Accor sees RevPAR jumps, sells 7% more of AccorInvest
 
Accor sees RevPAR jumps, sells 7% more of AccorInvest
26 JULY 2018 8:30 AM

On its first-half earnings call, AccorHotels executives reported RevPAR increases and announced a recent deal to sell the final slice of its AccorInvest portfolio.

PARIS—AccorHotels has sold a further 7% of its AccorInvest (HotelInvest) hotels, and flush with even more cash will continue its strategy of growth both organically and via bolt-on acquisitions.

Executives from the French hotels company on a first-half earnings call said they had received a binding offer on 25 July from Colony Northstar to acquire an additional tranche of 7% of AccorInvest’s share capital, for €250 million ($292.8 million).

If the deal is approved by AccorInvest’s board of directors, AccorHotels will be left with a 35.2% stake in AccorInvest’s share capital, executives added.AccorHotels was already flush from its initial 55% sale of the portfolio for €4.4 billion ($5.12 billion).

That February sale has allowed AccorHotels to add hotels and rooms both organically and via portfolio buys, as its latest earnings numbers for the first six months of 2018 show healthy revenue per available room increases across all its major markets.

Another goal reached in the first half of 2018, according to AccorHotels CFO Jean-Jacques Morin, was surpassing the 4,500-hotel and 650,000-room marks.

The exact numbers are 4,530 hotels and 652,939 rooms globally.

“Pipeline represents a 26% increase of the system, and it is well-balanced,” Morin said, adding that one current headache is foreign exchange headwinds in some markets.

During AccorHotels’ H1 2018 results conference call, executives also announced that the company will no longer pursue its previously announced interest in the French state’s 14.3% holding in airline Air France-KLM.

On 3 June, the company announced it was looking into the possibility of a strategic alliance with French investors to buy the airline “to enrich (AccorHotels’) range of services,” Morin said.

“We remain convinced it could have offered significant value-creation opportunities … (but) we have decided not pursue this opportunity,” he said.

RevPAR enthusiasm
AccorHotels reported performance gains in the first six months of the year, “driven by RevPAR and the expansion of our room count,” Morin said.

RevPAR increased by 5.1% overall for the first six months of 2018, with its home market of France seeing RevPAR increase by 5.6%.

“In Paris, we saw 9.5% RevPAR, thanks to inbound tourism,” Morin said.

RePAR gains in Germany, United Kingdom and Asia-Pacific came in at 1.5%, 1.3% and 5%, respectively.

There was also good news in South America, where Brazil has been for a number of quarters now its dragging market. RevPAR across the continent registered +11.5%, and for the total region of North America, Central America and the Caribbean RevPAR jumped 4.8%.

Only in the Middle East did RevPAR slip (-0.2%) during the period.

Revenue from Accor’s new businesses, such as concierge services, luxury home rentals and catering services, brought in €70 million ($82 million), up from €43 million ($50.4 million) for the same period in 2017. Earnings before interest, taxes, depreciation and amortization however was down 53.7% for the company’s new businesses, attributable mostly to home rental onefinestay and concierge service John Paul, according to the earnings news release. The dip was related to lower topline growth for those businesses, “which (rely) on synergies and scaling plans with AccorHotels, which have not been delivered as planned,” according to the release.

Still, in the release the company states “the Group firmly believes that both serviced private homes and concierge services offer strong potential in the Group’s ecosystem.”

Rooms, more rooms
The French hotel company opened 45,150 rooms in 301 hotels during the first half of the year, of which 19,757 were through organic growth and 25,393 via acquisitions of Mantra Group and 50% of Mantis Group, according to an earnings news release.

Notable assets opened in H1 2018 were the 367-room Novotel Shanghai Hongqiao and 245-room Rixos Alamein, Egypt.

Earlier this week, AccorHotels signed a joint-venture agreement with Qatari sovereign wealth fund Katara Hospitality to develop and own approximately 40 hotels and 9,000 rooms in sub-Saharan Africa. AccorHotels has agreed to spend $150 million over the next five to seven years, while Katara has pledged to spend a further $350 million over the same period.

Revenue in the first six months increased 8% to €1.46 billion ($1.71 billion), while earnings before interest, tax, depreciation and amortization increased 4.2% to €291 million ($340.8 million).

Full-year EBITDA is expected to be between €690 million ($808 million) and €720 million ($843 million).

AccorHotels remains in the process of acquiring Switzerland’s Mövenpick Hotels & Resorts for €482 million ($564.5 million) and Chile’s Atton Hoteles for $105 million, which incorporates 100% of its management and 20% of its real estate.

Of the company’s €1.8 billion in recent mergers and acquisition deals, more than 80% was in hotels, Morin said.

“Ninety percent (of buys) are in asset light, and that has been the rule over time. … It is about being intelligent. If there is an offer that presents itself, we will look at it, and there is no rush to get rid of assets,” he said.

“We expect the 5% RevPAR we have been enjoying to continue for the full year,” he added.

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