ACCOR: Q3 revenue feedback: higher than expected despite lower RevPAR. Upper end of guidance lowered | BUY | EUR51(+36%)
ACCOR - BUY | EUR51(+36%) Q3 revenue feedback: higher than expected despite lower RevPAR. Upper end of guidance lowered Good organic revenue growth despite lower RevPAR… …confirming the resilience of the asset light business model Uncertainties in ASPAC make management slightly less positive Orbis’ real estate on track with an incremental return to shareholders
18 Oct 19
Conservative FY 19 guidance following the strong Q2
Accor has published very reassuring H1 19 results following a weak Q1. The strong RevPAR improvement in Q2 was mainly driven by the robust leisure demand and favourable fair calendar in Europe, along with solid growth momentum in South America (83% of the business is in Brazil), which have been partially offset by the continued weakness in Asia Pacific. However, on the back of a strong Q2, the conservative EBITDA guidance for FY was a little disappointing.
01 Aug 19
Four reasons to buy Accor: *Balanced geographical presence, avoiding all the problematic areas *Strong balance sheet after adopting a pure asset-light business model *Complex capital structure with shareholders from three different continents *The stock has previously been over-penalised by its weak return on investment in new business and increased costs in marketing
01 Jul 19
Accor is not satisfied being only a simple hotelier
FY 18 top-line growth and profit generation were broadly in line with market expectations. The group ended the year with a network of 704k rooms (4,780 hotels) and a pipeline of 198k rooms (1,118 hotels); the organic net system size development and acquisitions integration were quite encouraging. However, instead of focusing on the net system size development, the additional investment and new ambition on the loyalty programme and brand marketing do not seem convincing enough.
21 Feb 19
Accor aims to double EBITDA by 2022 (CMD feedback)
Accor revealed its new five-year ambitions during its capital markets day. The group aims to double its EBITDA by 2022 to around €1.2bn through four pillars: • positive RevPAR growth momentum in the regions where Accor operates • sustainable healthy organic net system growth • optimisation of the cost base • integration of recent valuable acquisitions (Mantra, Atton, and Mövenpick) could be additional fuel
01 Dec 18
Reassuring summer performance
Accor has recorded solid revenue growth during Q3, mainly driven by the favourable price effect across all regions. In addition, the acquisitions of Mantra and Mövenpick have started to bear fruit as expected. Both have contributed 17% to growth (€144m) on a reported basis. New business development is still very challenging and the group has now decided to focus more on the profitable core business.
19 Oct 18
Solid hotel operating performance partially offset by development costs in new business integration
H1 18 revenue came in at €1.5bn, up +8.0% lfl (reported +3.0%), EBITDA was €291m, up 4.2% lfl (reported -3.2%), both slightly below the consensus and our expectations. HotelServices: revenue increased 6.8% lfl to €1.2bn with EBITDA amounting to €312m (+6.7% lfl), mainly driven by the solid growth in most of the group’s key markets and the fast net system development. New businesses: revenue came in at €70m (+7.1% lfl), with EBITDA dropping 53.7% lfl to €-15m. Hotel Assets: revenue came in at €389m (+8.6% lfl), with EBITDA up 7.0% lfl to €54m. The company opened 301 hotels with nearly 45,150 rooms (19,757 organic growth and 25,393 from the acquisitions of Mantra and Mantis) in H1 18. Of note, Accor has decided to drop the bid for an Air France-KLM stake, despite this it remains convinced of the strong potential for value creation of strengthened ties between the two groups. FY 2018 guidance: • The group expects to open more than 42,000 rooms via organic development. • The positive impact from the acquisition of Mövenpick and Atton should be realised during H2 18. • Following the H1 figures, the group expects a slowdown in growth for new businesses in 2018, with a target of breakeven earnings maintained for 2019. • The group expects FY 18 EBITDA should be €690m-€720m, which is below consensus (€738m) and our estimates (€755m).
26 Jul 18
Two chinese shareholders!
After JinJiang internationals, Accor’s largest shareholder with 12.32%, HuaZhu Hotels Group (China Lodging Group Ltd, NASDAQ: HTHT) announced its strategic investment in AccorHotels during its Q1 18 release and also indicated that they already hold 4.5% of Accor’s capital (just below the minimum reported level of 5%).
