Accor taps into China's luxury market potential

Accor, Europe's largest hotelier, said it is hoping to further tap into the upscale hotel market in China, as a burgeoning middle class coupled with a rise in business travel has created a growing appetite for more hotel rooms.

To achieve that goal, the Paris-based company plans to open one upscale hotel per month in Asia for the next five years and at the same time move its global luxury and upscale marketing operations from Paris to Singapore.

Michael Issenberg, chairman of Accor Asia Pacific, said the move is to be closer to where the customer base is growing fastest, as Asia now accounts for almost half of global sales of luxury goods.

"In the coming years, Asia will replace North America and Europe as the key market for travel, especially in the upmarket and luxury segments, with China and India playing an important role in that growth," he said.

In the luxury hotels segment, Accor runs more than 170 properties in the region with over 70 more under development across its brands such as Sofitel, Pullman, MGallery, Grand Mercure and Sebel.

China alone already has 19 Sofitel and 15 Pullman hotels, making it the number one market for these brands outside of Europe, Issenberg said.

The future trend in the hotel industry, he said, will lie in how fast the company can respond to customers' specific demands.

"Asian travelers are very demanding and the standard of hotels in this region is very high, making it become a hub of creativity, innovation and transformation," he said.

Brand reorganization

Understanding the new trends in Asia, especially in China, the group has recently created a new operation entity for the luxury and upscale segment to reorganize its brands.

Michel Molliet, senior vice-president of operations for greater China, said operations now vary "very geographically" in the north, south and east regions of China in order to create synergy and gain a bigger market share.

The hotels will also involve more experts in areas such as food and beverage, revenue management, sales and even spas to share knowledge with general managers.

"In the past, we talked to one or two people who had general knowledge. But now we have expert teams to help optimize every aspect of the hotels. We want to upgrade the organization to be more supportive, with more supervision and competitiveness."

He a key focus of operations would be food and beverage.

Molliet said big spending on dinners has changed in recent years following China's crackdowns on corruption but new opportunities exist in second and third tier cities, where Accor will open more luxury hotels and plans to reinvent its food and beverage offerings as important sources of income.

Digital revolution

In response to today's digital changes in how travelers are making their trip arrangements, the French hotelier also unveiled its digital strategy at the end of last year, with plans to invest 225 million euros ($255 million) from 2014 to 2018.

With more customers now booking travel online, the digital plan will be built around providing personalized services through online booking systems - the travel Accor reservation system, mobile devices and websites.

Vivek Badrinath, deputy chief executive officer in charge of marketing, digital solutions and information systems for Accor, said the company has to adapt to the market transformation in a market defined by accelerated technological innovation.

"The new digital products can help build a big database based on travelers' consuming habits so that the service can be customized," he said.

In 2012, the French hotel giant revamped its upscale brand - Grand Mercure - to win the loyalty of millions of Chinese who travel both domestically and abroad.

The brand, known as Mei Jue in China, has such Chinese elements as daily tai chi sessions, tea ceremonies in hotel lobbies and congee available around the clock.

China's tourism industry revenue is expected to reach 2.5 trillion yuan ($403 billion) in 2015, accounting for 4.5 percent of gross domestic product, according to the 12th Five-Year Plan (2011-2015).

Contact the writers through lvchang@chinadaily.com.cn