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AccorHotels Highlights – 2017 interim results and strategic review

Pressmeddelande   •   Aug 08, 2017 15:43 CEST

By rebalancing its portfolio in favor of the luxury segment, implementing an asset-light strategy and deploying innovative initiatives in new markets, AccorHotels is forging a unique identity for itself. Chief Financial Officer Jean-Jacques Morin sees the mid-year results as an endorsement of the Group’s strategic choices.

What is your assessment of results for the first half of 2017?

Operating in an economy that has picked up since the beginning of the year, we are in an excellent position with RevPAR up 3.8%, solid growth in revenue of 8.3% (at constant scope and exchange rates), and a great number of hotel openings.

This summer, AccorHotels is expected to pass the significant milestone of 600,000 rooms. Since the beginning of the year, we have opened 23,000 new rooms, of which 16,000 came through strong organic development, and the rest by way of acquisitions, in particular with Rixos Hotels. At end-June, the Group had a total of 167,000 rooms in the pipeline.

What went on in the hotel industry?

In the first half of 2017, business was strong in Asia-Pacific, where like-for-like revenue increased by 9.3%, as well as in Europe (up 8.1%) and, to a lesser extent, in the Africa-Middle East region (up 4.7%).

Within Europe, business continued to report extremely robust growth in the UK (7.1%), which remains an attractive destination, especially London, for both domestic and foreign tourists. The Eastern Europe region expanded by 12%, reflecting the vibrant market, while the Iberian Peninsula continued its recovery with RevPAR improving by 14.9%. While in Germany, RevPAR recorded rather more modest gains of 1.1% due to lower than expected returns from the trade fair circuit in April and June. Finally, revenue in France and Switzerland rose 3.7% on a like-for-like basis, driven by foreign tourists gradually returning to Paris, in particular as a leisure travel destination. The French capital, badly hit in 2016, saw the strongest upturn in RevPAR (4.3%), boosted in particular by very positive trends (up 7.2%) in the luxury/upscale segment. 

So, rebalancing the group's portfolio in favor of the luxury/upscale segment has contributed to achieving such strong results?

Yes, absolutely. The impact is visible in both France and North America. Even though the North America, Central America and Caribbean region experienced a slowdown in the first half of 2017 (like-for-like* revenue slipped 2.9%), as a result of a significant drop in foreign tourists travelling to major US cities, RevPAR for Fairmont, Raffles and Swissôtel (FRS) notched up gains of 7% in the US and 15% in Canada. The Group is reaping the benefits of a well-distributed portfolio of hotels across the US and Canada and a strong footprint in those American cities less exposed to an international clientele. 

At what stage is the booster project? What effect will AccorInvest becoming a separate subsidiary have on the group?

Since the Extraordinary Shareholder’s Meeting of June 30, AccorInvest has been trading as a separate subsidiary and we have now entered into a phase of active discussion with investors. We aren’t able to say anything more on the matter at this stage, even though the questions employees are asking are legitimate. The key here is the structural change brought about by Booster, which is shifting the Group from an asset- heavy model towards being asset light. Deployed by most major players in the hotel industry, an asset-light model, which distinguishes between hotel operation and hotel ownership, will enable us to refocus on our business as hotel operators while offering far greater agility when confronted with market changes. 

And how about new business and other initiatives, like AccorLocal?

We are successfully integrating the new acquisitions. For example, when we took over onefinestay in 2016, the brand was operating in four cities. Today, we’re present in 13 destinations, including the Côte d’Azur, Rome, the Hamptons and Miami. We will without a doubt achieve our goal to expand to cover 40 destinations by 2020.

As announced, Travel Keys and SquareBreak will be regrouped under the onefinestay banner before the end of the year, which will enable us to consolidate our leadership position in the market and step up development in luxury home rentals. As a result, clients will be able to access a selection of over 10,000 properties.

As for AccorLocal, early trial results are encouraging. They show a genuine interest from consumers for this kind of convenience services offer, which will call upon a network of 4,200 addresses, open 24 hours a day, 7 days a week. With support from concierge service provider John Paul, the AccorLocal project was initially trialed in 10 Parisian hotels, before being rolled out to a total of 80 hotels in five cities. The offer will be implemented across France as a whole from September, and will be extended to other European capitals toward the end of the year. AccorLocal will be rolled out worldwide in 2018. 

Is the group on track to hit its objectives for 2017?

We are exactly where we need to be to achieve our goals. We have been able to successfully integrate FRS, as well as expand our business into new regions. We’re on our way to becoming an innovative, high added- value service provider that is active in the communities in which we operate. Of course, our established operations in hospitality will remain our main driver;

over the next five years, this part of the business is expected to generate over 70% of total growth for the Group. But we will continue to strengthen and enrich this core business with new proposals, such as in luxury home rental and digital services. Finally, convenience services, while acting as a source of growth through the AccorLocal offer, will enable us to build close and active relationships with guests. A combination of robustness and agility, this new profile for AccorHotels is very promising for the future. 

Accounting changes to the presentation of results

For the first year, the Group’s real estate operations are not included in the half- year results. In accordance with IFRS 5, all assets held for sale in relation to the project to turn AccorInvest into a subsidiary have been recognized separately in the balance sheet, income statement and cash flow statement. The figures recorded for the first half of 2017 and published on July 27 reflect this treatment. 

