Accor starts 2022 €1.2b EBITDA push with strong Q1
Accor starts 2022 €1.2b EBITDA push with strong Q1
23 APRIL 2019 8:42 AM

Accor is on a four-year mission to boost EBITDA to €1.2 billion, with CEO Sébastien Bazin saying the company expects to post record years in 2019 and 2020 as it gears up to 2022. The first results, Q1 2019, underline the strategy is going according to plan, despite a few RevPAR wobbles in the APAC region.

PARIS—Accor CEO Sébastien Bazin’s recent bullishness about the company’s next four years has been backed up by its first quarterly earnings results, which set the pace for an ambitious ramp up to 2022.

“We have this ability, which is very rare, to transform a company, to add many things, and yet still to perform better and better every single year. … You are going to see 2019 will be another record year; 2020 will be another record year. The next four years to go, we know exactly where we’re going end up in 2022, which is the €1.2 billion ($1.3 billion) (earnings before interest, tax, depreciation and amortization) coming from €712 million ($798 million) last year,” Bazin told Hotel News Now in April.

Presenting the earnings numbers, Accor CFO Jean-Jacques Morin said revenue in the first quarter of 2019 was a record for that period, the tally of €987 million ($1.1 billion) being an 8.8% like-for-like increase.

“As for HotelServices, which is our core business, revenue growth was 7.3%, fueled by an organic system growth of 5.6% for the last 12 months and a (consolidated revenue per available room) of 1.6%. This demonstrates the resilience of our business model,” Morin said. “We expect an improvement of the momentum across the year and confirm the 3% RevPAR growth full-year target that was mentioned (in) February.”

Speaking to HNN at the 18 April opening of the Jo&Joe Paris-Gentilly, the flagship property of Accor’s first in-house brand created in several decades, Bazin said revenue per available room across the portfolio was a little weaker than expected in the first quarter due to a slight drop (-0.6%) in the Asia-Pacific region and a similar decline (-0.7%) in the Middle East.

Recovery in Europe and South America helped boost success in the quarter, Morin said.

South America “posted a sound RevPAR growth of 11.2%, occupancy being up 350 basis points on a like-for-like basis, and with Rio (de Janeiro) finally recovering from the Olympic Games,” he said.

Morin said the RevPAR wobble in Asia-Pacific was largely due to oversupply in Australia’s major cities, with upcoming elections in the country affecting average daily rate and occupancy.

Oversupply also is the cause of the RevPAR dip in the Middle East, where like-for-like ADR fell 2.9%, drop, he added.

Sébastien Valentin, chief communications officer at Accor, said the French firm opened 71 hotels in the quarter with approximately 8,300 rooms and that the pipeline showed 1,135 hotels with approximately 200,000 rooms.

Of the pipeline, approximately 100,000 rooms will be in the APAC region, with the next highest level, approximately 42,000 rooms, in the Middle East-Africa region.

Increased share
Morin also said a second batch of shares had been rebought in a share-buyback program that remains ongoing.

Accor has bought back 21.8 million shares since the program was initiated in July 2018.

According to Accor’s earnings statement, the overall transaction represents “7.5% of (Accor’s) capital, for a total of €850 million ($953 million), or an average price of €39 ($43.73) per share. … The board of directors will soon decide the next steps to complete the execution of the program.”

Morin also noted developments concerning Accor’s Polish hotels subsidiary, Orbis S.A. In January, Accor acquired 33.15% of Orbis for approximately €339 million ($380 million), bringing its ownership of share capital to nearly 86%.

“On Orbis, we signed a cooperation agreement … under which we work with the company on value restructuring options. So the project is moving on. We have on the restructuring announced at the end of 2018 all the appropriate approvals to move ahead,” Morin said.

As of press time, AccorHotels stock was trading at €38.55 ($43.22) a share, up 4.3% year to date. The Baird/STR Hotel Stock Index is up 15.5% for the same period.

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