French hotel company Accor set a personal record for earnings before interest, taxes, depreciation and amortization in the first half of the year.
The global hotel brand's EBITDA was €504 million ($547 million) in the first six months of 2024, which Chairman and CEO Sébastien Bazin said was a 13% increase over the first half of 2023 and exceeded the company's EBITDA growth guidance range of between 9% and 12%.
“We’ve never done that before, half a billion-plus for six months,” he said. “We feel confident, we feel strong, and we are able to control the controllables. Wherever we see demand, we are there. Yes, there are challenges, but we are confident.”
Accor also reported a 6% year-over-year increase in hotel revenue per available room and an 11% year-over-year revenue. Earlier in the year, the company projected RevPAR growth between 3% and 4%.
Bazin added that the results are “confirming our sound and controlled business model. … In today’s world, you better control as much as you can.”
Accor announced its half-year results the day before the 2024 Summer Olympics begin in Paris. But the Games are likely to only represent a 0.5% increase to Accor's full-year EBITDA, Bazin said.
“We have fuel in other regions that allow us to be where we are,” he said.
Globally, Accor is optimistic about its growth opportunities in Asia-Pacific, the Middle East and Africa. Bazin said the company is seeing no signs that consumers are pulling back their spend or tightening their travel budgets, either.
Outbound travel demand from India represents approximately 14 million people, which Bazin added could rise to approximately 80 million in a year or two, most of whom were initially heading to Southeast Asia. It's a similar projection from when Chinese travelers began taking more and more international trips a decade ago.
China, meanwhile, continues to be challenging, said Martine Gerow, Accor's group chief finance officer. She said domestic travel there was difficult, and business travel has not come back as expected.
Bazin said Accor showed “solid future demand” across its portfolio, notably in the Middle East, where Accor said it expects a 51% increase in international visitors, fueled by continued interest in the United Arab Emirates and in Saudi Arabia.
He added Accor’s portfolio growth aligns well with where the company sees growth in traveler demographics around the world.
In Asia-Pacific, for example, Accor's rooms pipeline is 51% of the current stock, and that additional stock will contribute 31% of fees payable to the French firm. In March, Accor added 22 hotels in Japan with a total of more than 6,000 rooms in an agreement with owner Ebisu Resort LLC and its brand Daiwa Resorts. The hotels included in the acquired portfolio were rebranded as either Accor’s Mercure or Grand Mercure brands.
Bazin said other goals are to improve management and franchise EBITDA by 100 basis points from the same period this year and to strengthen the firm’s global hotel share of wallet, especially in the Middle East and Africa.
Accor's partnerships with up-and-coming hotel brands continue to blossom. Its recent collaborations have been with Our Habitas and LVMH Moët Hennessy Louis Vuitton.
“Our Habitas looked for us. That is a perfectly similar pattern to that of [now-Accor brands] Hoxton, Rixos, 25hours and others. It is a natural alliance, similar to other [companies whose] founders knocked on the doors of Accor,” he said.
Bazin described Our Habitas as a “resi-luxury tourism” brand.
According to its full-year 2024 guidance, Accor projects year-over-year RevPAR growth between 4% and 5%, net unit growth between 3% and 4% and an EBITDA range between €1.09 billion and €1.125 billion, an increase of between 9% and 12%.
AccorInvest Update
During the first half of the year, Accor injected €67 million in operational costs to AccorInvest, its separately owned and managed asset division it created to make the global brand company more asset-light.
When AccorInvest was first spun off from Accor, it contained approximately 1,400 hotels, of which Accor owned approximately 300. Today, AccorInvest has a portfolio of 701 owned or leased hotels with more than 109,000 rooms.
Bazin said more capital help might be provided, but that would be determined by AccorInvest sales levels.
“At the moment I do not think so, but we will need to talk more to you in upcoming quarters,” he said. “AccorInvest needs to deliver. Its level of debt is too high.”
Bazin added he hoped by the end of 2025 or by early 2026 to find a buyer for the remaining assets in the AccorInvest's platform.
Further, Bazin said he wants to make sure Accor is being properly valued. More clarity would be available on this by the release of full-year 2024 numbers next spring, he said.
“The value of our assets are not properly reflected in our share price,” he said.
As of press time, Accor stock was trading at €36.40 a share, a 5.9% increase year to date. The Euronext stock exchange index has shown a 16.6% increase over the same period.
In the first half of the year, Accor returned €686 million to shareholders via share buybacks and dividends, a number that “translated to 7.9% of our market cap as of Jan. 1, 2024,” Gerow said.
In total, €1.1 billion has been returned to shareholders, with projected returns of approximately €3 billion by the end of full-year 2027.