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Accor believes more than ever in Indonesia

Luc Citrinot - 02 January 2013, 01:35

Accor plans to locate half of its new Southeast Asia properties in Indonesia to take advantage of the country’s growing economy and expanding middle class.

BANGKOK- Accor plans to increase the number of its hotels in the region to more than 200, from 132, Robert Murray, chief operating officer for Accor’s northeast and Southeast Asian operations, said in a telephone interview. The group’s hotels in Indonesia, which include 16 Novotels and 11 Mercures, will increase to 94 from 55 now, he said.    
 
“Indonesia is China without the public relations,” Murray said from Bangkok on Dec. 7. “The middle class keeps growing and Indonesians are traveling more and more.”   
 
Hotel and airline operators are seeking to take advantage of a swelling population in the nation whose growth has outperformed every major economy except China this year. More than two-thirds of Accor’s business in Indonesia comes from domestic travelers, driving demand for its mid-tier brands in secondary or smaller cities in the country, Murray said.     

Accor will add 20 hotels in Bandung, Makassar, Serpong, Samarinda and 12 other smaller cities, mostly through its lower-priced Ibis and mid-scale Mercure and Novotel brands, he said. It will also add 11 properties in the capital, Jakarta, and eight on the island resort of Bali, he said. The group will consider buying properties, taking on management contracts and franchises, he said.

 “Traditionally, Jakarta and Bali were the primary Indonesia stories,” Murray said. “But the secondary cities, that’s where the domestic demand is growing and that’s where the hotels are being built.”     

Growth in the country’s tourism market is also spurring airlines to expand. Indonesian carrier Lion Air is considering purchasing additional aircraft from Airbus SAS and Boeing Co. as it adds flights in a region where air travel is expected to grow more than 6.4 percent annually through 2031.     
                   
“The influx of low-cost carriers in Southeast Asia has contributed to a fair bit of domestic and intraregional travel and that’s led to a lot of growth in hotel demand in Indonesia,” Jonas Ogren, Asia director at STR Global, which provides research for the hotel industry, said in a telephone interview. “Indonesia is definitely one of the hot markets that a lot of groups are looking at.”     

Indonesia has the third-highest number of hotel developments in the planning or construction stages, after China and India, Ogren said. The country, which added more than 7,000 rooms in the 12 months to Oct. 31, has almost 28,000 more rooms in the pipeline, he said.     

The number of hotels in the Asia-Pacific region will grow by about 410,040 rooms in the next three to five years, according to the website of the World Hotel and Resort Development Congress. Southeast Asia will account for about 18 percent, and Indonesia will have the biggest share at 5 percent. Southeast Asia’s “growth is exploding,” Murray said.

(Source: Bloomberg)

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