ACCOR AND BEIJING TOURISM GROUP LAUNCH MERCURE BRAND IN CHINA

Agreement targets over 50 hotels by 2008

Accor and Beijing Tourism Group (BTG) have committed to forming a new joint venture hotel management company, with master franchise rights to manage and expand the Mercure brand north of China’s Yangtze River.

This mandate covers 16 provinces/autonomous regions and three direct administrative municipalities in China, including Beijing, Tianjin and Chongqing.

Accor and BTG will each take a fifty per cent stake in the new enterprise. The initial objectives call for a minimum network of 20 Mercure hotels during the first three years, and growing rapidly to over fifty Mercure hotels after five years in time for the 2008 Beijing Olympics.

The deal confirms Accor’s intention to enter China’s three-star domestic market where there are a very large number of existing unbranded hotels. The joint venture will place its emphasis on local management, and not on expatriates, providing incumbent and local hotel executives with training and access to Accor support services in all business disciplines.

The joint venture has already secured management contracts for three existing hotels in Beijing totalling 1,500 rooms that will be rebranded Mercure hotels in early 2002.

Commenting on the agreement, Accor Deputy Chairman Asia Pacific, Mr Jochen Dobel, said: "We are delighted to expand our relationship with BTG.”

“This is the first real agreement in China between international and domestic hotel management companies to form a joint venture dedicated to managing and expanding a well-respected international brand. I am confident that joint venture will prove attractive to hotel owners in China and will successfully meet the demands of the local market.”

BTG chairman, Mr Duan Qiang, said: “The deal will combine Accor’s international management experience and Mercure’s strong brand recognition with BTG’s advantageous position in the domestic Chinese market.”

“BTG knows how to effectively produce results in China’s business culture, while Accor’s professional management, training and support resources will bring important job skills to our country. The joint venture will serve as a catalyst for Accor ‘s further dynamic expansion into China, by co-operating with BTG to solidify its leadership position in the country.”

BTG’s has a portfolio of three-star hotels around the Beijing area. Also, BTG’s management experience is with three-star hotels catering to the Chinese domestic market, which is an excellent fit for Accor’s Mercure brand profile.

Accor has managed the Novotel Peace Hotel in Beijing for BTG since April 2000, and this year was awarded a second management contract in the Chinese capital for the Novotel Xinqiao Hotel in August 2001. BTG has also invested in Accor’s Hotel Mercure Paris Tour Eiffel Suffren. Accor and BTG are also partners in BTG-Accor Travel and BTG-Accor Corporate Service Company.

The Beijing Tourism Group is a large state-owned company with a strong presence in China and in particular Beijing. Its core business activities include hotels, travel agencies, car rentals, exhibitions and food and beverage.