A boom with a view – budget hotels take off in Asia

MUMBAI/JAKARTA (Reuters) – Surrounded by fine wines and elephant motifs in the Tusker bar of Accor’s new luxury Sofitel hotel in Mumbai, chief executive Denis Hennequin is unsurprisingly betting on Asia to make up for uncertain prospects at home.

He is also convinced the real elephant-sized growth will come from looking downmarket at low-cost, high-return economy hotels—piggybacking on the rise of budget airlines that have opened up domestic travel to Asia’s emerging middle classes.

Facing economic malaise in Europe and the United States, as well as heavy local competition to build hotels in China, the world’s fastest growing hospitality market, global hoteliers see a window of opportunity in India and Indonesia.

“We are a French-European company, but if you look at the pipeline for the next 3-5 years and beyond, more than 70 percent of the inventory of new rooms is from this part of world,” said Hennequin.

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