INTERVIEW: Accor To Double Hotels In China, HK By 2007

HONG KONG (Dow Jones)--French hotel group Accor S.A. (12040.FR) said it expects to more than double its hotels in China and Hong Kong to 50 by 2007, drawn by an increase in travel within mainland China and its strong economic growth.

China currently contributes less than 1% of our profit, Accor Asia Pacific President Michael Issenberg told Dow Jones Newswires in an interview.

"Within five years, we expect it to be at least 5% of our profit," Issenberg said.

Issenberg said the company's expansion in China will focus on the top and lower ends of the country's hotel market, which will help protect the group from the cyclical nature of the hotel and tourism industry.

The hotel group expects to invest about EUR50 million in China through 2007 on 100%-owned "economy class" Ibis hotels, Issenberg said.

The group will add five Ibis hotels next year, and another 10 in 2007. The company hopes the hotels will address a gap in China's market.

"There is no international hotel brand in China aimed at this sector and with domestic travel scheduled to grow five-fold by 2010, there is a clear market need for quality, internationally branded accommodation in major cities, new economic zones, transport hubs and regional centers."

As part of its expansion, Accor will also open at least eight of its top-tier Sofitel hotels under management contracts in China this year, Issenberg said.

The company will open two Sofitels in Nanjing this year, with one each in Xian, Xiamen, Suzhou and Shi Jia Zhuang.

It will open two other Sofitel hotels, in Hangzhou and Haikou, by the end of this year.

It plans to open another of the deluxe-brand hotels in Jiangsu Province's Liyang City in December 2006.

Currently, Accor runs 20 hotels in China, including eight Sofitel hotels, ten "business class" Novotels and one Ibis hotel. In Hong Kong, it has four hotels, including two Novotels and one Ibis.

Accor will also work closely with its partners to cater for a growing number of outbound Chinese travelers to popular destinations around the world, expected to grow to 50 million by 2008 from 25 million currently, the company said.

Elsewhere in Asia, Accor is also expanding into India, with the first Novotel in the country to open at the end of this year in Hyderabad.

Two Ibis hotels will be added next year, and another three the following year.

The company's businesses in Southeast Asian countries, including Vietnam, Indonesia and Thailand, have done well this year, said Issenberg.

But he said he expects occupancy rates in Phuket to take two years to return to the levels before the tsunami hit at the end of last year. He said he believes that Accor's hotel occupancy rate in Phuket in the coming peak season of November to March will fall short of the 90% level prior to the tsunami.

However, tourists are apparently visiting other destinations in Thailand instead of Phuket, which is helping Accor's hotels in Hua Hin and Ko Samui, he added.

Accor has around 4,000 hotels, or 463,000 hotel rooms, in 90 countries worldwide.