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Accor Plans Additional Cost Savings As 1st Qtr Revenue
Falls 9.6% from a Year Earlier;
Room Occupancy and RevPAR Down Across All Brands
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News for the Hospitality Executive |
Accor Plans Additional Cost Savings As 1st Qtr Revenue
Falls 9.6% from a Year Earlier;
Room Occupancy and RevPAR Down Across All Brands
.
PARIS, April 16, 2009 - In the midst of an unprecedented
recession,
(in EUR millions)
2008 2009 % change
% change
(1) At constant scope of consolidation and exchange
rates.
First-quarter 2009 revenue performance reflects the impact of: - The strategic refocusing on the Hotels and Prepaid
Services businesses (with the disposal of the Brazilian foodservices operations)
Strong performance in Prepaid Services, with an 8.3% increase in the midst of an unprecedented recession Revenue from the Prepaid Services business stood at EUR231 million,
up 2.0% as reported, reflecting in particular the following factors:
Prepaid Services in Europe: up 5.8% like-for-like In France, revenue grew by 7.1% like-for-like, despite a 5.3% decline in financial revenue. Excluding gift vouchers, whose revenue rose 0.4% and accounted for 25% of the business' revenue in France, the increase was 10.0% for the quarter. In the United Kingdom, revenue was up 7.0% like-for-like, despite a 6.1% decline in financial revenue. Childcare Voucher revenue rose 12.0% during the period, while gift card revenue, which accounts for just 15% of total prepaid service revenue in the UK, declined by 16.3%. Prepaid Services in Latin America: up 11.6% like-for-like Revenue rose a like-for-like 16.3% in Brazil over the quarter, led by gains of 10.3% for Ticket Restaurante, 27.5% for Ticket Alimentacao and 20.1% for Ticket Car. In the rest of Latin America, like-for-like growth totaled 24.3% excluding Brazil and the impact of the gradual elimination of tax breaks in Argentina. Worsening business conditions in Hotels, with an 8.7% decline like-for-like Hotels revenue amounted to EUR1,182 million in the first quarter, a year-on-year decline of 7.8% as reported. This figure takes into account the impact of: - The sale of hotel properties as part of the "asset-right"
strategy, which reduced growth for the quarter by 2.4%.
Upscale and Midscale Hotels: down 9.2% like-for-like In the Upscale and Midscale segment, revenue was down 9.2% as reported for the period. In general, the Midscale segment was relatively less affected than the Upscale segment. This was the case in France, where RevPAR declined 10.1% in the Midscale and 13.4% in the Upscale. Moreover, business in Paris was more affected than in the rest of the country, with RevPAR down 14.7% in the capital versus 6.6% elsewhere. In Germany, revenue declined by 1.9% like-for-like over the period,
or by 8.1% adjusted for the shift in the Easter vacation period.
Economy Hotels outside the US: down 6.8% like-for-like RevPAR volatility in this segment is typically around twice the change in GDP, which is notably lower than in the Up and Midscale segments (where elasticity is 4 to 6). Given the unprecedented drop in GDP in most European countries, Economy Hotels revenue declined by 7.7% as reported and 6.8% like-for-like during the first quarter. In France, revenue was down 3.2% like-for-like, or just 2.7% adjusted for the impact of the F1 hotels renovation program. As was the case in the Upscale and Midscale segment, business outside Paris fared better than in the capital, with RevPAR down 5.1% in Paris but up 0.9% in the rest of the country. Revenue in Germany was down 5.0% like-for-like, of which 4.6% for Ibis as well as for Etap Hotel. In the United Kingdom, business in London was more affected than in the rest of the country, with RevPAR down 15.1% and RevPAR down 11.5% elsewhere. Revenue was more severely affected in certain other European countries, such as Spain (down 29.3% like-for-like), Italy (down 17.5%), the Netherlands (down 10.9%) and Belgium (down 10.5%). Economy Hotels in the US: down 11.5% like-for-like The Economy segment experienced an 11.5% decline like-for-like, but remained less affected than the Upscale and Midscale segments in the United States. Furthermore, Motel 6 outperformed its competitive-set, in a segment that saw a decline in business for the second year in a row. The opening of approximately 50 hotels in 2008 drove a 19.4% increase in fees from franchised hotels during the first quarter on 2009. New cost-saving initiatives in the midst of an unprecedented recession In a first-quarter business environment shaped by a faster decline in
revenue compared with fourth-quarter 2008, particularly in Europe, Accor
has decided to reduce its 2009 and 2010 annual renovation budget to EUR315
million, or EUR175 million less than in 2008.
Quarterly Information Significant transactions and events of the period Creation of a leading joint venture with MasterCard Europe in the European prepaid market In mid February, Accor Services and MasterCard Europe announced a strategic alliance resulting in the creation of PrePay Solutions, which is owned 67% by Accor Services and 33% by MasterCard Europe. PrePay Solutions will provide services to Accor Services and MasterCard, enabling each firm to offer its respective customers - corporates, local authorities and government agencies for Accor Services, banks and other financial institutions for MasterCard - solutions leveraging the partners' closely related expertise in prepaid services and electronic payments. These customers will therefore be able to take advantage of the strong growth in the European prepaid market, which is estimated at EUR130 billion. At the same time, PrePay Solutions will market prepaid solutions directly to its own customers, such as retailers. Financial position and results Successful bond issue in January 2009 On January 28, 2009, Accor successfully placed a EUR600 million issue of fixed-rate, five-year bonds, maturing February 4, 2014 and paying 7.50% interest. The bonds were placed with more than 200 European institutional investors. The transaction enabled the Group to diversify its financing sources and increase the average maturity of its debt. CIWLT dispute On December 12, 2008, the Cergy Pontoise Administrative Court handed down a ruling against CIWLT, which was immediately enforceable even in the event of an appeal, thereby lifting the suspension previously applied to claims for the years from 1998 to 2002. As a result, Accor settled the claims and late interest on February 27, 2009, in a total amount of EUR242.5 million. Stake in Groupe Lucien Barriere raised to 49% Under the January 2004 agreements signed by Colony Capital, the Desseigne Barriere family and Accor, Colony Capital held a put option to sell its 15% stake in Groupe Lucien Barriere SAS to Accor for a price to be determined by five independent banks. In November 2008, Colony Capital informed Accor that it intended to initiate the valuation process. The process resulted in a price of EUR153 million, corresponding to the average valuation of the independent experts, excluding both the highest and the lowest valuation in accordance with the 2004 agreements. Following the valuation process, Colony Capital decided to exercise its put for EUR153 million, which was paid on April 15, 2009. The transaction is expected to increase Accor's consolidated net debt by EUR270 million, following the proportional consolidation of 49% of Groupe Lucien Barriere's debt in the second half. Financial resources The cash position is solid with EUR1.5 billion in unused committed credit lines as of mid-April 2009, after taking into account the above items. During the period, Fitch has confirmed its BBB long-term rating with
stable outlook, and Standard & Poor's its BBB long-term rating with
negative outlook.
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