AccorHotels expects full-year profits to be at the top end of previous guidance as it brings Mantra and Orient Express into the fold and looks forward to AccorInvest cash.
PARIS—AccorHotels executives said they expected its full-year 2017 operating profit would be at the upper end of the €460 million ($543.6 million) to €480 million ($567.2 million) target range it announced at its last earnings roundup in July.
CFO Jean-Jacques Morin told analysts on the company’s third-quarter earnings call that like-for-like revenue for the quarter increased by 6.4% to €504 million ($596 million).
Morin said those numbers were “on the back of 4.5% system-wide (revenue per available room) growth.”
Morin also gave a little color on the French hotel firm’s agreement to purchase Australian hotels firm Mantra Group for $1.3 billion Australian dollars ($1 billion), saying the deal was shaped around management and lease agreements.
“In Australia, supply is stable there, and demand has been picking up over many years. It is a country where (gross domestic product) has been growing for 20 years, and it is a favorite travel destination for Chinese travelers … particularly to the Gold Coast region, where Accor was much weaker than Mantra is,” Morin said.
Another milestone from the third quarter was the growth to more than 600,000 rooms across the AccorHotels portfolio, and Morin said in the fourth quarter of 2017 a further 40,000 rooms would be added.
“We opened 73 hotels in the third quarter with approximately 11,000 rooms,” Morin said.
More cash soon
AccorHotels’ top brass are equally buoyed by the knowledge that the assets it owns under its HotelInvest division—the working title for the sale is Booster Perimeter or AccorInvest—might be partly offloaded soon, with AccorHotels retaining a majority stake.
Here again, there were few concrete details given, but conversations are ongoing on a deal that would see AccorHotels retain value in the portfolio but also benefit in cash in the region, so Bazin calculated in February, of some €4 billion ($4.7 billion).
Morin remained tightlipped on the call.
“We are in discussion with a potential investor to sell part of the share capital of AccorInvest. We confirm that we aim at signing an agreement before year-end 2017. At this stage, the group has no certainty to reach an agreement,” Morin said.
“After the completion of the Booster operation, we will start to eliminate fees between AccorHotels and HotelInvest,” Morin added.
Morin also underlined AccorHotels’ other hotel M&A deal struck this October, the 50% stake in Orient Express, with plans to develop the brand (known best for its line of passenger trains) globally in the luxury hotel space.
Morin said Mantra and Orient Express were two of the four deals the company has transacted since it reported its half-year numbers in July.
The other side of AccorHotels’ business, HotelServices, contained 4,209 hotels and approximately 604,000 rooms under franchise agreements and management contracts at the end of September 2017, with Morin reporting a 3.5% increase in revenue like-for-like to €442 million ($523 million).
Morin added that, also for the end of September, AccorHotels’ pipeline comprised 992 hotels and approximately 178,000 rooms, of which 81% are in emerging markets and 47% in Asia-Pacific.