Accor CEO Says Middle Class in India Will Bolster Hotel Sector

Skift Take

Accor’s top boss said during a Thursday earnings call that the hotel group will benefit as the middle class expands in India and beyond in the next several years.

Sean O’Neill

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.”