22 May 18
Q1 revenue in line with expectations
Q1 18 revenue came in at €633m, up +9.5% lfl (reported +0.6%). HotelServices: revenue increased 7.7% lfl to €553m, mainly driven by the revenue growth of the franchise agreement and management contracts, which confirmed the company’s near-term strategy. New businesses: revenue came in at €31m, up +14.5% lfl. Hotel Assets & Other: sales were €157m, +7.5% lfl. The company opened 61 hotels and nearly 10,000 rooms in Q1 18. The FY 18 guidance should be released in H1 18.
19 Apr 18
Upbeat outlook but AccorInvest deal is still unfinished
Q4 revenues rose by 8.6% lfl, to €512m (reported +5.5%), with RevPAR growing 6.2% (+4.7% for the year). The 2017 EBIT was at €492m, broadly in line with expectations. The annual net profit came in at €441m (+66%). AccorHotels opened 301 hotels (51,400 rooms) in 2017 and has 161,000 rooms in its pipeline (vs. 178k rooms in Q3 17). 2018 should be a new record year for organic room openings.
21 Feb 18
Reaching 600,000 rooms
Q3 revenues were €504m (lfl +6.4% yoy, reported +7.2%). 2017 guidance: the company expects EBIT in the upper side of the €460-480m range, broadly in line with consensus estimates. AccorHotels opened 73 hotels (11,000 rooms) in Q3 and has 178,000 rooms in its pipeline (up from 167,000 in H1), with emerging markets accounting for 47%.
20 Oct 17
Luxury-driven RevPAR growth
H1 revenues came in at €922m (lfl +8.3% yoy, reported +33.5%). EBITDAR was €356m (lfl +22.4%). The net profit before loss from discontinued operations stood at €181m. The company provided guidance on 2017 EBIT of €460-480m. AccorHotels expects to open around 17,000 new rooms in H2. The company opened 115 hotels (>23,000 rooms) in H1 and has 910 more in its pipeline (167,000 rooms), weighted more on the emerging markets side (81%).
27 Jul 17
A brighter momentum in France, at last
Q1 17 figures revealed improved trends in France which recorded sustained RevPAR with a particularly strong Paris market. Sales were up 7.4% lfl while the changes in the group’s perimeter provided €82m of additional sales (+26% yoy), largely reflecting the contributions of Raffles, Fairmont, Swissotel, onefinestay and John Paul. Organic sales benefited from the solid New Businesses (i.e. concierge services, luxury home rentals and digital services for independent hotel operators) which posted a 10.4% lfl rise in sales followed by HotelServices (+5.6% lfl). Hotel assets (i.e. HotelInvest’s assets which have not been transferred to AccorInvest, mainly relating to Orbis, hotels operated under management leases and the assets to be restructured before the Booster transaction closes) showed a 5.8% growth in lfl sales. For the first time since the first wave of terrorist attacks in January 2015, Paris recorded strong figures on the back of a robust leisure segment (+9% in RevPAR) and corporate stays (+5% in RevPAR). Europe posted an 8.4% rise in sales (+7.4% in RevPAR) fuelled by a supportive UK (RevPAR up 9.2%) where the weaker sterling stimulated Britons to travel within the UK. London was also marked by continuing solid corporate travel and a recovery in the leisure segment with rising demand from Asia and North America. Germany was solid (RevPAR +7.1%) helped by a favourable trade calendar. The Middle East and Africa region (+1.9% rise in sales) was impacted by the oil-producing states, while the Asia-Pacific region (+10.6% in sales) was fuelled by the Luxury segment (+6.4% in RevPAR). In April, AccorHotels acquired Availpro which specialises in online services dedicated to independents (through Fastbooking) and recorded 10.4% organic growth in sales in Q1.
