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December 14, 2015

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Hotel industry copes with shifting demand, more discerning clients

AccorHotels is celebrating its 30th anniversary in China this year.

The French hospitality giant now operates in 65 cities around the country with a portfolio of 164 hotels — everything from luxury to economy accommodation. The luxury and upscale segment accounts for about one-third of the company’s existing network in China.

Michel Molliet, senior vice president of that segment for AccorHotels China, said the current mix of properties will probably remain unchanged as the company expands in China.

The native of France is a 27-year industry veteran whose professional stints have covered the Middle East, Southeast Asia, Australia and China.

In an exclusive interview with Shanghai Daily, he shared some of his views on the rapid development of the international hotel business in China, AccorHotels’ expansion plans and trends in the industry.

Q: Could you tell us about AccorHotels’ China expansion plans over the next couple of years?

A: It is very difficult to look at the past 10 years and the next 10 years. China is changing a lot. In the past 10 years, we developed many hotels here because there was very strong demand for luxury and upscale hotels, especially luxury hotels. With the recent economic slowdown and some changes in government policies, demand for luxury accommodation has slowed a bit, mainly in the government and corporate market, which used to be a very important part of the business.

In the past, if we were planning to open 10 luxury/upscale hotels a year, we are now slowing down and looking at opening six maybe seven hotels a year in the next two years. But we are gaining in the mid-scale segment.

We are still planning to open about 50 hotels in the next three years, or around 15 hotels per year. Of that, six will be luxury/upscale hotels and the remaining nine will be in the mid-scale and economy segments.

We also are shifting our development focus from tier 1 cities. Even tier 2 cities in China are already saturated with luxury hotels. So we are looking to tier 3 and tier 4 cities. One market showing very strong demand is the leisure domestic market, which has been growing very fast, not only in Shanghai and Beijing but also in many tier 2 and tier 3 cities. That segment is really helping drive our business growth in the next three years.

Q: As AccorHotels expands into smaller cities across the country, are there any particular regions you would be focusing your attention on?

A: We have identified about 65 cities where we feel we should be present in the luxury and upscale segment. We are already present in 65 cities, but in many of them, we are present only with economy and mid-scale hotels. So we are constantly looking at how cities are developing in China.

Q: How do you perceive the current competition scenario?

A: Demand is growing everywhere despite the slowdown. The number of hotel rooms is growing faster than demand. Not all, but some of the markets are very competitive. The way we operate our hotels is different from 10 years ago, when luxury hotels did well automatically because of less competition. Today, Chinese travelers are more discerning and their expectations are higher because they have so many choices. As a hotel operator, we have to focus a lot on guest satisfaction. We spend a lot of our energy on the guest experience, trying to be different from our counterparts.

Q: How are AccorHotels hotels different from others?

A: All hotels have nice rooms, nice showers and nice food. To make difference, you really need to have unique points. If you look at all brands out there, you have a lot of Anglo-Saxon brands and then you have Asian brands. We are the only French company with brands ranging from luxury to economy. Many people around the world like French luxury. In our hotels, we have many uniquely French touches. We work very closely with architects and interior designers, trying to blend the local culture with the French soul. It’s a marketing advantage for us, and we really want to capitalize on it.

Q: It that true only in your luxury segment?

A: It’s far more sophisticated in the luxury segment. We also want to capitalize on it in other brands, like our Pullman and Grand Mercure hotels.

Q: You have three brands in the luxury and upscale segment. Which one do you expect to show the strongest growth?

A: Sofitel remains the core brand in that segment, but the brand to watch for fastest growth is Pullman as demand shifts from luxury to upscale. China is the single largest country with the most Pullman hotels.

Q: What are the major challenges you’ve encountered in your China operations?

A: One is that some of the markets here are highly competitive. Secondly, it is very challenging to find talent. The hotel industry is not an industry where a new recruit walks in the door and can expect to become general manager after two years. It’s a very complex profession. You need experience that builds with time. In China, a lot of young people don’t necessarily want to work in the hospitality industry because they find it very hard. You have to work on weekends and you have to work late hours. So we must find ways to motivate them. There are so many hotels opening, but there are not enough talented people to staff them.

Q: Any major trends in the hospitality industry?

A: Domestic travelers are growing, and a big focus is on food and beverage. The other is the digital trend. Everything is about mobile devices. That’s the future. AccorHotels has over 200 people in the headquarters working only on digital -- doing research application, project management and tests on everything you can imagine that is digitally related to a hotel. It is all about how we are going to make the life of our clients easier and friendlier from the moment they arrive until the moment they check out.


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