French hotel firm Accor is continuing to ride the wave of improved hotel performance metrics, even if insiders insist the hospitality industry has entered a period of normalization.
During a third-quarter conference call with analysts, executives at the Paris-based firm said Accor is on track to deliver full-year earnings before interest, taxes, depreciation and amortization of between €1.1 billion ($1.19 billion) and €1.125 billion.
At the firm’s half-year results in late July, Sébastien Bazin, Accor's chairman and CEO, predicted such an outcome. At the time, Accor reported a 13% EBITDA increase to €504 million, which he said was the first time it had passed the half-billion-euro hurdle.
In its full-year 2023 earnings results, Accor posted EBITDA of €1.003 billion, the first time Accor had passed the billion-euro mark.
Accor's hotel revenue per available room increased 5.3% year over year in the third quarter. Chief Financial Officer Martine Gerow said Accor's full-year RevPAR growth outlook sits between 4% and 5%.
During the quarter, Accor's global revenue increased 12% year over year to €1.43 billion. The company's luxury and lifestyle division reported an 18% revenue increase and the premium, midscale and economy division reported a 7% revenue increase.
In a note accompanying the third-quarter results, Bazin said that “good performance was driven in particular by the dynamism of our luxury and lifestyle brands, sustained growth in high-potential regions and the positive impact in France of the Olympic Games, for which Accor was one of the Premium partners.”
Gerow underlined the value of the 2024 Summer Olympics being hosted in Accor’s home city.
“RevPAR [across Europe and North Africa] was up 6% versus prior year driven by a 7% growth in average room with France, obviously, and Germany, equally, being strong drivers,” she said. “In France, Paris RevPAR was clearly boosted by the Summer Olympics. The Games period delivered a peak performance, which was in line with our expectations with ADR that was more than double in the period, and we also had 15 [percentage] points of incremental occupancy over the game period.”
Group demand is also back in force at Accor's hotels. Executives said there has been a 20% increase in event attendance in the company's key markets.
Around the world
In the third quarter, there was marked improvement in Accor's Southeast Asian hotel portfolio, which reported the strongest RevPAR growth in the company's Middle East, Africa and Asia-Pacific region. Gerow said that region was “driven by international demand, including from China.”
China itself, which represents 21% of Accor's regional rooms revenue, reported flat RevPAR performance during the third quarter.
“The [China] domestic market remains penalized by the decline in consumption,” Gerow said.
A milestone for the Mercure brand
One of Accor's significant achievements in the last 90 days has been the opening of the 1,000th hotel for its Mercure brand.
Accor debuted the Mercure brand in 1973 with the Mercure Paris Nord Saint-Witz. Its 1,000th Mercure hotel was one of several hotels that opened on the same day: the 282-room Mercure London Earls Court; 60-room Mercure Chandigarh Tribune Chowk, India; 291-room Mercure Fukuoka Munakata Resort & Spa, Japan; the 495-room Mercure Marival Emotions Resort, Mexico; and the 216-room Mercure Nantong Renmin Road, China. Nine Mercure hotels opened in China just in August.
In the third quarter, Accor debuted 47 hotels and approximately 8,000 rooms across all its brands, a 3.2% increase over the same quarter in 2023. At quarter's end, Accor's global portfolio included 5,638 hotels and 838,826 rooms.
“As [Accor] anticipated, churn was higher this quarter as compared to [the third quarter of 2023], primarily driven by the portfolio-upgrade program we have in the [premium, midscale and economy] division, and we do expect this to normalize in the fourth quarter. We regained positive momentum in the pipeline, which increased 6% versus last quarter,” Gerow said.
Accor ended the third quarter with a hotel development pipeline of 1,380 hotels and approximately 231,000 rooms.
As of press time, Accor’s stock was trading on the Euronext Stock Exchange at €42.04 per share, up 21.5% year to date. Euronext was up 6% over the same period.