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Accor Launches €200M Saving Plan as H1 Revenue Halves

RevPAR was down 59.3 per cent in first-half 2020. This marked decline reflects the dramatic deterioration in the industry linked to the spread of the Covid-19 virus worldwide, as well as lockdown measures and border closures implemented by governments throughout the world.

Sébastien Bazin, Chairman and Chief Executive Officer of Accor, said: “The shock that our industry is experiencing is both violent and unprecedented. Against this backdrop, we have managed to limit the impact of the crisis: on our performance by taking immediate steps to protect our resources and, thanks to the Group recent years transformation and our sound financial structure; on our employees by implementing concrete and immediate support measures. The peak of the crisis is undoubtedly behind us, but the recovery will be gradual. Having taken these emergency steps, we must now finish the job from an asset-light model to a full asset-light company. Beyond Covid-19, this is essential. Accor must become simpler, leaner, more agile and even closer to the field. These initiatives will enable us to extend our leadership, make our decision process more efficient and boost our recovery. They will be implemented with transparency and candor and, in a spirit true to our values of solidarity and commitment.”

Nevertheless, we are observing signs of recovery in all regions, after a particularly hard-hit period in April and May, first in Asia-Pacific (RevPAR down 77.4% in Q2) before gradually spreading to other regions, particularly Europe (RevPAR down 90.6% in Q2).

During the first half, Accor opened 86 hotels, i.e. 12,000 rooms, illustrating the appeal of the Group to hotel owners. At end-June 2020, the Group had a portfolio of 747,805 rooms (5,099 hotels) and a pipeline of 206,000 rooms (1,197 hotels), of which 75% in emerging markets.

As of August 3, 2020, 81% of Group hotels were open, i.e., more than 4,000 units.

Consolidated revenue for the first half of 2020 totaled €917 million, down 48.8% like-for-like and down 52.4% as reported compared with the first half of 2019.

Reported revenue for the period reflects the following factors:

• Changes in the scope of consolidation (acquisitions and disposals) had a negative impact of €57 million largely due to the disposal of Mövenpick leased hotels.

• Currency effects had a negative impact of -€13 million, mainly due to the Australian dollar (-4.6%) and the Brazilian real (-19.1%).

HotelServices revenue

HotelServices, which includes fees from Management & Franchise (M&F) and Services to Owners, reported revenue of €650 million, down 52.8% like-for-like reflecting the decline in RevPAR as a result of the health crisis and government lockdown measures implemented worldwide.

Management & Franchise (M&F) revenue amounted to €139 million, down 72% like-for-like, reflecting the collapse in incentive fees based on hotel operating margin generated from management contracts.

Consolidated RevPAR was down 59.3% overall for the first half, and down 88.2% for the second quarter.

M&F revenue was down by a sharp 74.9% like-for-like in Europe, reflecting a 62.1% decline in RevPAR combining all segments.

• In France, RevPAR was down 60.4% like-for-like over the first half. Most Accor hotels remained closed during June. Paris and the Paris region (RevPAR down 62.2%) were harder hit than the rest of France (RevPAR down 58.9%). This trend was even more pronounced during July;

• In the United Kingdom, RevPAR fell by 64.5%. RevPAR in London was down 64.8%, slightly harder hit than the rest of the country (-63.5%). The end of the lockdown began later than in other European countries and 99% of Group hotels in the UK were closed at end-June;

• In Germany, RevPAR was down 58.3% as lockdown measures in the country were implemented earlier than in other European countries;

• In Spain, RevPAR fell by 68.7% in the first half of the year.

M&F revenue in Asia-Pacific was down 70.8% like-for-like as a result of a 54.7% decline in RevPAR.

• In China, there was a noteworthy recovery in RevPAR, declining 51.9% in June and down 65.2% over the first six months of the year.

• In Australia, RevPAR fell by 49.3% in the first half of the year. The decline was less significant than in other countries owing to the more limited Covid-19 impact over the first quarter (-18.2%). Government-imposed quarantine measures were the main source of business for hotels.

The Africa & Middle East reported Management & Franchise revenue down 72.5% with RevPAR declining 55.6% due to the closure of borders. The lack of crowds during religious pilgrimages to the holy cities in Saudi Arabia will continue to weigh on RevPAR over the coming months.

North America, Central America & the Caribbean reported a 66.0% decrease in M&F revenue, in line with the drop in RevPAR of 64.3% over the first half. The collapse in fee income based on hotel operating margin (i.e. “incentive fees”) was offset by the relative resilience of other income generated by Management and Franchise contracts.

Lastly, the spread of the pandemic to South America had a sharply negative impact on regional RevPAR, down 52.4% in H1, with Management & Franchise revenue down 62.1%.

Services to Owners revenue, which includes the Sales, Marketing, Distribution and Loyalty division, as well as shared services and the reimbursement of hotel staff costs, came to €511 million, versus €879 million at end-June 2019.

Hotel Assets & Other revenue

Hotel Assets & Other revenue was down by 40.2% like-for-like to €237 million. This segment saw a more moderate decline in business thanks to a more limited Covid-19 impact in Australia in the first quarter, and the delayed spread of the pandemic to Brazil. The 54.4% decline in revenue as reported was exacerbated by the disposal of the Mövenpick leased hotel portfolio in early March 2020.

The division’s hotel base included 168 hotels and 30 071 rooms at June 30, 2020.

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