Accor-Interglobe JV to Expand to 300 Hotels in India

Mumbai, Apr 9 (PTI) Travel-focused Interglobe and its French hospitality major partner Accor on Wednesday announced an expansion in the total number of hotels to 300 in the next five years from the present 71.

The 20-year-old partnership has another 40 properties already under construction, and the new additions will be done in an asset-light manner, where the joint venture will not be investing big sums, officials said.

The officials explained that the JV will sign "management contracts" under which local entrepreneurs will invest under various brand names, and declined to quantify the investments which will be going in as part of the expansion.

Sebastien Bazin, the chairman and chief executive of the French hospitality chain, said the overall number of employees will increase to over 14,000 from the present 10,000.

An official said over the last 20 years, the two partners have operated in India under "several joint ventures", and they have decided to bring all of them under a single umbrella as part of the move.

In a statement, the two partners said they aim to create the country's fastest growing hospitality business through their venture that will cover all segments.

The two partners will jointly invest to become the largest shareholder in budget hotel chain Treebo that manages 800 properties across 120 cities, it said, adding that the Accor and Treebo portfolio will be the third biggest in India with over 30,000 rooms.

Under its expansion strategy, the JV will put up new brands and attack new segments, officials said, reiterating that the growth is coming through third-party investments.

Bazin said India is the only other country after China where the group has tied up with a local company to make inroads into.

He said both markets are "complex to underwrite" due to which a company like Accor has to be humble and give autonomy to the local partner it trusts.

There is an appetite for the local entrepreneurs to invest in the assets which can be run by the JV, all stakeholders associated with it said.

"A lot of what is happening in India is what I would call a brownfield. There are existing structures that are capable of being converted into a hotel. So, we see a big opportunity there, particularly in the midscale economy sector," an official said.

Interglobe Enterprises' Managing Director Rahul Bhatia said the expansion will "turbocharge" the 20-year partnership and added that the partnership will continue to be restricted in serving the India opportunity, though both entities have their presence in various other markets.

When pointed about the financial stress in the hospitality space and if there are any structural weaknesses in the sector, an company official replied in the negative saying the fundamentals of the business are strong.