24 Apr 17
The imminent disposal of HotelInvest opens a new page for AccorHotels
Strong pace of FY16 results, strong prospects underpinned by a new strategy Accor released its FY16 results, marked by a challenging French market which as expected was heavily impacted by the terrorist attacks last year. But international geographies performed strongly and the overdue disposal of the property arm was further detailed (under the so-called Booster project) with a closing due in H1 17. This is paving the way for a new strategy for the group consisting of boosting the weight of private rental activities and community services (including concierge services via the recently-acquired John Paul), both to be at the heart of the company’s growth. Tough French market, but clear improvements in Q4 FY16 sales grew by 2.2% (+0.9% reported) in line with the market’s expectations with robust performances across most geographies, with improved figures in Q4 (sales lfl +3.1%, RevPAR +1.3%). In France (-2.8% lfl in sales but -1.2% in Q4), trading conditions remained challenging in Paris (RevPAR -13.2% in FY16) as a result of the terrorist activity, contrasting with the Provinces which held tight (+4.2% in RevPAR). At the group level, the UK (+2.3% in FY16 RevPAR, o/w +3.8% in Q4) and Germany (+4% in FY16 RevPAR, +3.1% in Q4) along with a strong Asia Pacific (+5.5% in sales LFL) and the Americas (+4.7% LFL) helped to compensate for the poor French market. Strong international markets, record EBIT level Group EBIT reached a record €696m level (+4.6% reported, +3.8% lfl, the EBIT margin at 12.4%, +50bp yoy) fuelled by a robust Q4 (improved performances in France), organic activity (+€25m), the contribution of FRHI (over 6 months in H2, €48m) and hotel development (€7m), all of which compensated for the negative contribution of new businesses (including Fastbooking, Onefinestay and John Paul) and FX impacts (€18m). The Asia-Pacific region (+32% in EBIT lfl) benefited from the sustained development completed since 2014 while the UK and Germany played as strong supports for the NCEE region (55% of Group EBIT, +9% lfl). Brazil continued to weigh on the Americas’ performances (-18% in EBIT lfl) while France (-13% in EBIT lfl) felt the pain of the terrorist attacks in Paris and Nice. The group’s net profit rose by 8.6% at €265m while net debt reached €1.6bn (vs €194m of net cash position in FY15), largely due to acquisitions, including FRHI (for €2.6bn, partly financed by €768m of cash).
23 Feb 17
Colony Capital fully exits from AccorHotels
Colony Capital, AccorHotels’ second largest shareholder (6% stake, 10.4% of the voting rights) following the Chinese Jin Jiang (15% stake) has announced the sale of its entire stake in the company on 31 January. The private equity firm, which entered the hotel group’s capital in 2005, was AccorHotels’ former reference shareholder and had two seats on the Board. It held a concert stake with Eurazeo (4.28% stake, 7.97% of voting rights and two seats on the Board) which entered AccorHotel’s capital in May 2008.
08 Feb 17
AccorHotels to buy private vacation rental platform Travel Keys
Accor Hotels has announced it is in exclusive talks to acquire 100% of the Atlanta-based Travel Keys, a private vacation rental broker which has over 5,000 luxury properties across more than 100 destinations (including the Caribbean, Mexico, Hawaii & the US, Europe, Asia, Africa). Travel Keys was created in 1991 and provides clients with professional vacation planning and 24/7 concierge services. Accor expects the deal to close in Q2 17.
07 Feb 17
AccorHotels invests S$24m (c.€16m) in Banyan Tree
The French hotel group will spend c.€16m in the Singapore-based hospitality brand Banyan Tree. The pair have locked in a long-term strategic partnership to develop and manage Banyan Tree branded hotels around the world. Banyan Tree will have access to AccorHotels’ global reservation and sales network and its loyalty programme (Le Club AccorHotels). Banyan Tree operates 43 luxury hotels and resorts (between 75 to 300 rooms) under the Banyan Tree and Angsana brands but also under the newly-established Cassia and Dhawa brands. The group also operates 64 spas, 77 retail galleries and three golf courses across 28 countries. In exchange for its initial S$24m investment, AccorHotels will get a 5% stake in Banyan Tree upon conversion of a mandatory convertible debenture (a long-term security that will be automatically converted into stock at a specified date). AccorHotels has an option to purchase an additional c.5% stake.
