Accor, the world’s leading hotel operator and market leader in Europe, with nearly 3,500 hotels and 450,000 rooms and an extensive portfolio of hotel brands – Sofitel, Pullman, MGallery, Grand Mercure, Novotel, Suite Novotel, Mercure, Adagio, ibis, ibis Styles, ibis budget and hotelF1 – has reported solid results for 2012 at the same time as it begins a period of transformation to drive further growth.
Highlights
- Growth in revenue, up 2.7% like-for-like to €5,649 million
- Improvement in EBIT, up 3% like-for-like to €526 million
- Operating profit before tax and non-recurring items, up 4.1% like-for-like to €468 million
- Net profit of €80 million, before the impact of the Motel 6 disposal
- Ordinary dividend of €0.76 a share, up 17% compared with 2011 (subject to shareholder approval)
- Record expansion with the opening of more than 38,000 rooms, 85% of which under management or franchise agreements
- €1,402 million reduction in adjusted net debt thanks to the asset management strategy, of which €606 million from the asset management program and €796 million from the disposal of Motel 6.
2013-2016: a new ambition
- Confirmed expansion plan of 30,000 rooms per year through organic growth, with an EBIT margin above 15%
- Extended Asset Management plan, with 800 hotels to be restructured, for a total negative impact of €2 billion on the Group’s revenue, and a €2 billion reduction in Adjusted Net Debt
- About €30 million annual investment plan to consolidate the Group distribution systems
- A €100 million savings plan between 2013 and 2014, to maintain the Group’s competitiveness, in an environment shaped by increasing operating costs and accrued competition in Europe
- A clear improvement in the Group’s economic performance by 2016-end, implying a structurally strong cash-flow generation
Accor’s performance in 2012 was shaped by:
- Sustained revenue growth in every segment, driven by steadily rising room rates
- An improvement in EBIT, to €526 million, at the upper end of the target range announced in August 2012
- The generation of positive free cash flow before non-recurring items, at €150 million
- The disposal, on October 1st, of Motel 6 to Blackstone
- The effective launch of the ibis megabrand program, with the rebranding of more than 1,500 hotels
- The issue in June of €600-million in five-year, 2.875% bond, with a further €100 million tranche successfully added in September.
- The development momentum remains very strong, with 112,600 rooms in the pipeline as of December 31, 2012, of which 84% were under management contracts or franchise agreements and 77% in emerging markets (52% in the Asia-Pacific region, 17% in Latin America and 8% in Africa Middle East).
- Stable performance in Upscale & Midscale hotels: revenue increased by 1.4% as reported and by 2.7% like-for-like in 2012.
- Good performance in Economy hotels : revenue increased 3.4% as reported and 2.6% like-for-like.
The ambition for 2016
As part of the ongoing transformation of its business model, which is being driven both by fast growth under management and franchise contracts and by a dynamic asset management strategy, Accor is now committed, by the end of 2016, to operating its portfolio with 40% under franchise agreements, 40% under management contracts and 20% in owned or leased hotels. This transformation will also lead to a geographical shift in the income stream, with the target of earning 50% of EBIT from emerging markets by the end of 2016 (15% of EBIT was earned from emerging markets at the end of 2011.)
This process will involve consolidating the Group’s existing leadership in emerging markets, restructuring the portfolio in Europe to focus on a majority of management and franchise contracts, and strengthening the Group’s expertise and accountability.
It will be supported by five key drivers:
1. Strengthening the brands and distribution
2. Maintaining the fast pace of development
3. Stepping up the asset management program
4. Improving organizational efficiency
5. Achieving operational excellence to improve competitiveness
6. Improving organizational efficiency
7. Achieving operational excellence to improve competitiveness