In the second quarter, Accor's hotel revenue per available room surpassed 2019 levels for the first time since the COVID-19 pandemic began.
During a presentation of the French hotel firm’s half-year 2022 results, Sébastien Bazin, Accor’s chairman and CEO, said he expects further “robust” improvements the rest of the year as conventions, meetings and group and business travel rebound, although he added economic and geopolitical issues still put a damper on recovery efforts.
Bazin mentioned upcoming events such as Oktoberfest in Munich — which takes place September through October — Mondial Paris Motor Show in October, construction show Bauma from October 24-30, and the soccer World Cup in Qatar — scheduled from November 21 to December 18 — as being major boosts to hotel demand.
He estimated that 60% of revenue in the fall travel season typically derives from business demand, so it was encouraging to see close to a full calendar of events.
Bazin said tourism figures from the United Nations World Tourism Organization have been revised upward every month of the past six months.
“In only a matter of four months, [international travelers] have been up to 912 million, while we are still missing a lot of people from Asia,” he said.
Accor's room rate in the second quarter compared to the same period in 2019 shows hotel rooms were priced 14% more in London, 11% more in Paris and 7% more in Sydney.
“In probably 80% of the major capital cities of Accor, we have better pricing today than we have ever enjoyed … so let’s make sure it lasts; let’s make sure we provide the highest level of service,” he said.
Bazin said Americans are traveling in large numbers, and domestic markets remain strong. He added he does not have any worries about “activity, pace, geography, and that is all across the brands of Accor, from luxury to economic sectors.”
Guidance for the full-year 2022 earnings before interest, taxes, depreciation and amortization is 550 million euros ($559 million).
Jean-Jacques Morin, Accor’s chief financial officer and deputy CEO, said the firm has experienced significant improvement in profitability and cash-flow generation.
“The most notable thing here is that in [the second quarter] we are back to the top line of 2019, so it is the first time we are back to the level of business we used to do in 2019,” he said.
Morin said Accor's revenue of 1.7 billion euros for the first half of 2022 is a 97% improvement over the same period of 2021 but still a 10% decline from 2019.
In the first half of the year, the company opened 85 hotels and 11,700 rooms, which contributed to 1.8% net system growth. For the full year, Accor projects its portfolio to grow by 3.5%, with 97,000 hotel rooms added to the Asia-Pacific region, 40,000 to Southern Europe and 15,000 to the Americas. In total, Accor is expected to finish the year with 778,000 rooms in 5,300 hotels, with a pipeline of 212,000 rooms in 1,215 hotels.
Recovery Pains
Bazin said he expects improvements to follow the “reset” of the firm, with its brands being organized in two groups: market-driven “power brands” headed up by geography-based CEOs, and luxury and lifestyle brands divided into distinct groups such as Fairmont; Raffles/Orient-Express, Ennismore, and Sofitel/MGallery/soft brand Emblems. This change is expected to be fully in place by Oct. 1.
Bazin said executives have not considered splitting the organization along the lines of these two groups.
In June, Accor agreed to sell 10.8% of its luxury and lifestyle division Ennismore to a group of Qatari investors for 200 million euros, which placed a nominal value on the division of approximately 2 billion euros.
“What we will do for at least 24 months is not to have any de-synergies. We will have a common bond of five things, which we call ‘shared services’: distribution, loyalty, Accor tech, which is the IT infrastructure, digital [tools] … and procurement,” Bazin said.
Morin said he could not comment too much on inflationary pressures as no one can predict its full effect. But he added staffing remains a major challenge.