Mid-range hotels: France focusing on emerging market : N° 22, may 2013
The Ibis, Mercure and Campanile are brands which can be found throughout the world. In recent years, French hotel chains have been opening up in high-growth countries.
Need a bed for the night on a business trip to Beijing? Just 15 minutes from Tiananmen Square stands a hotel which customers do not choose for its originality, but rather for the confidence it inspires: the Ibis. The brand, which is owned by French hotel group Accor, is enjoying huge success in emerging markets. With the growth of the middle classes in developing countries, the major French chains have opted to set up hotels offering comfortable rooms at reasonable prices.
Growth of French hotels in the BRICs
Accor is the world’s largest hotel operator and is currently promoting its brands in Brazil, Russia, India and China (the ‘BRIC’ countries). Christian Karaoglanian, Chief Development Officer, states that, "One of our group’s main goals is to expand into emerging markets, as they are the source of future growth." BRIC growth figures for 2012 indeed make happy reading for investors, with China at 7.8%, India 4.5% and Russia 3.6%.
Infrastructure to meet new needs
With 120 hotels already up and running in China, Accor is now setting its sights on India: " India is where we have invested most heavily in recent years. It is still lagging behind in terms of supply, so there is room to develop our brand." The group, which posted a turnover of €5.65 billion last year, plans to open 45 hotels in India by 2015, mainly under its Ibis and Formule 1 brands.
While 23% of Accor’s hotels are located in the Pacific region of Asia, it is also developing hotels in Brazil, which will stage the 2014 football World Cup and the 2016 Summer Olympics. “These events create momentum and speed up the development process for business and leisure customers. The State is making land available to build infrastructure,” explains Christian Karaoglanian.
Accor already has about 100 Mercure and Novotel hotels in Brazil and ten more are currently under construction. And they have also entered the Russian market: the first Mercure opened up in Moscow in June 2012, followed by a second in Sochi, host city of the 2014 Winter Olympics.
An internationalization strategy to generate brand awareness
But Accor is not the only group setting up in emerging countries, as Louvre Hôtels is also promoting its image abroad. Owner of the Campanile, Kyriad and Golden Tulip brands, in 2013 this French chain intends to open 80 new hotels around the world. Its strategy is to first establish upper mid-range hotels and then budget hotels. “The mid-range market is our growth driver in emerging countries,” says Matthieu Evrard, Chief Development Officer. To gain recognition in China, the group has formed an innovative partnership with the Jin Jiang Inn hotel chain. Since the end of 2011, fifteen French hotels have been co-branded as “Campanile - Jin Jiang Inn” and offer services tailored to Chinese customers such as brochures and telephone assistance in Mandarin. Similarly, in China, fifteen “Jin Jiang Inn – Campanile” hotels provide services catering for continental Europeans, such as pastries on the breakfast menu!
Targeting the emerging African middle classes
Hotel sector professionals also plan to open several establishments in Africa. These investments are mainly motivated by the development prospects offered by the strong economic growth and expanding middle classes. The Louvre Hôtels group, which has a strong presence in Morocco with 4,600 rooms, wants to develop its mid-range hotels, as confirmed by Matthieu Evrard: “We are focusing on Africa, and in particular we want to double the size of our network in Sub-Saharan Africa.”
With 116 hotels on the continent, Accor is also one of the major players in Africa and has even created a specific website for its African customers. Meanwhile, France’s number one hotel group continues to build on the success of its online reservations system, with the launch in February 2013 of an Ibis smartphone app. With this technology, customers can use their phones to book a room in any of the 1,600 Ibis hotels around the world.