Accor’s overall performance is improving with every quarter, buoyed by domestic demand in each of its markets, which will return to 2019 levels by the end of this year, according to executives at the global hotel franchise company based in France.
“Domestic travel will be back in 2022 to 2019 levels,” while international inbound travel still lags, said Jean-Jacques Morin, Accor’s chief financial officer and deputy CEO, who presented the firm’s first quarter earnings results during a conference call with analysts.
“The numbers we’re seeing in April underline our confidence. We will have a strong summer,” he said.
The firm's hotels in China remain the big drag on performance, Morin said.
“Shanghai is closed down, and 70 million people are shut down,” he said. “No one can foresee when China will reopen, and every statement out of China clearly shows that there is to be no short-term change to its policy of restrictions."
He said performance improvements would be sustained by demand from domestic travelers in both the leisure and business sector, along with a general acceleration in global travel.
“I think we will be surprised at the speed in which international recovers,” Morin said, adding that airline capacity might restrict travel numbers.
Demand for travel is there, but airlines have not returned to full seating capacity, he said.
“Increased business travel has led to greater visibility in the booking window and the ability to push rates. Pricing power is strong,” Morin added.
In most metrics for the quarter, Accor continues to underperform 2019 levels, but a notable exception is a 11.2% increase in global luxury and upscale average daily rate, as well as a 0.2% increase in global midscale ADR.
Luxury and upscale revenue per available room at Accor's hotels in the Asia-Pacific region, despite continued strict COVID-19 rules in China, grew for the same period by 12.1%, although across all segments in that market revenue per available room is down 43% compared to 2019.
Morin said RevPAR numbers are improving every quarter and have done so since the second quarter of 2021.
Increased Visibility
In a statement accompanying the earnings results, Sébastien Bazin, Accor’s chairman and CEO, said “such underlying trends, combined with borders reopening give us confidence that our performance will continue to improve month after month, with prices already above 2019 level.”
Overall, RevPAR increased 108% in the first quarter compared to 2021, but was 25% below comparable 2019 levels.
Bazin added: “Compared with the same period last year, [Accor] was better able to optimize its pricing policy, thanks to the increased visibility provided by earlier bookings.”
In the Asia-Pacific region, where COVID-19 restrictions remain strict, RevPAR was down 43% compared to the first quarter of 2019.
Accor reported first quarter 2022 revenue of 701 million euros ($737 million), up 85% year over year.
Notable openings and reopenings in the quarter included the reopening of the 957-room Pullman Paris Montparnasse, the largest Pullman hotel in Europe, following a four-year renovation.
Accor currently has 5,304 hotels and 777,849 rooms, a year-over-year increase of 2.5%. Morin said the company projects 3.5% net rooms growth for full-year 2022. In the first quarter, Accor opened approximately 3,700 rooms across 26 hotels.
As of press time, AccorHotels stock was trading at 31.90 euros ($33.54) a share, a decline of 0.48% year over year. The Euronext Stock Exchange was down 9.21% over the same period.