Accor’s Third quarter 2014 revenue up

  • Published by Ozgur Tore

accor logo14Accor turned in a robust third-quarter performance supported by satisfactory RevPAR growth, which was linked to both demand and prices.

The vast majority of the Group’s markets reported solid third-quarter growth, for total revenue of €1,459 million, up 4.6% like-for-like pro forma and 3.3% as reported. This consolidates the positive trend observed in the first half of the year, resulting in a 3.4% like-for-like increase for the nine months to end-September.

Sébastien Bazin, Chairman and Chief Executive Officer, said: “This strong third-quarter performance enables us to confirm the full-year EBIT target set for 2014. Obviously, we will continue to pay close attention to changes in the persistently lackluster French market, and to the situation in Africa. The strong demand in Europe, including in Southern Europe, and in emerging markets will provide the growth necessary for HotelInvest and HotelServices to continue to implement their strategic roadmaps.”

At September 30, 2014, the HotelInvest portfolio comprised 1,359 hotels, of which 77% in Europe (France & NCEE) and 95% in the Economy and Midscale segments.

HotelInvest’s performance in France improved during the quarter, with a 0.9% increase in revenue versus a 0.2% decline in the second quarter.

The NCEE region, which accounted for 45% of HotelInvest’s revenue, recorded like-for-like growth of 6.5% versus 1.7% in the second quarter, led by particularly robust demand in the UK (up 9.2%) and Germany (up 7.2%).

The MMEA region also confirmed its performance overall, with revenue up 11.7% like-for-like, thanks to the ongoing vitality of Southern European countries. In particular, occupancy rates in Spain returned to levels comparable with those recorded in 2008. Conversely, booking cancellations are increasingly affecting sub-Saharan Africa.

With revenue up 9.0%, the Americas region maintained its good performance overall, primarily thanks to Brazil (up 9.3%), which benefited from the positive impact of the FIFA World Cup in July but suffered from significant consumer hesitation in August and September in the run-up to the presidential elections. In Chile and Colombia, the momentum observed in the first half of the year continued during the third quarter, resulting in very favorable revenue gains of 8.1% and 7.6% respectively.

HotelInvest’s business in the Asia-Pacific region was once again weighed down by Australia, where revenue fell 3.4% in the third quarter due to the still challenging situation in its mining regions, and by China.

HotelServices: Third-quarter 2014 revenue up 2.7% like-for-like1 to €325 million

HotelServices reported €3.2 billion in business volume in the third quarter of 2014, an increase of 4.7% at constant exchange rates, led by the combined impact of development and growth in RevPAR.

During the quarter, Accor opened 51 hotels or 7,529 rooms, of which 95%2 under franchise agreements and management contracts. At September 30, 2014, the HotelServices hotel portfolio comprised 3,675 hotels (or 475,713 rooms), of which 27%2 under franchise agreements and 73%2 under management contracts, including the HotelInvest portfolio.

Revenue rose by 2.7% like-for-like from the year-earlier period, with solid gains in all regions (6.4% in NCEE driven by a 10.2% increase in the UK; 8.5% in MMEA with a particularly strong 26.2% increase in the Middle East; 5.6% in the Americas; and 1.4% in the Asia-Pacific region) with the exception of France, where revenue declined by 3.2%. This decrease was due in particular to changes in the scope of consolidation (asset management strategy) and to the recording of marketing fees paid by franchised hotels in accordance with IFRS. Restated from these factors, the performance of HoteIInvest in France was comparable to that of HotelServices.

Fees paid by HotelInvest to HotelServices amounted to €150 million in the third quarter, or 46% of HotelServices revenue for the period.

Third-quarter key market review

In France, RevPAR rose by 1.8% in the third quarter (versus 0.5% in the second quarter), with Paris showing growth of 4.2% (versus 1.9% in the second quarter). Other French cities, however, saw a decline of 1.0%, as they remain structurally less vibrant. Performance outside Paris was also affected by the airline pilot strike, which weighed on occupancy during the second half of September.

Overall, only a small portion of the increase in the VAT rate from 7% to 10% has been passed on to room prices. In spite of this, business grew by a slight 0.6% in the third quarter.

In Germany, business increased by a strong 7.4%, driven by leisure travellers in July and August and by business travelers in September, as the upturn in the trade fair and trade show calendar benefited all of the country’s large cities. RevPAR grew by 8.0% all segments combined (13.7% for Luxury-Upscale, 8.3% for Midscale and 5.6% for Economy), thanks to a 4.7% price increase and a 2.4-point gain in the occupancy rate.

As a result, revenue was up 7.2% for HotelInvest and 2.4% for HotelServices, reflecting a solid macroeconomic environment that generated good levels of demand in all regions.

In the United Kingdom, demand again improved strongly in the third quarter. This performance, led once more by the Midscale and Economy segments (up 8.8% and 10.5%, respectively) was due mainly to solid demand and the success of new openings during the period.

Business remained firm in London, with very strong occupancy rates and slightly higher prices (RevPAR up 3.7% in the third quarter versus 3.8% in the second quarter). Other cities turned in an excellent performance, with Britain’s vibrant economy and major events such as the Commonwealth Games in Glasgow, the Ryder Cup and the NATO Summit in Wales driving a 14.8% increase in RevPAR in the third quarter.

Like-for-like revenue growth amounted to 9.2% for HotelInvest and 10.2% for HotelServices.

€575-€595 million EBIT target confirmed

Accor turned in a robust third-quarter performance supported by satisfactory RevPAR growth, which was linked to both demand and prices.

Business in France benefited from a certain improvement in August and September that should continue in October, thanks to the Paris Motor Show, currently being held in the capital. However, the situation in the French market remains uncertain over the medium term in a constrained economic and tax environment.

The other large European countries are on an upward trend, with good business levels in the United Kingdom (up 9.2%), Germany (up 7.4%) and Southern Europe (Spain up 13.8%, Portugal up 15.7% and Italy up 5.9%), which has returned to strong growth.

Performance in the Americas (up 8.2%), led by Brazil (up 10.1%), was satisfactory overall, with a sharp contrast between the excellent month of July (buoyed by the FIFA World Cup) and, as expected, significantly weaker business in August and September. This slower trend should be confirmed in the fourth quarter.

The Group remains extremely vigilant concerning the situation in Africa, and its potential consequences for international tourism.

In light of these factors, the Group confirms its EBIT target of between €575 and €595 million for full year 2014.

Significant openings

A total of 7,529 rooms (51 hotels) were opened in the third quarter of 2014. Significant openings included the Pullman Panjin Oriental Ginza in China, the MGallery The Lake Garden Nay Pyi Taw in Myanmar, the Grand Mercure Goa Shrem Resort in India, the Novotel Basel City in Switzerland, the Mercure Hotel Heilbronn in Germany, the Ibis Styles London Kensington in the United Kingdom and the Adagio Abu Dhabi Al Bustan in the United Arab Emirates.

HotelInvest: property asset management

HotelInvest restructured 16 hotels during the third quarter of 2014, of which eight were previously leased properties and eight were owned hotels.

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