Off the back of another record earnings year, Accor is considering exiting the rest of its 30% stake in AccorInvest, the independent ownership vehicle spun off from the French hotel company in 2017.
During a conference call to discuss Accor's full-year 2024 earnings Thursday, Chief Financial Officer Martine Gerow said the exit is scheduled to be completed by the end of 2026.
Jean-Jacques Morin, group deputy CEO and CEO of Accor's premium, midscale and economy brand division, is a board member of AccorInvest. Sébastien Bazin, Accor’s chairman and CEO, is not a board member.
Morin said on the conference call it should not come as a surprise that Accor is starting its exit from AccorInvest.
“It is the right time. The performance of AccorInvest is very good. On top of that, it is recognized by the market. Just the refinancing that was done over the last couple of months … has been a huge success, and the debt on the balance sheet has been reduced by more than €1 billion ($1.04 billion), and the terms on that debt are very good,” he said.
Putting its AccorInvest stake on the market is already attracting investor interest, Morin said.
“Obviously, there is interest because it is a unique portfolio. A portfolio of this size doesn’t really exist anywhere else in the world outside of the U.S.,” he said.
Morin added it will be a complex negotiation “because it is a big portfolio and a big value, but it is what we’re going to do.”
AccorInvest has successfully sold approximately 50% of its original portfolio, Gerow said. She added discussions are happening with New York City-based investment fund Fortress Investment Group for Fortress to acquire Accor’s super-budget brand F1, which has 127 hotels and 9,929 rooms all in France.
Full-year earnings and development milestones
According to its full-year earnings release, Accor's earnings before interest, taxes, depreciation and amortization reached €1.12 billion in 2024, up from just over €1 billion in 2023.
Revenue increased 11% year over year to €5.61 billion, slightly higher than Accor's projections for the year. Global revenue per available room increased 5.7% year over year.
Full-year EBITDA for its premium, midscale and economy brand division increased 8% year over year to €809 million, almost three-quarters of the overall 2024 EBITDA.
Bazin said another record to fall in 2024 was in recurring free cash flow, which reached €614 million, up from €596 million in 2023.
Accor opened 293 hotels with more than 50,000 rooms in 2024, a 3.5% increase in its portfolio. In total, it now has 5,682 hotels and 850,285 rooms. It also has a pipeline of more than 233,000 rooms.
Gerow said Accor's premium, midscale and economy hotels increased by 2.8% in terms of its overall hotel count, while luxury and lifestyle hotels increased by 7.5%. She added one highlight in 2024 was the opening of the firm’s 1,000th Mercure-branded hotel.
Network growth will be lower in the next year due to Accor exiting some hotels across all brands that Bazin called “debt-tractors.” In other words, these are hotels that offer little in terms of adding to overall profitability and to not offer the right design, brand promise and even location.
Reflections and reasons for optimism
Accor anticipates the full return of international travel in 2025, Bazin said. The company anticipates an increase of between 3% and 5% in international travel demand, or approximately 1.51 billion travelers, which would eclipse 2019.
Bazin said the world of hotels and travel always stands at the intersection of guest requirements and desires and geopolitics.
“The world is probably more so than ever fragmented in terms of conflict and in terms of accepting differences. Economies are very contrasted depending on where you are. … We have to navigate between a lot of different economies,” he said.
Other concerns Bazin discussed included that 2024 was the hottest year on record and some global markets wrestled with overtourism.
“Accor is doing quite a bit on really putting new destinations on the block, but we have to be part of [the conversation on overtourism], and we have to act,” he said.
Technology is both an opportunity and a caution, Bazin added. The hotel industry this year should spend much time understanding where AI can be used in operations and where it is being used for making travel decisions.
The majority of those aged 18 to 24 use ChatGPT to research and book travel, a good percentage of that being on “gig tripping,” travel to concerts, sports and cultural events, which Bazin said in 2023 amounted to approximately $600 billion.
Accor's goals for the next 12 months include accelerating hotel development in growth markets — more than 60% of openings in 2025 will be in the Middle East, Africa and Asia-Pacific — and completing a new €440 million share buyback program, Bazin said.
Gerow added that in 2024 €686 million of stock value was returned to shareholders in 2024.
As of press time, Accor stock was trading at €47.50 a share, up 25.5% year over year. The Euronext Stock Exchange was up 34.7% over the same period.