Accor's Asian plans unaffected by Bali bombing

Accor's Asian plans unaffected by Bali bombing

Dow Jones, Bangkok

French hotel and leisure company Accor SA, one of the world's largest hotel chain operators, said Wednesday it still plans to double the number of its properties in Asia-Pacific over the next five years, despite a recent terrorist attack in Bali.

Accor currently manages 197 properties in 15 countries in the Asia-Pacific region, including eight it fully owns, out of its roughly 3,900 hotels and resorts worldwide.

David Baffsky, chairman of Accor's Asia-Pacific operations, said the negative impact of the Indonesian resort island bombing on room bookings has so far been limited to a few properties in the region and was not expected to be long-lasting.

"We have already seen substantial shifting of activity to other destinations in the region. It is so far a localized issue," Baffsky said.

In Bali itself, the Mercure Kuta Bali hotel located close to the bombing site has seen little short-term impact as it was used by media and security after the bombing, but is suffering a drop in forward bookings, Baffsky said.

The group's other property in Bali, a Novotel, on the other side of the island now has a 30 percent occupancy rate, down from normally over 70 percent at this time of year, Baffsky said, adding Accor's 22 other Indonesian hotels were little affected.

In Thailand, which benefited most after the Bali bombing, the group's forward bookings are currently up 3 percent-4 percent on- year in part due to a shift from Bali and partly because of the start of the high season, Baffsky said. However, he added on the Thai resort island of Phuket, Accor is suffering a drop in bookings like other hotel operators.

Industry sources said Phuket hotels have suffered a 10 percent or more decline in their bookings due to travel warnings issued by certain countries and on concerns the island could become a terrorist target. The Thai government is denying such risks and has criticized the warnings.

Baffsky was speaking to reporters at the official opening of the group's 17th property in Thailand. The new property is the fourth Thai property to be placed under the Sofitel brand, the group's luxury chain, and the 158th Sofitel worldwide.

Accor signed late last year a 15-year management contract for the Sofitel Silom, a 38-story and 454 room hotel owned by Thai property developer Sansiri PCL.

Baffsky said domestic customers account for over 70 percent of Accor's Asia-Pacific demand. This means bookings by residents in the countries where it operates helps it from being harder hit by fluctuations in global tourism.

Baffsky said a main area of growth for the group in the region over the next five years will be China where it hopes to bring its presence "to a total of 60 to 100 properties under management, from 18 now."

The group also wants to add more properties in Japan, where it already has four hotels, and in Korea, where its first property is to open soon.

Accor also aims to reenter the Indian market after a recent exit, he said.

Serge Ragozin, Paris-based Accor's executive senior vice president, said the group will also continue to look for opportunities to expand in other parts of the world despite the current situation. Since the Sept. 11 attacks in the U.S. last year, Accor has continued to expand and has only postponed plans for three new U.S.-based hotels, he said.

Accor earlier this week bought a two-thirds stake in Egypt's Gezira Hotels and Tourism for $39 million, he said.

Ragozin also said despite a recent acquisition in Germany, Accor was still talking to another German group, Steigenberger Hotels & Resorts, "like everybody else in the industry."

According to earlier reports, leading hotel groups Hilton Group PLC and Starwood Hotels & Resorts Worldwide are also eyeing Steigenberger.

In early October, Accor signed agreements with German hotel operator Dorint AG and its primary shareholder, which will give the French group a 30 percent interest in Dorint and add another 93 hotels to the group's already strong presence in Germany, plus another 20 properties in development. The deal's implementation is subject to the approval of the EU's competition authorities.

Accor announced Tuesday third-quarter revenue was down 4.2 percent on-year to 1.82 billion euros, below market expectations. Over the first nine months, revenue was down 1.7 percent to 5.40 billion euros.