MADRID—Accor is bullish on Spain, where the French hotel company has 22 hotels signed or under construction.
Part of those expansion efforts includes introducing the Suite Novotel and All Seasons brands to the country, as well as reintroducing Sofitel.
“We plan to have 100 hotels here by next year and 130 by 2013,” said Juan Carlos Delgado, Accor’s managing director of Spain. “Spain is attractive for very good reasons: It is the third-largest tourist destination in the world, and it ranks fourth in the number of hotel rooms.”
This last statistic may lead some to question the logic of entering a well-supplied market where both international and domestic chains are competing for prime sites. But Delgado explained Accor decided its presence was weak in Spain and moved to do something about it.
“Spain’s hotel sector is principally centered on vacations and is largely midscale, so we looked for a niche market here and concluded that the economy urban sector would be best for us,” he said, adding that Accor’s franchising business model is particularly advantageous in economy and midscale hotels.
The economy market
Accor operates 76 hotels in Spain with 9,010 rooms in its Pullman, Mercure, Novotel, Suite Novotel, Ibis, All Seasons, Etap and Formule 1 brands. With 43 properties, Ibis has the biggest brand presence; another 10 are in the works. There also are 11 Etap hotels in the economy hotel market.
“We see Travelodge as our biggest competitor in this market and, perhaps, Holiday Inn Express,” Delgado said.
Helena Burstedt, the senior VP for Spain at Jones Lang Lasalle Hotels, said the French group is on the right track.
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Juan Carlos Delgado managing director, Spain Accor |
“Accor is well-positioned in Spain and well-respected in the market, and its economy brands have a particularly strong brand recognition. You need such presence to add value, and so it makes sense to expand in this sector,” she said.
“And there is an opportunity in the economy and low-cost sectors in Spain as there are few other chains or investors with the money to do what Accor and their investors are planning,” she explained.
Other investors are interested in those areas outside the main cities where Accor usually places its economy and low-cost properties. However, they have difficulties financing acquisition and construction, Burstedt said.
“The good thing is there are plenty of land plots for sale, and the prices are more attractive than a couple of years ago,” she added.
At the same time, Accor also wants to place economy properties in the centers of major cities following the success of its Ibis hotel in downtown Madrid.
New brands for Spain
Accor also is opening more upscale properties in Spain and recently debuted its medium-stay Suite Novotel in the southern Mediterranean coastal city of Malaga.
“Our next one is planned for 2013 at Madrid’s Barajas Airport,” Delgado said.
Another brand undergoing expansion is All Seasons, which the group describes as urban, economy properties, each with its own identity and an emphasis on colorful, cutting-edge design.
The first All Seasons is open in Madrid where another is planned. A third property is scheduled for Zaragoza, northeast of Madrid.
Accor also wants to reintroduce Sofitel to Madrid, where several years ago one located in the city’s trade fair and convention complex was upgraded to a Pullman. Another was converted into a Mercure in the city center.
“We are now searching the downtown areas of Madrid and Barcelona for appropriate sites for Sofitel, but the brand is very selective and there are not many opportunities at the moment,” the managing director said. “Plus, real-estate prices in these cities are still very high.”
Delgado said the Spanish hotel sector suffered during the economic crisis and the urban and mid-scale offer was particularly hard hit with revenue per available room down by 21% in some cases.
“But Accor probably suffered less than most chains, and we used the occasion to introduce cost controls which also helped,” he said.
Year to date through May, the country’s occupancy was up 6.9% to 60.9%, average daily rate was up 1.8% to €81.29, and RevPAR was up 8.9% to €49.54, according to STR Global.
“Spain is undergoing a very difficult time economically, and the business travel sector is not doing well. However the rest of Europe is improving, and I believe tourism here will grow,” Delgado said.
Spanish government statistics suggest a recovery is on the way. The number of foreign visitors to the country in the first quarter of the year grew by 8.5% compared to the same period in 2010, according to figures released last month. Overnight stays were also up by more than 7%.
“Spain’s two principal markets, Madrid and Barcelona, are turning around,” the Delgado said. “Some say Madrid is overhoteled, but I don’t believe it and the capital has been enjoying an increase in both leisure and business travel.”
“In Barcelona, our Pullman property has done well and there has been a real recovery in the market,” he continued. “Even though there are many five-stars in Barcelona, there have not been many opened in recent years so we are very optimistic.”