08 Dec 16
Finally, good resistance
Accor reported Q3 sales up by 3%, of which +1.8% organic growth (mainly price increases) and +11.5% from expansion (new rooms and FRHI integration since July): • HotelInvest sales reduced by 0.1% lfl due to the tough environment in France and Belgium; • HotelServices sales grew by 24.2% thanks to the consolidation of FRHI and 6.7% organic growth. This good performance is reassuring in the current alarmist context about tourism in France and Belgium. The group reduced its medium EBIT target slightly from €695m to €680m due to the situation in France (28% of EBIT).
19 Oct 16
The Big Short !
Accor H1 2016 Sales grew +2% Like-for-Like while Ebit dropped -4% to EUR 239 Mln France is largest issue (makes for 25% of Company total Sales & Ebit) as Leisure traffic collapsed -50% since Nov 2015 Attacks (while Corporate was almost flat). Company has kept prices unchanged in Paris (big mistake according to us), declaring customers were scared to travel to France whatever the price of rooms was (Airbnb traffic jumped +86% Y-oY in June, July, August 2016 in France…)
21 Sep 16
Mixed results and the issue of the Digital Plan
Accor published mixed H1 16 results: Sales increased 2% lfl to €2,598m excluding disposals from the Asset Management Programme (-5.2%) and forex impacts (-3.2% with Brazil and the UK). In the first half, the group opened 110 hotels (19,366 new rooms), increasing its portfolio to 3,942 hotels and 524,955 rooms. EBIT was down to €239m (-4% lfl) with the cost impact of the Digital Plan (€-14m), the market (€-6m) but up by 5% excluding these elements and dotcom acquisitions. The EBIT margin decreased to 9.2% from 9.6% in H1 15. Net profit decreased by 19% at €74m (from €91m) mainly due to the operating profit decrease and increase in financial expenses (impacted by a €41m negative fair value adjustment of an interest rate hedge), but helped by non-recurring items (€-18m H1 16 vs €-71m in H1 15). Net debt totalled €511m, mainly increasing due to acquisitions (€607m).
01 Aug 16
Some new investors for HotelInvest
AccorHotels has just announced a project to create a subsidiary for its HotelInvest operations. Its purpose is to provide a legal structure for the division and will enable third-party investors to hold the majority of HotelInvest’s capital (50-80%) by the end of the first half of 2017.
18 Jul 16
Jin Jiang is back for more, seeking 29% of AccorHotels’ capital
The press revealed this morning that the Chinese Jin Jiang, AccorHotels’ top shareholder (the last reported stake held on 27 May was 15.06% of capital and 13.15% of voting rights through Rubyrock and Gold Apple Capital, both controlled by Jin Jiang) may be seeking 29% of the French hotelier’s capital, just below the 30% threshold which would force the launch of a takeover bid. According to the press, Jin Jiang could have approached Colony and Eurazeo to buy their 11% stake held in concert at €45 per share (c.19% above AccorHotels’s last price at €37.9, following a 5% drop in the last three days). The two Private Equity houses are supposedly waiting for Sebastien Bazin (Accor’s CEO) and the Board’s green light to sell their stake to Jin Jiang. However, the French State may impede Jin Jiang’s intentions on AccorHotels by imposing a ceiling in terms of share capital or voting rights.
03 Jun 16
Accor acquires the luxury home rentals business Onefinestay
A portfolio of 2,600 properties, with an estimated market value of £4bn AccorHotels has announced the acquisition of the London-based short-term vacation rental company, Onefinestay for €148m (£117m). Created in 2009, Onefinestay is a high-end hospitality online portal dedicated to luxury serviced Home rental (hand-picked homes and made-to-measure/personal services, including a personal welcome on arrival and a team on a call 24/7), addressing both leisure and corporate clientele. For homeowners, Onefinestay provides marketing, distribution and assurance of screening each guest, to professional cleaning, management and maintenance. Onefinestay operates a portfolio of 2,600 properties under exclusive management in key gateway cities including London, New York, Paris, Los Angeles and Rome. While Onefinestay has just raised c.$80m in venture capital, AccorHotels announced that it would invest an additional €64m (£50m) to expand Onefinestay internationally. The start-up is expected to launch more than 40 new markets over the next five years and to grow tenfold its revenues from c.£15m in 2015. It will continue to be run by its co-founder and his management team as a separate entity within the AccorHotels Group.
