In an extremely weak economic environment,
Accor’s consolidated revenue for the first half of 2009 totaled
€3,410 million, down 9.3% on a reported basis and 8.1%
like-for-like compared with first-half 2008.
Revenue from the Prepaid
Services business rose by 5.7% like-for-like in the first half,
overcoming the adverse impact of i) sharply higher unemployment
rates, and ii) lower interest rates, which are reducing interest
income recognized in revenue.
Operating revenue (i.e. excluding
interest income) rose by 6.8% over the period, compared with a
1.2% decline in interest income.
Revenue growth was led by
stepped-up marketing and sales initiatives, which drove the
development of new products and the penetration of new markets, in
particular with the launch of travel agency cards in the United
Kingdom and holiday vouchers in Romania.
targeted France’s prefunded Universal Employment Service Vouchers
(CESU Social) program, which is designed to support people most
hurt by the recession.
EBIDTAR (earnings before interest,
taxes, depreciation, amortization and rental expense) margin stood at 43.2%, up 0.8
points on a reported basis and 0.4 points like-for-like. The
margin improvement reflected the 1.1-point like-for- like gain in
the margin on operating revenue (51.3% flow-through ratio
excluding interest income). The decline in interest income reduced
total margin for the period by 0.7 points like-for-like.
Europe, EBITDAR margin narrowed by 1.4 points like-for-like,
impacted by rising jobless rates in the region and the steep
decline in interest rates. In Latin America, it improved by 2.0
points like-for-like, despite the decelerated growth in interest
income following the steady drop in interest rates since May
In a severely depressed
business environment, hotels revenue fell 11.4% like-for-like in
the first half.
Although the Upscale and Midscale Hotels and
US Economy Hotels segments have been hard hit, with revenue
contracting by 13.3% and 12.8% respectively over the period, the
Economy Hotels outside the US segment demonstrated firmer
resistance, holding revenue weakness to 7.3%.
ability to limit the revenue decline compared with the competition
was supported by a certain number of marketing and sales
initiatives deployed as part of the battle for revenue process.
The battle for revenue is also being supported by the success of
the A|Club loyalty program, whose more than 3 million
cardholders account for 10% of retail customer revenue, just one
year after launch.
In addition, the first half already saw
operating costs in the owned/leased hotels reduced by €72
million, out of the announced €120-million target for the year.
Accor confirmed its objective of opening 30,000 new rooms in 2009.
12,100 have already been opened in the first six months of the
year, of which 78% under low capital-intensive ownership
structures (management contracts, franchise agreements and
variable rent leases), 58% in the Economy and Budget segments,
35% in Europe and 35% in Asia. Pursuing this expansion dynamic
remains a priority, with 103,000 rooms in the pipeline.
Upscale and Midscale Hotels hard hit by recession In the
Upscale and Midscale segment, revenue declined by 11.9% as
reported in the first half, and by 13.3% like-for-like.
EBITDAR margin came to 23.6% of revenue, down 4.1 points as
reported and like-for-like. The response ratio, excluding
support costs, stood at 33.9% and at 45.5% after accounting for
the €25- million reduction in support costs driven by the
Economy hotels outside the United States:
resilient revenue and margins, led by a solid performance in
In a lackluster economic environment, Economy Hotels
proved to be more resilient than the other segments, with
revenue retreating by 7.6% as reported during the first half and
by 7.3% like-for- like.
At 34.1%, EBITDAR margin narrowed by 1.9
points as reported and 2.3 points like-for-like. The firm
resistance was primarily due to operations in France, where margin
was down just 0.4-points like- for-like, to 30.5% on reported
basis. The response ratio, including support costs, was 34.9%.
Economy Hotels US: deeply impacted by two years in a row of
Motel 6 revenue contracted by 2.0% on a reported
basis in the first half and by 12.8% like-for-like.
still affected by the severely weakened US economy, Motel 6 is
still faring better than the competitors, with RevPAR two
points higher than the peer group’s. In the United States, the
Economy segment is generally outperforming the Upscale and
Midscale segment by around 10 points of RevPAR.
margin amounted to 30.8%, down 7.1 points as reported and 5.7
points like-for-like, while the response ratio was 18.7%, in a
country that has been in recession for more than two years.
Consolidated EBITDAR amounted to €924
million in the first half of 2009, down 15% like-for-like
compared with the year-earlier period and 15.1% as reported.
EBITDAR for the period reflected the support-cost savings
already achieved in the first half, which totaled €37 million out
of the full-year target of €80 million.
It represented 27.1%
of consolidated revenue, compared with 29% in first-half 2008.
The firm resistance of the group’s two main core businesses,
Prepaid Services and Economy Hotels outside the US, helped to
limit the decline in margin to 1.9 points as reported and 2.2
EBIT fell by 43.0% to €242 million as
reported and by 39.0% like-for-like. The fact that some rental
expense is indexed to revenue helped to save around €15 million
over the period.
Operating profit before tax and non-recurring
items stood at €182 million for the period, down 44.5%
like-for-like and 53.7% as reported.
Operating profit before
non-recurring items, net of tax amounted to €114 million, compared
with €264 million in first-half 2008.
The net loss, Group
share, which came to €150 million, was impacted by €194 million in
asset impairment losses (of which €118 million on Motel 6
goodwill). These losses reflected the decline in the assets’
balance sheet value and did not have any cash impact. In addition,
the net loss includes €53 million in restructuring costs,
primarily related to Group reorganization programs.
first-half 2008, the Group reported a net profit, Group share of
€310 million, lifted by €130 million in capital gains on asset
Funds from operations declined to €378 million from
€487 million in first-half 2008.
Net debt stood at €1,961
million at June 30, 2009, after €193 million in expansion
expenditure in the Hotels and Prepaid Services businesses, €77
million in asset disposals and the payment of €201 million in
dividends. Net debt also includes two non- recurring items: the
acquisition of an additional 15% interest in Groupe Lucien
Barrière for €269 million and the payment of €242 million to
the French State in settlement of tax assessments on Compagnie
Internationale des Wagons Lits (CIWLT). Note that the Group has
contested these assessments before the court.
financial ratios attest to the solidity of Accor’s balance sheet
at June 30, 2009. Backed by the two bond issues totaling €1.2
billion carried out in the first half, the Group has €1.8 billion
in unused, confirmed lines of credit at June 30, 2009. No
significant amount of debt has to be repaid over the next three
years. The ratio of funds from operations to adjusted net debt4
stood at 21.5% at June 30, 2009, compared with 24.2% at June
30, 2008 and 25.8% at December 31, 2008.
Return on capital
employed declined by 2.4 points during the first half, to 12.1% at
period-end from 14.5% at June 30, 2008.
JULY 2009 -
In Upscale and Midscale
Hotels in Europe, July RevPAR was down 12.7% like-for-like,
compared with a 19.2% decline in the second quarter.
Economy Hotels segment in Europe, July RevPAR was down 8.5%
like-for-like, compared with a 9.7% decline in the second
In the US Economy Hotels business, July RevPAR was
down 15.2% for the month, versus a 15.7% decline in the second
hotels business, Accor is not expecting any major improvement in business in
the second half of 2009.
The plan to reduce operating costs in the
owned/leased hotels will be stepped up to €150 million from
€120 million, to ensure that the response rate holds steady at
Accor’s Board of Directors has approved
Chairman and CEO Gilles Pélisson’s recommendation to conduct a
review of the potential benefits of demerging the two
businesses into two independent companies, each with their own
strategy and resources for growth.
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