French hotel company Accor anticipates continued growth throughout the rest of the year as executives raised their outlook for full-year revenue per available room growth to between 15% and 20%.
Martine Gerow, Accor's group chief finance officer as of July 1, said during an earnings conference call that the company's growth had been consistent through the first half of the year.
“It is a half year of solid growth momentum,” said Gerow, who joined Accor after previous chief financial officer roles with Carlson Wagon Lit Travel and American Express Global Business Travel. “Our [earnings before interest, taxes, depreciation and amortization] more than doubled.”
During the first half of 2023, Accor's consolidated EBITDA was €447 million ($495.5 million), up from €205 million during the same period in 2022. Accor's guidance for full-year consolidated EBITDA is between €930 million and €970 million.
In a statement accompanying Accor's earnings statement, Chairman and CEO Sébastien Bazin said the company's “momentum should continue for the coming months, driven by robust demand in both leisure and business tourism. The performance enables us to raise our 2023 guidance and to continue investing in our brands, talents and digital tools.”
Accor's first-half 2023 RevPAR increased by 38% year over year, while revenue rose 39% to €2.4 billion.
Accor's like-for-like RevPAR increased in both of its hotel brand divisions. RevPAR rose by 36% in premium, midscale and economy, and increased by 52% in luxury and lifestyle.
Gerow said despite a strong start to the year, Accor is keeping its outlook realistic, especially in its premium, midscale and economy brand division, “based on the fact that the recovery is well on its way, so there will inevitably be some softening.”
Through the first six months of 2023, Accor opened 114 hotels with a total of 14,500 rooms, equal to net unit growth of 3.5%. As of the end of June, Accor's portfolio totaled 805,436 rooms in 5,487 hotels and its development pipeline includes 217,000 rooms in 1,262 hotels. Gerow said Accor anticipates between 2% and 3% net unit growth annually as development pace increases in the second half of this year.
Excitement in its home market surrounds the Summer Olympics that are being staged in Paris in 2024.
In late July, Accor signed a deal with Japan’s Ebisu Resort to rebrand 23 hotels affiliated with the Daiwa Resort brand to the French firm’s Mercure and Grand Mercure brands by the second quarter of 2024. The agreement will add more than 6,000 rooms to Accor's overall portfolio, and it will be a debut for Grand Mercure in Japan, with 12 hotels changing to that brand.
Accor already has 21 hotels in Japan within its Ibis, Ibis Budget, Ibis Styles, Mercure, Novotel, Pullman and Swissötel brands, and it is currently developing a 219-room Fairmont in Tokyo scheduled to open in 2025.
Gerow said Accor is excited to expand in Japan given the attractive incentive fees it generates. The company could also expand to other markets in the Asia-Pacific region.
“The other market we are looking at [in Asia] is India, which also has great growth potential due to the emergence of the middle class there,” Gerow said.
Increased Incentive
The return of incentive fees across Accor's portfolio to 35% could only be realized if operational performance continues to improve, Gerow said.
“EBITDA is being driven by resorts. Group and corporate is showing solid growth, too, especially in the [meetings, incentives, conventions and expositions] segment,” she said.
In the Americas — where Brazil is Accor's largest market in that region — “occupancy is a little above 2019 levels, with ADR significantly so,” Gerow said.
Gerow said performance growth in Australia softened due its recovery from the pandemic being earlier than many other markets. Conversely, performance growth in China — which ended COVID-19 restrictions much later than other major markets — has accelerated, and Gerow added there is potential to build up on that when flight schedules return to a normal or improved level.
Accor’s recurring cash flow is up from €41 million in the first half of 2022 to €157 million in the first six months of 2023, while net debt has increased from €1.66 billion to €1.84 billion.
As of press time, Accor stock was trading at €33.29 Euros per share, up 42.7% year to date. The Euronext 100 index is up 13.7% over the same period.