05 Apr 16
Accor and HNA are considering bids for Carlson’s hotel group
According to Bloomberg, Accor is amongst the companies eyeing the upscale Carlson Rezidor Hotel Group, the owner of the upscale Radisson (including the luxury Radisson Blu) and midscale Park Plaza brands and which owns a controlling interest in the Swedish publicly-traded Rezidor Hotel Group AB (€631m of market cap, c.€1bn of sales, 10% of EBITDA margin). The Chinese conglomerate HNA (China’s four biggest airline Group), which is NH Hoteles’ reference shareholder (29.5% interest) is also said to be amongst the suitors. A deal could be locked by the end of H1 16 for a price of c.$2bn (€1.8bn). A month ago, the press indicated that Carlson was exploring strategic alternatives, including a partnership, merger or sale. Neither Accor nor HNA have commented on the rumour.
03 Mar 16
Jin Jiang raises its AccorHotels stake again, seeking board representation
The Chinese Jin Jiang announced today that it has raised its stake in Accor from 5.5% in early February to 11.7% today. Rubyrock and Gold Capital (both controlled by Jin Jiang) now hold a combined 10.2% of voting rights in AccorHotels and do not rule out to be seeking board seats. AccorHotels commented in the press that it would consider any request for board representation. We recall that Jin Jiang International, the Chinese hotel group entered Accor’s capital in June 2015 (2% stake) and raised its interest to 6.05% on 26 January (corresponding to 5.27% of voting rights).
29 Feb 16
2015 in line with expectations
FY15 came in line with Accor’s expectations. Sales were up 2.9% lfl, largely attributable to HotelServices (+6.2% lfl) while HotelInvest showed more modest growth (+1.9% lfl), penalised by the challenging French and Brazilian markets. The EBITDAR margin dropped from 32.5% in 2014 to 31.9% in 2015, impacted by the sharp recession in Brazil (€29m impact), the challenging environment in France (€26m) and the opex related to the implementation of the Digital plan (€32m). Group EBIT came in at €665m (+10% yoy, +90bp in EBIT margin to 11.9%) despite the collapse in the Americas (-40% yoy to €29m) and France (-10% yoy). However, Northern, Central and Eastern Europe (NCEE, 55% of EBIT) and Mediterranean, Middle East and Africa (MMEA, 8%) buoyed up the group EBIT recording a 20% and 57% rise in EBIT respectively. The former was fuelled by new business levels while the latter benefited from a solid turnaround driven by South Europe's recovery. Net profit jumped by 9.4%. Accor showed a healthy financial position (net cash position of €194m) while the recurring FCF/EBITDA improved from 33% to 35%.
22 Feb 16
Jin Jiang raises its stake in AccorHotels’ capital
Jin Jiang International, the Chinese hotel Group which entered Accor’s capital in June 2015 (2% stake) raised its interest to 6.05% on 26 January, corresponding to 5.27% of voting rights. The operation was made through Jin Jiang’s investment fund Rubyrock.
03 Feb 16
Accor to sell 85 hotels to a newly-created hotel investment company
The restructuring of HotelInvest continues. Accor announced that it has entered into exclusive negotiations for the sale of a portfolio of 85 owned and leased European hotels that it currently operates in the Economy and Midscale segments, for a total asset value of €504m. The newly-created company will be jointly owned by Eurazeo (70%) and AccorHotels (30%) but the capital structure may rapidly evolve with the arrival of a third institutional investor. It is expected to be up and running by the end of H1-16 and will become HotelServices’ largest franchisee. All of these hotels will remain under the AccorHotels brands through franchise agreements and will benefit from a c.€100m renovation programme. The new entity’s management team will be partially made up of AccorHotels employees who are leaving the Group. The portfolio comprises 1 Pullman, 19 Novotel, 13 Mercure, 35 ibis Styles and 14 ibis budget hotels. The bulk of these hotels are located in France (61 hotels, primarily in regional cities and in urban agglomerations) and Spain (9 hotels). The remainder is spread across Italy, Portugal, Germany, Austria, Belgium and the Netherlands.
