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Business trends

Vietnam's Danang basks in Southeast Asian hotel boom

Accor plans to double its locations in the region, while Marriott bets on luxury

France's Accor now operates luxury hotels in Danang, Vietnam, such as the Pullman Danang Beach Resort. (Photo by Riho Nagao)

TOKYO -- French hotel group Accor seeks to solidify its dominance in Southeast Asia by doubling its regional network of 300 lodgings over the next decade, trying to fend off American rival Marriott International, which is attempting to woo wealthy customers in the region with its luxury locations.

Southeast Asia's foreign tourist arrivals swelled 40% from 2012 to 2017 to well over 100 million a year. One of the region's hottest resort cities is Danang, on Vietnam's central coast, where luxury hotels with giant pools and upscale rooms line the beach.

Accor was one of the first Western players to enter the city. The group debuted a location in 2011 and now runs five hotels in Danang, including the Pullman Danang Beach Resort, which opened in 2013.

The many multinationals that followed prompted the group, commonly known as AccorHotels, to take a bold step and renovate the luxury Pullman after five years in business. The city boasts 15% more guest rooms than a year ago, said Fraser Ross, Pullman's general manager.

About a 10-minute drive from the Pullman stands the Sheraton Grand Danang Resort, run by Marriott. The luxury hotel, which opened in 2018, already garners an "extremely high occupancy rate of around 80%," a representative said. Latecomer Marriott debuted its first Danang site last year but now runs two hotels there as it plays catch-up with Accor.

The French company rules the roost in Southeast Asia. Accor holds the biggest share of guest rooms in Thailand, Indonesia and Singapore, and ranks second in Malaysia, data from U.K. hotel research company STR shows.

Southeast Asia provided easier entry for Accor than Japan or China, where global No. 1 Marriott had already established a big presence, said Patrick Basset, chief operating officer of AccorHotels for upper Southeast and Northeast Asia.

Patrick Basset, chief operating officer of AccorHotels, said tourists to Asia total around 350 million are increasing 6% annually, making it a relatively high-growth region. (Photo by Riho Nagao)

While expanding in the region, Accor benefited from its 33-brand portfolio spanning varied price points, from Raffles luxury hotels to the ibis business chain. When teaming with Southeast Asian conglomerates, the French company immediately presented hotels in the price ranges its partners coveted, which enabled swift openings and market share gains, Basset said.

Accor, looking to extend its grip on the rapidly growing market, will double its Southeast Asian hotel network to 600 locations over the next 10 years, Basset said.

Marriott, which has a luxury-heavy portfolio, intends to challenge Accor by bolstering its casual brands and opening more W Hotels and other five-star accommodations. The American group will unveil an Aloft in the Indonesian resort of Bali this summer. The edgy Aloft chain is geared toward younger travelers.

Marriott, which is said to have about half as many Southeast Asian locations as Accor, acquired Starwood Hotels & Resorts Worldwide in 2016. This move brought brands such as Sheraton, which has enjoyed success in Asia, under its umbrella. Marriott plans to enter Myanmar and other emerging markets soon.

Regional players enjoy a strong presence as well. Archipelago International and Santika Indonesia Hotels & Resorts occupy the second and third places in Indonesia, after Accor. In the Philippines, Hong Kong's Shangri-La Hotels and Resorts leads, followed by a Thai company.

Asia hosts around 350 million tourists a year, and the figure is increasing 6% annually, Basset said, referring to the region as relatively high growth.

The number of hotel rooms Accor has in Asia represents 30% of the group's total. Most of the company's hotels are in Europe, with Accor intending to build more in China, India and Southeast Asia.

Accor also plans to add hotels in Japan, where tourism is booming. It opened the Pullman Tokyo Tamachi in 2018. Next month it will open an MGallery by Sofitel hotel in Kyoto.

In China, Accor plans to expand its footprint by seeking tie-ups with local companies.

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