PARIS—Accor released its first-half 2012 results. The company reported a solid performance in every segment, led by steadily rising room rates.
First-half 2012 was shaped by:
- A solid performance in every segment, led by steadily rising room rates
- A sharp 10.1% like-for-like improvement in EBIT, to €212 million, in particular thanks to the success of the asset management strategy
- A recurring free cash flow generation at €140 million
- Record expansion that added 20,700 new rooms, or 141 hotels, including Mirvac
- The signature on May 22 of an agreement to sell Motel 6 to Blackstone
- The effective launch of the ibis megabrand program, with 661 hotels rebranded to date
- The issue in June of a €600-million in five-year, 2.875% bond
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Consolidated revenue for the six months ended June 30, 2012 totaled €2,717 million, down 0.1% year-on-year on a reported basis and up 3.6% like-for-like compared with first-half 2011.
During the period, business levels remained robust in emerging markets. It was generally stable in Europe, with solid conditions in the key markets (excellent performance in the capitals), but still very challenging in the Southern countries.
By segment, like-for-like growth came to 3.5% in the Upscale & Midscale segment and 4.0% in the Economy segment. The gains were led by rising room rates across every segment and supported by the growing percentage of management and franchise fees in the revenue mix.
Expansion
In the first six months, 141 hotels (20,700 rooms) were opened, including:
- 85% under management contracts and franchise agreements.
- 57% in the Asia-Pacific region, 25% in Europe, 13% in Africa and the Middle East and 5% in Latin America.
This expansion remains dynamic, with 108,700 rooms in the pipeline for the period to 2016.
Satisfactory performance in Upscale & Midscale Hotels
In the Upscale & Midscale segment, revenue increased by 0.7% as reported and by 3.5% like-for- like in the first six months of 2012.
EBITDAR margin remained virtually unchanged at 27.8% of revenue, (down 0.1 point as reported and 0.4 point like-for-like). This represented a satisfactory performance given, in particular, the high prior-year May comparatives in France and the persistent deterioration in the Southern European economies.
Strong improvement in margins across the Economy brand portfolio
Revenue from Economy Hotels ended the first-half up 4.5% as reported and 4.0% like-for-like. EBITDAR margin widened by 0.8 point as reported and 0.7 point like-for-like to 37.5%, a new record first-half high that reflected very robust demand and the segment’s sustained expansion under asset-light agreements.
Continued deployment of the asset management program
In first-half 2012, 48 hotels (4,500 rooms) changed ownership structure and are now operated under variable leases, management contracts or franchise agreements. In addition, 11 hotels (representing 1,700 rooms) were sold during the period. These transactions had the effect of reducing adjusted net debt by €283 million.
As of August 29, 2012, following the announced disposals of the Novotel Beijing Sanyuan, the stake in the Mirvac Wholesale Fund and the MGallery hotels in Cologne and Amsterdam, the impact of property disposals on adjusted net debt amounted to €354 million. The Group has now met close to 75% of the targeted €1.2 billion impact on adjusted net debt over the 2011-2012 period.
These transactions have confirmed Accor’s ability to pursue a dynamic asset management strategy as part of a hotel property asset disposal program designed to reduce consolidated adjusted net debt by €2.2 billion over the 2011-2015 period.
New objectives for year-end 2016
As part of the transformation of its business model, which is being driven both by fast growth under management and franchise contracts and by a dynamic asset management strategy, Accor is now committed, by end-2016, to operating a room base 40% under franchise agreements, 40%
under management contracts and 20% in owned or leased hotels. To meet these objectives, Accor enhances its expertise:
- In Europe, a brand-based operating organization will be introduced on January 1st, 2013.
- At the same time, the Group is working on creating a Property Management Department, which would consolidate all of its property-related activities.
This new structure will enable the Group to improve performance in every respect:
- Operationally, with stronger brands, faster supply growth, and a property portfolio focused on the most strategic hotels.
- Financially, with optimized margins, improved free cash flow generation and a reduction in both capital intensity and earnings volatility.