28 Jan 16
Hilton’s potential spin-off boosts Accor’s share price
Two positive pieces of news have come out for Accor. The first is that voyages-sncf.com has bent to the French union of hoteliers (GNI). The trial phase of a commercial partnership has been suspended following pressure from the GNI. By entering such a partnership, voyages-sncf.com would have taken the risk of harming commercial relationships with hotel groups. The latter have been claiming that Airbnb is a company that destroys jobs while it has also been competing on unequal fiscal and social footing with hotels in France (see our Latest dated 16/12/2015). The news is a relief for the whole hotel industry in France and for Accor in particular. The second is that Hilton is considering a spin-off of hotel properties into a real estate investment trust (“REIT”). An announcement could fall in early 2016.
17 Dec 15
Accor confirms the acquisition of FRHI
Accor has locked the acquisition of the Toronto-based FRHI Hotels & Resorts, adding to its portfolio the three luxury brands Fairmont (70 hotels, largely a Canadian chain, managing emblematic hotels like New York’s Plaza, The Savoy in London and Shanghai’s Peace Hotel), Raffles (12 hotels, predominantly an Asian chain) and Swissôtel (32 hotels, a mix of cities, primarily in China, Germany, Turkey and Switzerland) for $2.9bn (c.€2.6bn). The deal includes the purchase of 155 luxury hotels and resorts (56k rooms) including 40 hotels under development (c.13k rooms in the pipeline). FRHI’s hotels & resorts span 34 countries including 42 properties in North America, 26 properties in Europe, 17 in Middle East/Africa and 28 in Asia Pacific. Out of the 115 hotels bought, 108 hotels are operated under very long-term management contracts (average remaining terms of c. 30 years), six hotels are leased and one hotel is owned. Accor said that the operation will be accretive on EPS from 2017 while it expects €65m of synergies at the EBITDA level (full contribution in FY18, €120m of implementation costs) which will result from optimisation of support costs (55%), Marketing & Distribution efficiency (30%) and hotel P&L maximisation.
10 Dec 15
Another move in favour of HotelInvest restructuring
Accor Hotels announced the acquisition of three hotel asset portfolios in Europe, including 29 hotels (3,677 rooms) for €284m. The first hotel portfolio was bought from Axa Investment managers for €56m, comprising 19 hotels in France (1,512 rooms) which were operated under variable leases by AccorHotels since 2008 under the ibis budget, ibis, Novotel and Mercure brands. The second portfolio was purchased from Invesco for €152m and which is made up of 6 hotels (2 in Germany, 2 in Italy, 1 in the Netherlands and 1 in Austria). These hotels were operated under fixed and variable leases under the Novotel and Mercure brands. The third portfolio was bought from Deutsche AWM for €76m and comprises 4 Novotel hotels (818 rooms) located in Madrid, Barcelona and Seville and were formerly operated under fixed leases. This last transaction was completed at the end of November while the first two deals are expected to be finalised during H1 16. The deal will be financed by cash available in the balance sheet (which amounted to €2.7bn at end 2014) while we expect Accor to record a neutral debt position at the end of 2015.
01 Dec 15
Accor is eyeing up FRHI
According to the press, Accor is in talks to snap up FRHI Hotels & Resorts for c.$3bn (c.€2.7bn). FRHI Hotels & Resorts is a luxury hotel and resort operator, with operating brands that include Fairmont (largely a Canadian chain, manages emblematic hotels like New York’s Plaza, The Savoy in London and Shanghai’s Peace Hotel), Raffles (predominantly an Asian chain) and Swissôtel (a mix of cities, primarily in China, Germany, Turkey and Switzerland). FRHI operates a portfolio of 119 hotels and 45,192 rooms (o/w 74 hotels and 30.5k rooms under the Fairmont Hotels & Resorts brand). The group is currently owned by a Qatari government fund (via its Katara Hospitality holding) and Saudi Prince Alwaleed’s Kingdom Holding (KHI), both looking to sell the luxury operator. Although the two companies have not reached any agreement yet, Accor is said to be the most likely bidder (amongst three other finalists) to lock in the deal which could be announced next month.
