Accor Hospitality is aggressively expanding its budget hotel business in Thailand, even as the global downturn crushes tourist spending.

After bringing the Ibis brand to Thailand last May, Accor now operates five Ibis hotels: Ibis Phuket Patong, Ibis Pattaya, Ibis Bangkok Sathorn, Ibis Samui Bophut and Ibis Bangkok Nana.

The chain has already secured two more contracts for Ibis hotels - the 260-room Ibis Bangkok Chao Phraya, scheduled to open in the last quarter of 2010, and the 260-room Ibis Phuket Kata, due to open this December.

Paul Stevens, Accor's operations director for Thailand, said budget hotels were growing rapidly, particularly in Asia, despite the global downturn. Increased flights by low-cost airlines are a key factor helping the segment. Accor's Ibis hotels currently have the highest occupancy of the group's hotel brands.

"It's a challenging time for budget hotels in Thailand. Many operators, both local and international, are entering this market. So they must develop to counter high competition in the future," he said.

For Ibis, Accor sees distribution, product standards and services as key elements in competing with other brands.

Erwan Mahe, the executive general manager of the Ibis Erawan Thailand, said Ibis hotels were doing well despite political and economic uncertainty, while five- and four-star hotels were facing difficulties.

In the first quarter, the average occupancy of Ibis hotels was almost 60%, higher than for other hotels in the same area. The occupancy rate of five-star hotels in Bangkok was about 50%.

Ibis's continuing growth in Thailand stems from its strong international brand, its low investment and operation costs and its fair prices, he said.

The investment cost for each Ibis room, including land, is about 1.65 million to 1.75 million baht, less than for four- and five-star hotels, said Mr Mahe.

Accor has secured a long-term contract to manage 10 hotels under the Ibis brand for Erawan Group Plc, a local hotel investment company.

The Ibis brand mainly targets customers aged 20-40 who tend to be Thai. Most marketing campaigns will focus on this category, including the "Ibis Idols 2009" campaign to find an ambassador for the brand in Thailand.

Globally, the Ibis brand covers about 800 hotels in 40 countries with 90,000 rooms. Thailand has five Ibis hotels with 1,188 rooms.