For a second consecutive quarter, French hotel firm Accor achieved portfolio-wide revenue per available room that surpassed 2019 levels, driven by summer performance that "was just gorgeous," according to Chief Financial Officer and Deputy CEO Jean-Jacques Morin.
“The level of activity that we had at summer and the pricing level ... were just astounding,” he said, referring to performance at the firm's hotels in Europe and the Americas.
In a statement accompanying third-quarter 2022 earnings results, Sébastien Bazin, Accor’s chairman and CEO, said “business momentum remained very strong in the quarter, with ... RevPAR and revenue well above 2019 levels.”
Morin said Accor's hotels in its home market, France, posted RevPAR 11% higher than in the third quarter of 2019, and performance in Paris no longer lagged that of its hotels in regional France.
Revenue from group business reached 1.149 billion euros ($1.152 billion), an 83% improvement over the third quarter of 2021 and 9% above the same quarter in 2019.
Morin said that third-quarter momentum is continuing.
“The business profile of Accor is today more resilient than ever. … In September and October, we did confirm the return of corporate” bookings in meetings, incentives, conventions and expositions," he said.
Bazin added that continued operational and financial discipline provided “confidence in our ability to reach the upper end of our full-year [earnings before interest, taxes, depreciation and amortization] guidance range, which should be between 610 million euros and 640 million euros.”
Greater China performance remained a drag, but Morin said improvement in the country will be notable in future earnings results.
The Americas was the only region in which hotel occupancy exceeded the same period last year, Morin said.
Morin said Accor is targeting 3.5% net network growth in its portfolio for full-year 2022. As of the end of the quarter, Sept. 30, the company had 789,152 rooms in 5,357 hotels and a pipeline of approximately 212,000 rooms in 1,218 hotels.
He said owner and investor appetite also was strong in the quarter, with conversions amounting to half of the company's openings.
“People on the ground, the developers on the ground, see asset owners showing appetite for the positive long-term prospects of the hospitality industry, notably when compared with other real estate investment classes,” he added.
Morin mentioned two other developments — one just completed, the other due by the end of the year.
On Oct. 1, Accor completed the restructuring of the hotel firm into two groups — an economy, midscale and premium division; and a luxury and lifestyle division, which includes its lifestyle division Ennismore.
The sale of the company's Paris headquarters, which was announced on Sept. 28, is expected to close by the end of the year. Accor has entered exclusive negotiations with Valesco Group to sell the site for 465 million euros subject to a 12-year, sale-and-leaseback agreement.
According to Business Immo, Hotel News Now’s French-language sister publication, Accor bought the 463,000-square-foot building in 2018 for 363 million euros. It was the tenant of the building from 2015 until that purchase date.
Not All Equal
Morin said inflationary pressures are not being felt equally in all markets.
For example, the Middle East and some markets in Africa are benefiting from sales of natural resources now that the world has turned against Russian supplies and with Brazil also not being dependent on fuel or food imports.
Accor’s “natural hedging in many, many places in the world is paying off. It didn’t really pay off when there was a pandemic, but a pandemic [is not a problem] that we face today,” he said.
Additional hedging opportunities stem from its 50% franchise model in Europe and in centralized procurement.
“The cost of energy by buying in advance … is most definitely going to help us in 2023,” he added.
Morin said dividends likely will be paid to shareholders.
“There will be a mechanical dividend. … We said that there is a mechanical calculation by which 50% of the recurring free cash flow [will be] an ordinary dividend, and as we will generate recurring free cash flow this year, there will be a proposal by the management team to do a dividend,” he said.
He said a share buyback could also be in the works.
“We will talk about that when it is time, but for sure … there will be a dividend in 2023 coming from the performance of 2022,” he said.
As of press time, Accor’s stock was trading on the Euronext Stock Exchange at 24.35 euros ($24.41) per share, a decline of 20.2% year to date. Euronext was down 34.09% over the same period.