Accor to expand footprint, add 50 hotels by 2012

Global hospitality chain Accor Wednesday said it would invest $130 million (Rs.636 crore) in expanding its India network to 50 hotels by 2012.

The hotel major currently operates five hotels with a capacity of 1,100 rooms under three brands: Mercure - a four-star midscale hotel, Ibis - a three-star hotel in the economy category, and Novotel - a five-star brand.

After the expansion, the number of rooms under its management will increase to over 10,400.

"We will have six brands by 2012, Sofitel, which is a five-star luxury hotel; Pullman, which is in the five-star category, and Formule 1, which is a budget hotel brand," said Asia Pacific chairman and chief operating officer Michael Issenberg.

As part of its growth plans, Accor will concentrate on Novotel, which will see the number of its rooms go up to 4,279, and Ibis, which will increase capacity to 3,126 rooms.

"By early 2010, there will be three Ibis hotels in Gurgaon, Mumbai and Pune, with seven more being completed by 2011," said Uttam Dave, Accor's head of development in India.

Accor operates in India through two principal joint venture partners.

The first is Interglobe, with which it is developing the Ibis chain of hotels and three hotels that are a part of Aerocity - the hospitality precinct at Delhi International Airport.

The other partner is Emaar MGF, which will help it develop the Formule 1 brand of budget hotels.

In addition to the principal partners, Accor has smaller tie-ups for specific properties.

"We operate in India through various management agreements and joint ventures," said Dave.

The investment of $130 million will be split up between managed properties and joint venture entities.

Hospitality industry profit falls 64 percent: Assocham

India's hospitality sector has witnessed a fall of 64 percent in profit in the January-March quarter this year, thanks to the economic slowdown, an industry lobby report said here Thursday.

"While on the one hand the inflow of foreign tourists came down sharply and the room rates contracted, on the other hand there was a rise in expenses," the report by the Associated Chamber of Commerce and Industry (Assocham) said.

According to D.S. Rawat, secretary general of Assocham, the borrowing cost of the hotels went up 51.65 percent in the fourth quarter, while the total income decreased 4.47 percent.

The chamber said it had prepared the report by analysing the quarterly results of the hotel companies listed on the Bombay Stock Exchange (BSE) between April 1 and May 25 2009.

TAJ GVK Hotels and Resorts, a leading player in the industry, has suffered 41.49 percent quarter-on-quarter fall in net profit during January-March 2009, while Jaypee Hotels has posted a decline of 44.86 percent in profit during the period.

Other hotels that registered major decline in net profit were Oriental Hotels (28.34 percent), Jindal Hotel (58.12 percent) and Howard Hotels (57.28 percent).

Besides the decline in income, these hotels also had to cope with a 20 percent hike in costs during the period.

The maximum rise in expenses was incurred by Asian Hotels (11.57 percent), followed by Jaypee (10.85 percent) and TAJ GVK (8.3 percent), the report said.

The employee cost of these hotels rose 7.47 percent per worker in the fourth quarter, while the cost of power, fuel and light went up 11.28 percent.