30 Oct 15
HotelInvest restructuring: 43 French hotels purchased for €281m
Accor announced today the acquisition of a French hotel portfolio of 43 properties (4,237 rooms) from Foncière des Régions for €281m. Half of the hotels are located in cities of less than 300k inhabitants. The hotels (under the ibis budget, ibis, Novotel, Mercure, Pullman and Sofitel brands) were formerly operated under variable lease contracts since 2005 and 2007. The deal is due complete in H1 16. Also, HotelInvest has extended lease contracts for a further period of 12 years for the 80 other hotels owned by Foncière des Régions (initially expiring in 2017 and 2018) and under the same rental conditions as those locked for the previous lease agreements.
19 Oct 15
Stagnant France and a worrying Brazil, Reduce maintained
The Q3 15 trading figures showed a continuing difficult French market while Brazil deteriorated further. The group showed a 3.4% rise in revenues LFL on the back of strong HotelServices (+8.4% vs +2.7% in Q3 14, 23.5k rooms opened in 9m 15) which was fuelled by Northern, Central and Eastern Europe (NCEE, +4.8% with up to 10.9% in the UK) and the continuing recovery in the Mediterranean, the Middle East and Africa region (+10% LFL). France showed a 5.9% rise LFL in sales backed by the Luxury & Upscale segment (RevPAR +8.3% LFL). The Americas (-6.7% LFL in sales) however was hit by Brazil (-12.7% LFL) which was impacted by the continuing deterioration of the real, the challenging macro environment and the demanding comps (FIFA world cup in July 2014). HotelInvest (+2% LFL) was penalised by France (-0.5% LFL in sales), hampered by a deteriorating Economy segement (-1.7% LFL) and the Midscale segment to a lesser extent (-0.5% LFL) as both reflect a strong exposure (owned and leased hotels) to the poor Greater Paris area. A strong summer season helped the Upscale and luxury segment to record a 2.2% LFL rise in sales. The NCEE region gained momentum (47% of HotelInvest’s sales, +4.2% LFL) on the back of a strong UK (+5.6%), Benelux (+9.2%) and Germany (+1.7%). Despite strong performances, the MMEA decelerated (+8.4% LFL vs +11.7% in Q3 15) but was buoyed up by Portugal (+8.6%), Italy (+11%) and Spain (+5.1%). We recall that Southern Europe is not yet an EBIT contributor but the region has been improving with an operating profit now close to zero after several years of losses. Brazil (sales down 12.5% LFL) pulled down the Americas’ performances (-7.7% LFL).
15 Oct 15
Difficult French market weighs on long-term perspectives
Accor's H1 15 figures were marked by improved operating gearing and strong HotelServices but also by a deceleration in organic sales trends largely caused by the tough French and Brazilian markets. The group recorded a 5.1% rise in revenues (+4.1% LFL) and a c.24% jump in EBIT (+8% LFL) pointing to an EBIT margin improvement of 140bp to 9.6%. In H1, the EBITDAR margin came in broadly flat at 30.7% LFL (-0.2pt yoy), penalised by initial opex related to the Digital plan (€11m impact, -0.4pt), the downturn in Brazil (-0.4pt) and the tough backdrop in France (-0.5pt). In France, EBIT slipped by 7.5%, reflecting the lacklustre organic sales (+1.9% in H1 15, +0.7% in Q2, below Accor’s expectations) caused by poor RevPAR growth (+1.4% in Q2, o/w -0.2% in occupancy) and a disappointing Paris Air Show. The Americas (profit collapsed by c.50%) were hit by the performance in Brazil (sales down 11% in Q2) which accounted for 68% of the sales in the region in H1 15 (c.6% of group sales) and 80% of the Americas’ EBIT in FY14. The country has been experiencing a very tight macro situation while comps will be demanding in H2 due to the football World Cup held in FY14. However, this was almost compensated by the strong momentum in almost all geographies, FX moves as well as HotelInvest restructuring. We recall that Accor targets the restructuring of 100 hotels in FY15 (59 hotels were secured in H1) and the disposals of underperforming hotels completed in H1 (€-12m impact on EBITDAR) have lifted the EBITDAR margin by 30bp. At the HotelInvest division level, the EBIT margin has improved by 220bp on the back of the portfolio restructuring, while last year acquisitions have reduced rental charges by €33m.
07 Sep 15