Accor opens door to rapid brand growth

Michael Issenberg

Accor, the world’s leading hotel operator, has a strategic expansion plan to add 15 new hotels to its current network of 11 hotels throughout Vietnam ranging from mid-range to luxury brands by 2014. Michael Issenberg, chairman and chief operating officer of Accor Asia Pacific, told VIR’s Song Ngoc at an event commemorating 20 years of Accor operating in Vietnam that the plan was ambitious, yet achievable.

What do you think is Accor’s most impressive success in the past 20 years of operating in Vietnam?

Accor was a pioneer entrant into the hotel sector in Vietnam, arriving in 1991 and marked the beginning of a journey that has seen the company lead the international hotel industry in the country. Accor has built solid relationships with our business partners in Vietnam, earning trust and respect while providing leading expertise, systems and opportunities to the hotel industry in Vietnam. We have long been committed to the hotel industry in the country and remained excited by the continued growth and the opportunity that the country offers Accor. Currently, Accor operates 11 hotels throughout Vietnam under the Sofitel, MGallery, Novotel and Mercure brands. Additional hotels committed to development include four Pullman hotels, five Novotels, four Mercures and two ibis.

Will your announcement of adding 15 new hotels to Accor’s network in Vietnam by 2014 be affected by the current unstable macroeconomy with which the Vietnamese government’s tightened monetary policies have resulted in construction project delays and spiraling inflation which has affected travellers’ pockets?

I think it [the plan to double Accor’s existing network in Vietnam] is ambitious, but achievable because we have been working closely with different partners around the country. The thing is that we don’t build hotels for this year or next year, but for the coming 30-40 years. These hotels are located in destinations that will be successful over the long-term. Consistent economic growth, infrastructure investment, improved air access and international tourism appeal ensure that Vietnam today, as in the past, remains a country with significant potential for expansion for the hotel industry.

Tourism developers have claimed that Vietnam’s infrastructure weakness are a challenge to expand business in the country. How about Accor?

It is true that this is one of our challenges. Obviously, this challenge is not so much in Ho Chi Minh City and Hanoi but it is quite a big question in Vietnam’s secondary cities. If trains or roads can be improved in order to help travellers move to these destinations more quickly and conveniently, the tourism development potential for the country’s secondary cities will surely be greater.

Statistics show that a majority of international travellers to Vietnam come from Asian countries and Vietnam tends to attract more European and American holiday-makers. As a leading hotel operator worldwide, how will you help?

That’s true. It is not the issue for Vietnam but I think for all countries in Asia. Asia is the fastest growing region in the world, and for the future, the most important growth market will rapidly come from within Asia itself.  Of course, travellers from Europe and North American will also grow in the number but not just for Vietnam but for all countries in Asia.

With Vietnam’s increasing income per capita, the number of domestic holiday-makers has been sharply rising in the past few years. Have you had any specific plans to tap on this potential segment?

Definitely this number is increasing. As I mentioned, with the increase of economic prosperity, more and more travellers to Vietnam and Asia will come from within Asia. Let’s say that 50 per cent of guests to our luxury hotels are Vietnamese and we certainly expect that over the time this percentage will further increase. For example, in the Metropole hotel, five years ago 90 per cent of our guests were international visitors. Today, the volume is 40-50 per cent of domestic customers and this is very encouraging for us. In Vietnam, we have more luxury hotels as in an emerging country. However, once the domestic economy grows and we have more domestic visitors, we will bring in different types of hotels including four and three-star hotels. Generally, as the domestic tourism industry and the country mature, we will respond to that and bring other new brands into the country.