Demand for mid-market hotels is increasing, Accor India Senior VP

French hospitality chain Accor, which entered India in 2006, has been focused more on mid-market and economy segments with its brands Novotel, Ibis and, more recently, Formule1. Despite industry concerns about the viability of this segment, Jean Michel Casse, Senior Vice-President, Operations, Accor India, continues to be bullish. Excerpts from an email interview with Chitra Narayanan:

Q. During the past few years, every hotelier in the country was chasing the mid-market opportunity. As a result, one hears there is now a supply glut and price wars. How is Accor coping with that challenge?

A. India is one of the fastest-growing markets and plays an integral part of Accor's Asia-Pacific growth strategy. We have a strong network of 32 hotels in India and we plan to double that in coming years. We see huge potential for the mid-market segment in India. According to recent research by HVS India, of the 93,000 hotel rooms being added to the existing 114,000 hotels by March 2017 across major Indian cities, almost 50 per cent will be in the mid-market and budget range as demand for mid-market hotels is increasing. Furthermore, the market is experiencing a shortfall of around 150,000 rooms. We at Accor have seen a major shift in the nature of our industry for the past decade in the economy and mid-market hotels forming a larger percentage of the total room inventory and which now accounts for nearly half of all the hotel rooms in the country. India is a key growth market for the Novotel brand. The Novotel brand is a fast-growing brand due to the emerging middle-class market and corporate local demand within India. We firmly believe that given the size of the Indian market, the demand for hotel rooms in this segment will continue to grow.

Q. A common view is that foreign chains have had to tweak their global offerings a fair bit to fit the Indian consumer needs. Have you done that? Can you share learnings?

A. A key learning factor for us is positioning our brand with a range of product offerings to suit the various travellers in the market and continue to build on it for long-term success. For any hotel brand to succeed in India, it is imperative to focus on the needs of the Indian consumers, understand the market conditions and adjust their product offerings accordingly. At Accor India, we position our brands as 'Born in France, Made in India'. We have been successful with the amalgamation of French DNA and Indian traditions in which we customised our branding requirements to suit the needs of the Indian market.

As the brand continues to grow, we continue to reinvent and strive to look for new ways to improve on the branding needs and adapt it to the market conditions. We recently organised an 'ibis Day' celebration, which took place earlier this year. The event was attended by general managers from all over the country along with the hotel owners and the corporate teams to identify the future developments and improvements that the brand needed to better cater to meet the needs of the affluent travellers we have today.

In India, close to 44 per cent of Accor's business comes from our Loyalty (le Club Accor) members. In addition to customer differentiation, the programme stands out for its flexibility and generosity that comes with a host of little extras for our guests in India, such as welcome drinks, priority check-ins and late check-outs. In addition to offering special privileges, the programme provides members with the most attractive room rates.

Q. Now that you have fair experience of the Indian hotel landscape, where in your view is the real mid-market opportunity - in the metros or in Tier-II and Tier-III towns?

A. All of our growth and developments in the past few years allowed us to be present in most of the Tier-I cities across India. Close to 70 per cent of our existing network is located in the Tier-I cities and with an advent of better locations emerging from Tier-II and Tier-III cities, we are now actively looking at a second generation of this development in these cities through our Novotel and ibis brands.