Luxury segment riding high

Five years ago, the luxury segment accounted for around 20% of fees received by the Group. Since FRS’ integration, this share has climbed to 41%. As a result, the Group’s business model has been rapidly and fundamentally transformed while the momentum driving development in the luxury portfolio remains solid. A total of 32new Fairmont, Raffles and Swissôtel hotels were signed, including an iconic address in London, the Churchill Old War Office. Completed in 1906, the Grade II listed building has 1,100 rooms spanning seven floors and two miles of corridors. Throughout the 20th century, it served as the office for numerous political and military leaders, including Sir Winston Churchill. Raffles has teamed up with India’s Hinduja Group and Spanish construction company Obrascón Huarte Lain Desarrollos, which acquired the property in 2014 to develop a multi-purpose development that includes 125 rooms (of which 40% are suites), 88 private residences, restaurants and other amenities. Completion is expected in just over three years. 

Spotlight on acquisitions and majority shareholdings (escl. hotels business)

  • July 2017 - Onefinestay
    Travel Keys, Squarebreak and onefinestay grouped together under the ONEFINESTAY brand. 100% takeover of Squarebreak. The new onefinestay becomes global leader in luxury private rentals.
  • May 2017 - Noctis, acquisition of a 31% interest
    In a little under 10 years, the Noctis group has become a leading player in the events, hospitality and entertainment sector in France. The group organizes over 3,000 events every year in many iconic, high-end venues, including Chez Castel in Paris’ Saint-Germain- des-Prés quarter; Raspoutine, the Russian cabaret on the Champs-Elysées; and Monsieur Bleu, the restaurant located within the Palais de Tokyo just across from the Eiffel Tower.
  • April 2017 – VeryChic, 100% takeover
    Set up in 2011, VeryChic is a digital platform that compiles exclusive offers for hotels, apartments, cruises, trips and luxury package deals.
  • April 2017 – Availpro, 100% takeover
    Founded in 2001 and market leader in France, Availpro positions itself among the top European suppliers of digital solutions for independent hotel operators.
  • March 2017 - Potel & Chabot, acquisition of a 40% interest
    Founded in 1820 and made up of two brands, the group is a leading player in the luxury (Potel & Chabot) and premium segments (Saint Clair le Traiteur). It brings unparalleled expertise in organizing prestigious receptions using a made-to-measure approach
  • February 2017 - Travel Keys, 100% takeover
    Established in 1991, Travel Keys is the world leader in the luxury home rental market and concierge services with a portfolio of over 5,000 luxury villas in more than 100 destinations including the Caribbean, Mexico, Hawaii, the United States, Europe, Asia and Africa.
  • November 2016 - John Paul, acquisition of an 80% controlling interest
    World leader in concierge services founded in 2008, John Paul employs over 1,000 people with experience in the most prestigious luxury hotels and are available worldwide, 24 hours a day, 7 days a week, to satisfy their clients’ every need, ranging from simple requests to desires very much out of the ordinary. 

Key takeaways

1. Performance

  • Like-for-like revenue up 8.3% to €922 million.
  • EBIT growth of 33.9% at constant scope and exchange rates 
  • Increased net profit of €77 million
  • Strong recurring cash flow position at €182 million

2. Strong pace in development

  • 4,195 hotels and 597,132 rooms
  • 23,000 rooms available across 115 hotels

3. AccorInvest

  • AccorInvest, the Group’s real estate subsidiary 
  • 960 hotels
  • 26 countries

4. A financial position that supports the group's strategy

  • Net debt of €2,354 million
  • Cost of debt 2.47% at end-2017 

AccorHotels är en världsledare inom resa och livsstil samt en digital innovatör som erbjuder unika upplevelser vid mer än 4100 hotell, resorts och bostäder, samt över 3000 exklusiva privata hem runt om i världen. I 95 länder har koncernen kompetens som både investerare och operatör genom divisionerna HotelServices och HotelInvest. Portföljen innehåller flera internationellt kända lyxmärken som Raffles, Fairmont, Sofitel Legend, SO Sofitel, Sofitel, onefinestay, MGallery by Sofitel, Pullman och Swissôtel. Där återfinns även populära mellanklass- och boutiquehotell såsom 25hours, Novotel, Mercure, Mama Shelter och Adagio, samt ekonomiklasshotell som JO&JOE, ibis, ibis Styles, ibis budget och regionala varumärken som Grand Mercure, The Sebel och hotelF1. AccorHotels erbjuder innovativa helhetstjänster som följer kunden genom hela reseupplevelsen, inte minst genom det senaste förvärvet av John Paul, världsledande inom conciergetjänster.

Med en oöverträffad samling av varumärken och en rik historia som spänner över nästan fem decennier har AccorHotels, tillsammans med sitt globala team med mer än 240 000 engagerade medarbetare, en målmedveten passion för att alla gäster ska känna sig välkomna. Hos AccorHotels har gästerna tillgång till ett av världens mest givande hotellojalitetsprogram – Le Club Accorhotels. Hotellkoncernen är även aktiv i sitt engagemang för samhällsmedborgare, för en hållbar utveckling och solidaritet genom PLANET 21 – ett omfattande program som sammanför medarbetare, gäster och partners för att driva en hållbar tillväxt.

Accor SA är noterade på Euronext Paris (ISIN-kod: FR0000120404) och handlas i USA på OTC-marknaden (kod: ACRFY).

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