Shooting stars: French hotel group Accor bets on three-star hotels for Latin America's business travelers.

Who says that in Latin America the only good hotels are four-star or five-star places? Or that you should pay an arm and a leg to stay in a nice hotel in the region? Not the French hotel group Accor. The company wants to revolutionize the region's hospitality industry by expanding its three-star brand, Ibis, across the continent.

Accor executives say they will target the middle class, arguing that pretty and affordable hotels in countries like Colombia, Ecuador, Peru and Venezuela are few and far between. It will invest US$100 million to open 25 new Ibis-brand hotels in the region, on top of the 36 already operating. Expansion complements plans to boost existing operations in Brazil, Argentina and Mexico, says Gilles Gonzalez Xerry, Accor's director of operations and development for the Andean region and Central America. Nevertheless, Accor will invest most heavily in China and Eastern Europe over the next eight years, where it will open 300 hotels with 600 rooms each.

The Ibis chain will match the level of service with the economic health of the countries without compromising quality, executives say. "That's key to our success," says Gonzalez. The hotelier is not going to build units in the wealthiest neighborhoods of Latin America's capital cities. In fact, it's going to target other cities in the countries where it will build. In the Andean region, for instance, construction on new hotels is already underway in four Ecuadoran cities alone--Quito, Guayaquil, Cuenca and Manta--with local investors helping to foot the bill. Investments in Manta and Guayaquil are the closest to completion, with inauguration scheduled for 2007. Quito and Cuenca should open in 2008. Actor is not stopping with Ecuador; it's planning to invest $35 million in Venezuela, with its first hotel opening in Caracas by 2007. The company is in talks with investors to build hotels in Colombia and Peru as well.

Currently, Accor runs more than 4,000 hotels under nine brands in 90 countries on five continents, including those under the five-star Sofitel brand. The company says 56% of its total hotels are budget chains, which report occupancy rates of 75%. The daily fare for an Ibis room comes to $82 a night in France, $34 in Austria and $25 in Brazil, Argentina and Uruguay. Ibis hotels in Andean countries will charge an average $35 a night. Accor came to Ecuador two years ago to manage the Alameda hotel in Quito, now known as Mercure Alameda.

Accor will bring better hotel rates to Ecuador without skimping on quality, says Ricardo Poggi, general manager at Corporacion Magma Ecuador, part of Peruvian pharmaceutical company Infarmasa. Magma is based in Quito, but it covers a large swath of Ecuador, spending $2,000 a month putting up four executives in hotels in Guayaquil, Manta and Cuenca. The executives normally make three business trips a month, and pay between $60 and $70 a night at a five-star hotel. "If Accor charges me half for something comfortable and personalized, I wouldn't miss the luxuries at all," Poggi says.

Accor first launched its Ibis brand in France in 1974. Today, the company sees its star rising in Brazil. After bringing its Ibis brand there only five years ago, Accor says Brazil now accounts for 7% of Ibis' business worldwide. This year, the company will open 12 new hotels in Brazil, making the country the centerpiece of its Latin American operations.

Competition. Healthy competition is always welcome, says Sebastian Cornejo, president of Ecuador's tourism chamber and the owner of the Hotel Sebastian, a four-star hotel in Quito. Cornejo isn't taking Actor's investments lightly. Four-star hotels are especially vulnerable to the Ibis business model, which has taken guests away from four-star hotels in Brazil and Mexico.

Nevertheless, Ecuador Tourism Minister Maria Isabel Salvador is happy with the French chain's plan to set up shop in Ecuador. "One of the world's most important hotel chains is investing in Ecuador, and that is proof that the country is attractive, safe and profitable," Salvador says. In 2004, the country took in 800,000 tourists, a figure expected to double in two years, says Salvador. According to ministry data, tourism has pumped $400 million into the country over the last five years, placing it third behind oil and bananas among the economy's largest sectors.

MARIA ELENA VERDEZOTO * QUITO