Executives at Accor said that not only has leisure travel reversed the sagging, pandemic-era fortunes of the company, they have observed a noticeable pickup in business and group travel in the third quarter.
Some trade fairs and shows have return, although overall meetings, incentives, conventions and expositions’ business is still far from pre-pandemic levels.
Jean-Jacques Morin, Accor’s CFO and deputy CEO, said during a third quarter conference call that revenue per available room in the period fell by 37% from the third quarter in 2019. He added that a negative figure that low remains a move in the right direction.
RevPAR improved by approximately 20 percentage points from the second to third quarters of the year, and average daily rate has improved from the same period in 2019, Morin said.
Among Accor's hotels in the U.K., RevPAR was down 28% when compared to the third quarter of 2019, according to the company's earnings release. In regional U.K. markets outside of urban locations, that number was down only 6%, “with average room prices also higher than levels seen in 2019.” Hotels in regional U.K. markets have benefited from staycation demand throughout the summer.
Accor's properties in London, a city where hotels have always been dependent on corporate and international travel, reported RevPAR down 51%.
Markets dependent on international leisure demand, such as many in Southeast Asia, saw a region-wide decline of 72% in RevPAR from the same period in 2019, Morin said.
Positive Outlook
Sensitivity on earnings before interest, tax, depreciation and amortization also saw a meaningful fall during the quarter, Morin said.
“We improved EBITDA sensitivity per point of RevPAR target to below 17 million euros ($19.8 million) versus 2019, from slightly below 18 million euros previously, and our monthly cash-burn target fell to less than 35 million euros, versus 40 million euros previously,” he said.
Accor's revenue in the quarter totaled 589 million euros, a 79% like-for-like increase over the same period in 2020. When compared to the third quarter of 2019, revenue in the third quarter of 2021 was down 40%.
In the news release accompanying the numbers, CEO Sébastien Bazin said he was confident in Accor's performance and outlook.
“People are very keen to travel again. With this rebound, our vision of augmented hospitality to serve our guests beyond their hotel rooms has been confirmed with the acceleration of lifestyle and entertainment activities and takes on its full meaning,” he said.
Morin said another reason for optimism is the reopening of country borders. The U.S. will reopen travel for fully vaccinated travelers on Nov. 8, and Australia and Singapore, among others, have reopened to certain markets.
The U.K. is simplifying travel requirements, and its importance as a feeder market continues to grow as other countries welcome its citizens who also have had both doses of COVID-19 vaccinations, Morin said.
Development Goals
Accor's portfolio size continues to grow, Morin said. The French hotel firm opened 82 hotels and approximately 10,000 rooms in the quarter, representing net system growth of 2.5% over the last 12 months. Executives hope to end 2021 with 3% net unit growth by the end of the year.
Currently, Accor has approximately 769,000 rooms in 5,252 hotels and a pipeline of approximately 211,000 rooms in 1,187 hotels, which will take it within 20,000 rooms of 1 million rooms in its global portfolio.
Also during the quarter, Accor completed its merger of hotel firm Ennismore that now has morphed into an Accor division that contains all of the firm’s lifestyle brands. That agreement, first announced in Nov. 2020, sees Accor own 66.67% of the new entity.
On Thursday, Accor signed a deal with Qatar’s Supreme Committee for Delivery & Legacy to manage apartments and other non-hotel accommodation for the host country during the 2022 World Cup, according to a news release.
According to the agreement, Accor will operate and staff approximately 60,000 rooms until the end of 2022, which the statement said will ensure that the country will have a sustainable hotel market that doesn't create excess permanent hotel rooms.
The Qatar National Tourism Authority said in August it currently has approximately 30,000 rooms, with the expected attendance across the month of soccer games around 1.2 million.
As of press time, AccorHotels' stock was trading at 30.29 euros per share, up 3.1% year to date. The Euronext N.V. Stock Exchange was up 18.6 year to date.