Accor reports strong results and a successful transformation in 2019

20 February 2020

Accor has reported revenue up 16.0% to €4,049 million (+3.8% LFL), EBITDA up 14.8% to €825 million (+5.9% LFL) and net profit, group share of €464 million in 2019. 327 hotels and 45,108 rooms added during the period.

Sébastien Bazin, Chairman and CEO of Accor, commented: “The Group delivered a record performance again for FY 2019. This is all the more outstanding against a difficult macroeconomic background and in light of our successful transformation, parallel to achieving growth. Today, Accor is more diversified than ever, and a fully asset-light group. Going forward, we will pursue the execution of our strategy, focusing on our roadmap and value creation for shareholders. While these are challenging times for China, our thoughts are with the Chinese people, our teams, our clients and our partners there. As we are actively managing the situation in the region, our focus is on the fundamentals, which are the cornerstone of our business model: the excellence of our 300,000-strong workforce, our powerful brands, our top-performing distribution tools and loyalty programs, our consolidated leadership position in high potential regions, and our highly robust financial position. By leveraging these assets, we are confident in our ability to pursue our growth objectives and enhance sustainable shareholder returns.”

The full-year 2019 results confirm the strength of the asset-light model. The company delivered on its targets despite the uncertain environment. After adding a record 45,108 rooms (327 hotels) on an organic basis during the period, including 12,954 rooms (65 hotels) in the Luxury segment, Accor had a portfolio of 739,537 rooms (5,036 hotels) and a pipeline of 208,000 rooms (1,206 hotels) at December 31, 2019, of which 76% in emerging markets.

Strong growth in consolidated revenue
Consolidated full-year 2019 revenue totalled €4,049 million, up 3.8% like-for-like (LFL) and up 16.0% as reported compared with full-year 2018.

Reported revenue for the period reflects the following factors:
• Changes in the scope of consolidation (acquisitions and disposals) had a positive impact of €380 million (+10.9%), largely due to the contributions of Mantra and Mövenpick;
• Currency effects had a positive impact of €48 million (+1.4%), mainly due to the US
dollar (€50 million).

HotelServices revenue
HotelServices reported business volumes of €22 billion, versus €20 billion in 2018, and revenue of €2,894 million, up 4.6% like-for-like. This reflects the resilience generated by the geographic and segment diversification of the businesses and by the expansion of the hotel network.

Management & Franchise (M&F) revenue increased by 3.8% on a like-for-like basis to
€1,026 million, reflecting the Group’s growth in all its markets.

Consolidated RevPAR rose by 1.7% overall during the period.

M&F revenue increased substantially in Europe (up 4.0% like-for-like), underpinned by RevPAR growth of 2.6% all segments combined.

• In France, RevPAR was up 2.6% like-for-like. The strong first half of the year, buoyed by events such as the Paris Air Show and the FIFA Women’s World Cup, was offset by a softer end of year. The Paris region (RevPAR up 1.6% in full-year 2019) suffered from the absence of certain major conventions (Autoshow, SIAL,…) and from the strikes, which had an impact on corporate customers in the fourth quarter, while the regional cities were more resilient (+3.3%);

• RevPAR remained stable (+0.2%) in the United Kingdom, with considerable differences persisting between London and the regional cities. The increase in RevPAR in London (+2.0%) reflected the still-dynamic domestic tourism market, offsetting the decline in RevPAR seen in the regional cities (-1.7%) due to soft corporate demand;

• RevPAR rose by 1.4% in Germany. RevPAR growth picked up in the fourth quarter, as expected, due to a more favourable trade fair calendar.

M&F revenue in Asia-Pacific was up 2.3% like-for-like despite slightly negative RevPAR for full-year 2019 (-0.9%). The trend continued to worsen in the fourth quarter (-1.9%).

• RevPAR was down 6.1% in China in full-year 2019. While domestic demand remained strong, trade tensions between China and the United States, combined with the unrest in Hong Kong, continued to cause market conditions to deteriorate. This had a significant impact on business;

• RevPAR growth in Australia was slightly negative at -0.8%. The slowdown in tourism from China affected demand and the major fires that broke out in the country had an adverse impact at the end of the year.

M&F revenue in the Middle East & Africa region rose by 5.3% despite moderate RevPAR growth of 0.9%. This strong growth in revenue can be attributed to the expansion of the network in the region and the receipt of payments for breach of contract.

M&F revenue in North America, Central America & the Caribbean was up 1.5%, driven by 0.7% RevPAR growth in the region.

Lastly, South America continued to post significant growth, particularly in Brazil, with revenue up 13.0% reflecting a 12.3% increase in RevPAR.

Services to Owners, which includes the Sales, Marketing, Distribution and Loyalty division, as well as shared services and the repayment of hotel personnel costs, generated revenue of
€1,867 million, versus €1,654 million in full-year 2018.

Hotel Assets & Other revenue
Hotel Assets & Other revenue was up 2.9% like-for-like to €1,077 million. The reported rise of 43.4% notably reflects the consolidation of Mantra in May 2018 and Mövenpick in September of the same year. Following the reclassification of Orbis’ real estate operations to assets held for sale in accordance with IFRS 5, this segment was mainly driven by the Asia-Pacific region.

Excluding Orbis and the Mövenpick leased hotel portfolio, the division's hotel base consisted of 163 hotels and 29,417 rooms at December 31, 2019.

New Businesses revenue
New Businesses (concierge services, luxury home rentals, private sales for luxury hotel stays, and digital services for hotels) generated revenue of €159 million at end-December 2019, up 3.8% on a like-for-like basis. The 7.2% increase as reported reflects the acquisitions of ResDiary and Adoria in April and June 2018, respectively.

Asia-Pacific performance affected by Mantra
Accor’s various real-estate disposals, combined with the strong organic system growth in the region and the acquisition of Mantra in May 2018, left consolidated revenue highly exposed to Asia-Pacific, at 33% of revenue (excluding reimbursement costs).

This increase in revenue exposure to Asia-Pacific is coupled with Hotel Assets’ relatively greater weight than in other regions. These businesses are inherently more sensitive to economic conditions. This sensitivity was particularly evident at Mantra in 2019 as it had to contend with a worsening environment in Australia, resulting in a €150 million impairment.

The Asia-Pacific region is also currently being hit hard by the health crisis related to Covid-19, the effects of which are global and hard to measure. Accor will provide additional information at its results presentation.

EBITDA
Consolidated EBITDA stood at €825 million at December 31, 2019, up 5.9% like-for-like and up 14.8% as reported compared with full-year 2018. This is in line with the target range of €820 million to €840 million announced by the Group in October. EBITDA margin decreased by 20bp to 20.4%.

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