After a poor 2020 performance, Accor is focused on cash preservation and cost savings, simplifying its organization and getting prepared for the inevitable rebound in travel, according to CEO Sébastien Bazin.
In other words, the Accor plan is to “focus, simplify and expand,” he said.
Reporting full-year 2020 earnings results, Accor executives said earnings before interest, taxes, depreciation and amortization was down 391 million euros ($475 million).
Jean-Jacques Morin, Accor’s chief financial officer and deputy CEO, said with every percentage-point fall in revenue per available room, there is EBITDA sensitivity of almost 19 million euros ($23.1 million).
There have been "1 billion less travelers" in 2020 than last year, "and that is the level of the '80s,” Morin said.
Speaking on the French firm’s earnings conference call with analysts, Bazin pushed the calendar back even further, saying the current travel environment “is the worst since the 1960s."
"Only 2% of countries have no restrictions” on travel and hospitality as a result of the COVID-19 pandemic, he added.
Bazin said Accor and the general hotel industry are showing remarkable resilience.
“Accor will weather the storm. … We are set to go. We have 85% of our hotels reopened. Yes, with 5%, 10% occupancy, but the light is on,” he said. “In 2021, while the vaccine is ensuring a gradual rebound in tourism, largely driven by leisure guests, [we are] ideally positioned to benefit from the recovery and press ahead with our road map."
Of the company's open hotels, 92% have updated hygiene protocols in place, he said.
Europe shuttered
The 2020 loss constitutes a real swing from the profit of 825 million euros ($1 billion) for full-year 2019 — a decline of approximately 150%.
Consolidated RevPAR fell 62% year over year for full-year 2020, while in the second half of the year the decline was 64.5%.
RevPAR at Accor's London hotels declined 78.5% for the full year.
With a portfolio that has a large concentration in Europe, especially its home base of France, many of the company's hotels have been hit by second and third lockdowns, many of which are still in place.
Bazin said performance in China — the only country in the world with positive gross domestic product, which grew 8% for full-year 2020 — brings hope for recovery.
He said he also has been impressed with the resiliency shown by the U.S. hotel industry.
But “45% of Accor is in Europe, and it is tough,” he added.
Losses have been offset somewhat by a 200 million euro ($243 million) package of cost savings first outlined in August 2020, according to Bazin.
Accor’s continued move toward asset-light status was extended in 2020 by the disposal of assets in its Orbis SA and Mövenpick brands.
Meanwhile, a parallel push to cement its lifestyle offerings was emphasized by the creation of its Ennismore platform that now consists of 100% of SBE, Ennismore’s brands Gleneagles and The Hoxton, and a new partnership with Faena Hotels, as Bazin outlined in an exclusive conversation with Hotel News Now earlier this month.
Bazin said the lifestyle segment is where growth will be concentrated for Accor. This sector is currently only 2% of the company's global hotel room count, but 10% of its universal pipeline.
“Lifestyle hotels will constitute 20% of all offerings in the next 20 years. We made a long bet, a big bet, putting together Ennismore … as to where Accor should be positioning itself,” Bazin said.
The most recent injection of cash came from the company's Feb. 19 sale of its 1.3% stake in Huazhu Group Ltd. for $281.9 million, just a little more than a year after it sold a 5% stake in the company for $451 million. Accor will retain a board seat at the Chinese hotel firm.
Accor has approximately 4.2 billion euros ($5.11 billion) in liquidity, Bazin said.
Morin said he is proud of the firm’s current financials “because the numbers are the numbers, but I think we did as good a job as we could.”
Consolidated full-year 2020 revenue was 1.62 billion euros ($1.97 billion), down 60% compared to full-year 2019.
As of the end of 2020, Accor had 5,139 hotels and 753,344 rooms.
Bazin said the firm opened 205 hotels and 28,942 rooms in 2020, and the current pipeline is 1,209 hotels and approximately 212,000 rooms, 73% of which are in emerging markets.
Bazin also paid his tribute to Arne Sorenson, president and CEO of Marriott International, who died on Feb. 15 following a battle with pancreatic cancer.
Bazin said Sorenson "was a very rare individual who really put his heart and soul into achieving his vision. … There is a profound sense of loss.”
He added when he first started as CEO of Accor, he called Sorenson, whom he did not know, and asked to meet, which they did in New York City several months later.
“I have not told this story before,” Bazin said, “but we walked around Central Park for two hours, and he explained the hotel industry to me.”
As of press time, AccorHotels stock was trading at 34.74 euros ($42.23) a share, down 9.2% year over year. The London Stock Exchange was up 14.4% over the same period.