opportunities,” Dhawan added.
A part of this expansion, Dhawan says, also includes penetrating into tier two and three markets that give Accor a broader network across India.
“Some of the hotels we've signed in Aurangabad, Bhopal, Indore, in Mohali give us broadness of network available across India,” he added.
It is also planning to bring more brands to India. ”Globally, Accor has more than 40 brands across luxury, lifestyle, premium and midscale economy in India. Today, we have nine of those 40 brands present in India. We would like to bring some of the brands into India, and we are in discussions. And for franchise options, we are definitely looking, whether it's lifestyle brands or some of our collection brands, for the right opportunity in the right location to bring some more brands into India, because we see India as a market that has an appetite for more of our brands,” Dhawan says.
And as Accor looks to expand, a lot of the new development will happen in the asset-light model. Interestingly, this is the model most hospitality majors are now shifting to, including the likes of
ITC Hotels.
Dhawan says Accor is now aggressively looking at management contracts and a franchise model. While its portfolio is predominantly managed currently, with less than 10 percent of the portfolio being a franchise, moving forward the company will focus more on franchised properties.
“We've got 58 properties in 23 cities spread across the country. So we've got enough traction for brands to continue with the asset-light strategy be it via management contracts or franchises. There are few franchise properties in the pipeline that we have signed,” Dhawan adds.
HOSPITALITY SECTOR REVIVAL & TRENDS
Dhawan says the recovery in the hospitality business is happening across most segments. While domestic travel and staycations, which have been the travel trend for the past two years, continue to grow, corporate business and large MICE events have also come back, along with social events like weddings as well. Events like G20 and sports events also play a big role in driving business for hotels.
“It started from the second quarter of 2022 and we have consistently seen growth both in terms of occupancy and rates across the markets. It started with the leisure markets, but now the growth is pretty much throughout the country. The rates are finally growing as well, which leads to higher margins and higher bottom lines for us,” Dhawan adds.
Occupancy levels, he says, have grown by 10-15 percent over pre-pandemic levels. From a portfolio point of view, Accor is currently seeing occupancy levels of 70 percent.
“July has been a really, really good month for us. Occupancies are almost touching above 75%. Typically, July is a bit of a slower month, otherwise. But I think we've seen robust demand in some of our key markets. And we had a pretty solid growth in terms of occupancies,” Dhawan adds.
However, international demand, Dhawan says is still lagging, especially in markets like Bengaluru which he says are markets highly dependent on international business.
This, Dhawan says, is because of a combination of factors, starting with airline demand coming to India that is still lagging and more importantly economic slowdown seen across European markets, along with a slowdown in the IT sector that also used to contribute to a lot of non-leisure international travel.
“I think we are fortunate to be in India, where the economy is growing at a fairly healthy pace. However, if you look at the US or European markets, there are a bit of recessionary clouds hanging. Then you look specifically into IT & IT related businesses, they are suffering.”
“We've all heard of the massive layoffs some of the key global marquee IT companies have made. So I think overall, there is a bit of that as well. So it will take time for the international demand to be coming in at a much higher pace than what we've had before the pandemic,” he adds.
First Published: Aug 21, 2023 4:44 PM IST
