As the largest hotel company in France and all of Europe, Accor is ready for the Paris Olympic Games this summer.
During its annual general meeting with shareholders Friday, Accor executives shared their expectations for the Summer Olympics, reorganized the company's luxury and lifestyle operations, previewed the demand trends they're following and gave an update on the company's valuation.
Preparing for the Games
Accor is playing a pivotal role in the Paris Olympic Games that take place between July 26 and Aug. 11. The Paralympic Games follow from Aug. 28 to Sept. 8.
Group Chairman and CEO Sébastien Bazin said Accor’s relevant hotel room stock is not fully booked for the event. The firm has 1,700 hotels in France, and 650 of them are in the 10 cities in which the Olympic Games will be held.
He added that 40,000 Accor employees have been specifically trained for serving Olympic guests and that 1,200 Accor bars and restaurants will have some form of Olympics-related events and offerings.
“We are at about 71% occupancy for the hotels concerned. You probably heard some silly things were done by some hoteliers a year ago, asking for outrageous prices, thinking their hotel was going to be absolutely fully booked. We will probably be at 85% during the games,” Bazin said.
Bazin added the Olympics “will be good for France, good for the French economy and good for tourism.”
Accor is responsible for the reservation process and management of the athletes’ and media villages at the games. More than 100,000 breakfasts will be served.
Bazin said Accor administered a similar feat at the FIFA World Cup in Qatar in 2022.
“We managed 80,000 beds in about 400 residences. … We can do this again wonderfully well,” he said.
For the athletes, Accor has 71 residences and more than 14,300 beds, all in three towns just north of Paris: Saint-Denis, Ile Saint-Denis and Saint-Ouen. More than 25,000 athletes are expected to compete in the Olympic and Paralympic Games.
For the media village, there will be 31 residences and more than 1,500 beds for approximately 1,600 journalists and TV and IT specialists.
Luxury and Lifestyle Transformation
At Friday's meeting, Accor shareholders approved the French firm’s proposal to transfer all its luxury and lifestyle operations to its 100%-owned division Accor Luxury & Lifestyle SAS, which was formed on Jan. 1, 2023.
“This operation will align the group’s legal structure with this organization, making it fully operational and enabling detailed and consistent monitoring of its performance,” said Besma Boumaza, Accor’s group general counsel and board secretary.
She said the value of the contribution will be approximately €2.7 billion ($2.9 billion), and that approximately 2.8 billion new shares with the initial value of €1 each will be created.
Following the announcement and the approval of the firm’s 2023 accounts, Bazin was asked by one shareholder why the firm’s share price appeared sluggish. Accor's stock ended last week just under €40 per share.
“On the share price, well, for a very long time now we’ve been asking that same question together. This is my 10th [annual general meeting] with you and each and every year people point out that the share price doesn’t reflect the underlying value of the company. We deplore that,” he said.
Bazin said Accor executives have been transparent about the company's strategy as to how it sought to be more sustainable and its restructuring.
“There have been many milestones over the last 10 years. … Since COVID-19 the share price has rebounded from €22 to €42, an all-time high and a 90% increase,” he said.
Bazin added the firm now has fewer shareholders holding double-digit percentages of stocks, rather a new, larger set of investors holding approximately 4% and 5% of the company.
He said Accor needs to double down on its results, values and strategies.
Only one of 15 or so resolutions was rejected by shareholders, the proposal to “[delegate] authority to the board of directors for the purpose of issuing share subscription warrants to be allocated free of charge to shareholders in the event of a public offer relating to the company’s shares.”
Demand Accretion
Bazin said he is confident in the resiliency of Accor's hotel business and the hospitality industry for the next 10 years, notably as demand continues to outpace hotel supply.
“There are more people on the planet, and these people will one day have the urge to travel. … What is the growth in the middle classes? We know over the next 10 years we know about 1.3 billion people will enter what we call the middle class,” he said. “200 [million] to 300 million of that number will solely be in India.”
Bazin anticipates hotel demand will grow by approximately 3.7% per year over the next 10 to 20 years, while hotel supply will rise by only between 1.5% and 2%.
“We’re part of one of the few industries where over the past 20 years and for the next 10 years you have customer demand that is between two and three times higher than the supply, which is a huge benefit and gives us tremendous ability to predict tomorrow,” he said,
Over the last 10 years, Accor has changed from it having 86% of its hotels in Europe to having 45% in the continent as it diversifies its portfolio globally.
During the shareholder meeting, Accor's compensation committee chairman Bruno Pavlovsky reported what Bazin earned approximately €1.87 million over full year 2023. The figure is 139% of Bazin's total possible earnings — 150% was the highest level attainable — a sum that was approved shareholders. Bazin's salary and bonus are tied to Accor meeting certain sustainability targets.
Accor Chief Sustainability Officer Brune Poirson shared some of the company's sustainability highlights. In all, 79% of Accor’s hotels have removed single-use plastics, against a target of 80%; 60% of hotels are measuring carbon emissions, against a target of 85%; and 90% of its top 300 hotels have defined a baseline value for food waste, against a target of 80%.
Companywide, 42% of Accor's management positions are held by women, against a target of 40%, Poirson added.
Across its brand portfolio, Accor is celebrating the 50th anniversary of its Ibis brand. The company also recently opened its 700th hotel in Greater China, the 315-room Sofitel Shanghai North Bund, in late May.