UPDATE 2-Accor sees better 2010 in China after dismal year

* Sees key industry gauge falling 20-30 pct in China in 2009

* Strong improvement expected in 2010

* Plans to have 85 hotels in China by year-end (Adds details, quotes, background)

By Doug Young

HONG KONG, Oct 14 (Reuters) - Accor (ACCP.PA), Europe's biggest hotel operator, expects strong improvement in the performance of its hotels in the important China market next year after a difficult 2009, a senior executive said on Wednesday.

The company expects revenue per available room or revpar, a widely watched industry metric, in China to drop by 20-30 percent this year, mostly as a result of large new supply coming onto the fast-growing market, Michael Issenberg, Accor's Asia-Pacific chairman, told Reuters on the sidelines of a news conference.

But he said the situation should stabilise in 2010.

"Next year, you are not going to see anything (so dramatic) in terms of drops in China."

There's certainly a lot of supply coming into China, particularly in the tier-one cities. We do anticipate the year 2010 will remain a challenging year in China," he said.

China is one of Accor's most important markets in Asia, home to 24 of its 54 new hotels opening in the region this year.

The global economic downturn has inflicted severe pain on the hotel sector, with major operators such as InterContinental Hotels (IHG.L) saying a recovery for the sector could be two years away.

The massive supply of new rooms coming onto the Chinese market, as operators such as Marriot (MAR.N), Starwood (HOT.N) and Hilton build up their presence, has compounded weakness related to the global downturn.

That weakness has hit large and smaller hotel operators alike, with Hong Kong-based Shangri-La Asia (0069.HK) seeing revpar at its China business tumble 34.1 percent in the first half of the year.

But UBS said the industry's steep declines may have bottomed out in the first half of the year, with some modest signs of recovery emerging in August and September.

BUILDING UP

Accor operates 380 hotels in Asia-Pacific, including an expected 85 in China by year-end.

In May, Accor said it planned to add 30,000 rooms globally this year, and that 40 percent of those would be in Asia-Pacific.

Accor, operator of the Sofitel, Novotel and Pullman brands, said earlier this month that it would invest 80 million euros ($114 million) in hotels in Asia-Pacific in 2010, roughly in line with the amount the company invested in the region this year.

India is the company's other main focus in Asia. Earlier this month, Accor announced that it planned to have 50 hotels in India by 2012, up from five today.

The company is still working on its regional build-up despite weakness in most of its markets throughout the region this year.

In addition to China, Thailand has also fared poorly due to its political instability, while revpar at Accor's South Korea hotels is flat to up slightly. Indonesia has seen an actual increase in revpar, Issenberg said.

"We've been through difficult times," he said. "We had SARS, 9/11. We've recovered from all those, and we're confident we'll recover from this," he said. (Writing by Don Durfee; Editing by Chris Lewis and Anshuman Daga)