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AccorHotels to Focus on China in Worldwide Expansion

March 25, 2016

Photo by Naik

Last year ended on a high note for AccorHotels with the announcement that it was acquiring FRHI International, whose brands include Fairmont, Swissôtel and Raffles. Until that deal closes, AccorHotels has been hush, but the group's global chief development officer, Gaurav Bhushan, opened up on a host of other topics during the International Hotel Investment Forum, held earlier this month in Berlin.

Last year broke records for AccorHotels, Bhushan said, with 36,000 rooms and almost 230 hotels opening globally, a 20-percent increase over 2014’s numbers. In total, the company’s network now includes 3,869 hotels and 510,000 rooms in 92 countries. Nearly half of the new hotels are franchises and 43 percent are under management agreements.

In terms of segments, the company opened more midscale and upscale properties (54 percent of the total) against 45 percent in the economy sector. The Mercure brand opened 59 new hotels, followed by ibis, which added 44 new properties to its network. Pullman opened 17 new hotels in 2015.

Almost 40 percent of AccorHotels’ new rooms are in the Asia-Pacific region, Bhushan said, representing 14,000 rooms. Europe followed close behind at 37 percent and 13,500 new rooms.

AccorHotels will now up its luxury footprint via the nearly $3-billion buy of FRHI.

Huazhu Deal

At the beginning of 2016, AccorHotels finalized its alliance with China’s Huazhu Group. This partnership, announced in 2014, is set to accelerate AccorHotels’ brands in Asia with the opening of 350 to 400 GrandMercure, Novotel, Mercure, ibis and ibis Styles hotels in China, Taiwan and Mongolia over the next five years.

“The deal is transformational for Accor,” Bhushan said, calling China—along with the U.S.—“the largest and most important hospitality market globally.” Huazhu opened 800 hotels in China last year alone, he added, and will continue to develop its own brands as well as Accor’s midscale properties.

“The other aspect of [the alliance] is capturing the Chinese market,” Bhushan said, calling China— with  120 million outbound travelers—the “largest, fastest-growing outbound market.” Eighty-five percent of travelers those stay in the Asia Pacific region, however—and this partnership positions AccorHotels as a market leader for the region. “So we get a very tangible benefit out of that outbound market,” he said. “For us, this deal was as much about market leadership in China and actually capturing that very fast-growing and lucrative outbound Chinese market.” The two companies will link their loyalty programs and distribution platforms, and 2,000 AccorHotels will be listed on Huazhu’s website.

Forward Looking

AccorHotels’ pipeline is also passing milestones, with 160,000 rooms set to open in the coming years—another record for the company. Nearly half of these will be located in the Asia Pacific region, Bhushan said. In the last few months alone, the company has signed deals to open more than 54,000 rooms.

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