Room Upgrade
    Category: Companies & People By : Yessar Rosendar Read : 838 Date : Tuesday, March 15, 2016 - 05:13:29

    Last year was the year of big moves from hospitality giants. French company AccorHotels was not an exception as last December it announced it would acquire FRHI Holdings, the owner of three iconic luxury hotel brands: Fairmont, Raffles and Swissôtel. Together, FRHI has a collection of 155 hotels and resorts worldwide, of which 40 are under development. AccorHotels will pay for the acquisition by issuing 46.7 million new Accor shares and a cash payment of $840 million. FRHI in Indonesia currently has three properties in Indonesia, with two Fairmonts in Bali and Jakarta, and one Raffles hotel in Jakarta.

    The move is the icing on the cake for the AccorHotels story in Indonesia, which is still the leader in market share as it has already 100 hotels as of December last year in the country. “We are really excited, the brand portfolio is exceptional for the luxury market that allows us to have a good establishment in the segment,” says Garth Simmons, chief operating officer Malaysia, Indonesia and Singapore of AccorHotels, in an exclusive interview with Forbes Indonesia last December.

    Currently Accor already has several properties in the upscale market, with the Sofitel in Nusa Dua and several M-Gallery and Pullman hotels. The current contribution from the upscale segments only coined 12% of the company’s revenue. Going forward Garth sees that the segment role will increase as there are still growth opportunities in the upscale segment. The big story is on the segment that has been the bread and butter for the company for a long time, the middle and budget levels. “Our growth and core will still be the economy and mid-scale segments with all the domestic travelers, but there are opportunities in the luxury market. It’s a great compliment to what we’ve already got,” Garth says.

    Safeguarding the growth story is a huge task for Garth, who was just recently appointed to the position last July. He has been with the company since 2007 in a variety of strategic positions, including most recently as senior vice president of New Zealand, Pacific Islands and Japan. He replaces Gerard Guillouet, who was with the group since 1986. Accor reached its current level of 100 hotels after a significant growth in the last two years, as it increased its number of hotels from 70 hotels in 24 cities in Indonesia. Last December the growth trajectory continued as it aimed to double the number of hotels by building another 100 hotels by the next decade, bringing the total number of hotels to 200. Forbes Indonesia calculates that these projects need at least an investment of $1.2 billion, since building a hotel like Ibis typically require $4,000 per room and an upscale brand like Novotel and Pullman up to $120,000 per room.

    While doubling the number of hotels, the number of rooms will also be doubled as it aims to have more than 40,000 rooms from currently around 19,500 rooms. It also projects that its revenue will at least double in the next decade from what it recorded last year of $122 million. “When we were first established in Indonesia, we had more economic hotels, smaller room numbers, and what we have in the pipeline is larger hotels with bigger rooms and a number of different kinds of brands. We want more rooms, for economies of scale and profitability,” Garth says