Accor CEO Says a Rising Middle Class in India Will Bolster Hotel Sector
Skift Take
Key Points
- Accor CEO Sébastien Bazin expects the expanding middle class in India to drive hotel demand.
- Global hotel demand is projected to grow 4% to 6% annually, while supply growth will be limited to 1.5% to 2%.
- Accor plans to open 30 new hotels in India within the next three to five years and reported record EBITDA in 2023.
Summary
Accor's CEO, Sébastien Bazin, highlighted the significant impact of the expanding middle class in India on the hotel sector. He emphasized that demographic changes, particularly the rise of the middle-class population, will drive increased demand for hotels, especially for brands like Ibis and Mercure. Despite a projected global hotel demand growth of 4% to 6% annually, supply growth will remain constrained at 1.5% to 2% due to regulatory challenges. Accor aims to expand its presence in India, with plans to open 30 new hotels over the next three to five years. Additionally, Accor reported record-high results in 2023, with EBITDA surpassing 1 billion euros for the first time.
Accor’s top boss said Thursday that the hotel group will benefit as the middle class expands, especially in India.
“Demography is probably what drives us the most,” said CEO Sébastien Bazin during an earnings call. “What’s most important … is the increase of the emerging middle-class population, which went up one billion in the last 10 years, half of those from India. Those are the preferred targets for Ibis, Mercure, and many of the hotels in our core.”
Bazin forecasted that demand for hotels worldwide would increase at a higher pace because of the middle-class surge. Demand will rise from an average of between 3% and 5% a year over the past decade to probably between 4% and 6% over the next one.
But he said supply growth would remain between 1.5% and 2% a year because of various constraints, such as regulations that slow new construction.
Accor Expects Tailwind From India
“India alone… had 35 million international travelers for the last two to three years,” Bazin said. “There is no question in my mind that India will reach the 150 million mark that we’ve been enjoying with China and America.”
Accor’s CEO argued that rise of Indian outbound travelers will benefit his company in particular.
“When you’re going to have an extra 10 million, 20 million, 30 million, 50 million people from India traveling either East or West through Indigo Airlines or Air India, most of them will go to Indonesia, Malaysia, Southeast Asia,” Bazin said. “Most of them will be going to go to the Middle East, to Egypt, to North Africa. This is where Accor has the greatest inventory, market share, and leadership.”
Bazin didn’t discuss India’s domestic tourism, but his company has about 55 hotels with more than 10,000 room keys today. It intends to open 30 properties in the country “over the next three to five years.”
Strong Second Half
The Paris-based hotel group reported results for 2023.
“Accor generated record-high results in 2023, with EBITDA breaking the €1 billion mark for the first time in its history,” Bazin said.
Last year it generated about $1.084 billion (€1.003 billion) in EBITDA off of revenue of about $5.47 billion (€5.003 billion).
Skift Megatrend 2024: Is The World Ready to Meet the Indian Middle Class?
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Photo Caption: Raffles Udaipur, Novotel Chandigarh Tribune Chowk in India. Source: Accor.
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