French Hotel Group Accor Plans to Double Mideast Presence

Dubai has always had a penchant for luxury hotels and some of the best-known ones such as the sail-shaped Burj al Arab have come to be an integral part of the city’s skyline.

As Dubai’s economy has firmly picked up again following the infamous 2009 crash, the city is busy as ever building hotels to meet the rising numbers of visitors. This time, however, its focus is shifting towards the mid-market hotel segment to cater to local and regional consumers rather than the ultra-luxurious, says the chief executive of one of the largest hotel groups in the world.

“It [the luxury segment] is just the top of the iceberg,” said Sebastien Bazin of France’s Accor. “The Dubai Vision 2020 [the emirate’s tourism strategy for the next years] is insisting that Dubai should open itself to that new economic, mid-scale segment. Same thing in Saudi Arabia. Same thing in Qatar now,” Mr Bazin said.

The French executive, who spent a large part of his career at Accor shareholder and private equity firm Colony Capital, argues that religious tourism to the holy cities of Mecca and Medina together with infrastructure spending needed for organizing events such as the World Cup football and the Expo 2020 will drive demand for more hotel rooms in the years to come.

To that end, Accor plans to double the size of its operations to 30,000 rooms by 2020 in the Middle East. Most of those new rooms will open in the Gulf region under one of the company’s brands such as Ibis and Pullman.

Accor’s Mideast plans coincide with a wider push by the company to grow in higher-growth markets outside Europe such as Latin America and Asia. Looking further ahead, Mr. Bazin singles out Africa and eventually Iran as offering mouthwatering opportunities for expansion.

“The name of the game is to be less European-dependent and more in emerging markets, knowing we’re going to have some up and downs in those markets,” said Mr. Bazin, referring to political upheaval in the Middle East or a recent health crisis such as Ebola. “That’s basically the price to pay when you go in those emerging markets,” he said.

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(via WSJ Blogs)