Has AccorInvest eaten its fill? The former real estate arm of the Accor Hotels group, which became financially independent in May 2018, has announced revenue growth in the first half of 2022 to €1.5 billion for a portfolio of nearly 800 hotels and more than 120,000 rooms almost exclusively in Europe and in the economy and mid-range segment.
AccorInvest's revenue is still 20% lower than in 2019, a benchmark year for the group. But revenue per available room has returned to its pre-COVID-19 level, while the average occupancy rate has gained 9 percentage points since the beginning of the year, to 77%. It remains 7 percentage points below 2019, mainly due to the "relative" absence of international customers.
AccorInvest chief executive Gilles Clavié is confident about the summer season. "The activity of the last three months suggests a return to normal with occupancy rates that are close to 2019 and even higher average prices," he said.
The average price per room crossed the €100 mark last June, being 8% higher than that posted in 2019 on a like-for-like basis.
AccorInvest is returning to positive earnings before interest, tax, depreciation and amortization in the first half of 2022 after two years of purgatory. Gilles Clavié said this is largely credited to the implementation in July 2020 of a transformation plan that resulted in an intense financial restructuring through the renegotiation of debt with banks, the subscription of a €477 million PGE, a government-guaranteed loan, and a capital increase of an equivalent amount reserved for existing shareholders.
As a corollary, the group committed to a €1 billion asset disposal plan, which has since been reduced to €750 million.
"We will have completed half of this arbitration plan by the end of the year," Gilles Clavié said.
Today, the group has a debt of €4.2 billion, 70% of which is covered by measurement instruments below current rates, and will not have any significant maturity before 2025.
"There is no risk of a significant increase in the cost of our debt, whose [loan-to-value] ratio we have reduced to less than 50%, and we have a sufficiently long time to work on our refinancing," Clavié said, adding that the idea is to diversify the 100% bank financing today and to call on the market "when the conditions allow it."
Two Pillars
"We are reaping the benefits of our transformation plan, which also contains an important component on the transformation of our internal processes, integrating the ESG [environmental, social and governance] dimension into our strategy, and which allows us to maintain a similar level of margin in 2019 despite inflation," he said.
Not yet completed, the transformation plan has nevertheless turned into a strategic plan where AccorInvest intends to maintain a business model based on two pillars: real estate and operations.
"We want to increase the proportion of fully owned hotels so that they will eventually constitute the majority of our portfolio," Clavié said. To achieve this, AccorInvest intends to buy back leases within its portfolio, "depending on opportunities," and to draw on the development pipeline fed by the renovation of just over 40 hotels. Every year, AccorInvest invests between €200 million and €250 million to renovate its real estate portfolio.
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