ACCOR: FIRST-QUARTER 2020 REVENUE OF €768 MILLION DOWN 15.8% LIKE-FOR-LIKE
25.4% DECLINE IN REVPAR SUSTAINED PORTFOLIO ORGANIC GROWTH, WITH 8,000 ROOMS OPENED SOLID FINANCIALS AND AMPLE LIQUIDITY |
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ACCOR: FIRST-QUARTER 2020 REVENUE OF €768 MILLION DOWN 15.8% LIKE-FOR-LIKE
25.4% DECLINE IN REVPAR SUSTAINED PORTFOLIO ORGANIC GROWTH, WITH 8,000 ROOMS OPENED SOLID FINANCIALS AND AMPLE LIQUIDITY |
Catégorie : Monde - Économie du secteur
- Chiffres et études
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Sébastien Bazin, Chairman and Chief Executive Officer of Accor, said:“The world is facing an unprecedented health crisis that is having massive and unique impacts on the tourism industry. Nearly two-thirds of our hotels are currently closed, and most of the others are being used to support healthcare workers and all those on the front lines of the fight against COVID-19. Against this backdrop, the efforts of our employees and our owners have been extraordinary.
Today, our challenge is twofold: manage the emergency and prepare for the rebound.
The Group is in a strong position to address the current situation and we are taking aggressive measures to adapt our organization. Accor’s recent transformation has left the Group with a robust balance sheet which will enable it to absorb the economic consequences of this crisis in the coming quarters. At the same time, we are preparing for the recovery alongside the authorities and professional organizations in the countries in which we operate so that the Group will be well positioned to rebound as quickly as possible.”
Consolidated first-quarter 2020 revenue totaled €768 million, down 17.0% as reported and 15.8% like-for-like.
RevPAR fell by 25.4%, reflecting the sharp deterioration in the environment due to the worldwide spread of the COVID-19 epidemic, first in Asia-Pacific (-33.7%) and then in other regions, including Europe (-23.2%) and North America (-22.2%).
Changes in the scope of consolidation (acquisitions and disposals) had a negative impact of-€7 million largely due to the disposal of Mövenpick leased hotels.
Currency effects had a negative impact of -€4 million, mainly due to the Australian dollar (-4.2%) offset by the US dollar (+3.0%).
During first-quarter 2020, Accor opened 58 hotels, representing 8,000 rooms, which is a very satisfying level given the current environment. At end-March 2020, the Group had a portfolio of 746,903 rooms (5,085 hotels) and a pipeline of 208,000 rooms (1,202 hotels), of which 76% in emerging markets.
As of April 22, 2020, 62% of the Group’s hotels are closed, i.e., more than 3,100 units.
Decrease in revenue
The Group reported first-quarter 2020 revenue of €768 million, down 15.8% like-for-like. This decrease reached -17.5% for HotelServices and -13.0% for Hotel Assets. New Businesses revenue was down 13.8% like-for-like.HotelServicesHotelServices, which operated 5,085 hotels (746,903 rooms) under franchise agreements and management contracts at the end of March 2020, reported a 17.5% like-for-like decrease in revenue, to €540 million. This decline reflects the rapid COVID-19-related deterioration in RevPAR.
Revenue in the Management & Franchise (M&F) business was down 34.9%, with performance hit by the gradual spread of the virus in various regions.
Consolidated RevPAR was down 25.4% overall in the quarter, including a 62.6% decline in March alone, after a 2.0% increase in January and a 10.2% decrease in February. RevPAR’s impact on M&F revenue was compounded by the significant decline in incentive bonuses based on hotels’ gross operating profit.M&F revenue was down by a sharp 31.2% like-for-like in Europe, reflecting a 23.2% deterioration in RevPAR - In France, RevPAR fell 22.4% in first-quarter 2020. Paris and the regional cities saw similar declines of -22.3% and -22.4%, respectively. The lockdown implemented since March 17 led to the temporary closure of more than 75% of Accor hotels in France.
- In the United Kingdom, RevPAR declined by 22.1%. London was more affected than the regional cities with RevPAR down 23.9% and 19.7%, respectively. Most hotels have been closed since March 25.
- In Germany, where protective measures were put in place on March 22, the impact on RevPAR was similar, reflecting a 24.5% decline for the quarter.
- Spain, which went into lockdown on March 14, reported a 29% drop in RevPAR in the first quarter
In Asia-Pacific RevPAR was down 33.7%, reflecting the deterioration that began a month earlier than in Europe - In China, RevPAR fell by 67.7% in first-quarter 2020. The epicenter of the pandemic is still affected by COVID-19, but initial signs of an improvement can be seen in the pick-up in occupancy rates and in the restaurant business. Average prices remain low as the rooms are mainly being used by medical personnel or for quarantine measures.
- In Australia, where COVID-19 has had a more limited impact, the decline in RevPAR was somewhat less pronounced at 18.2%. This decline was also mitigated by the hotels being used for quarantine, which had a positive short-term impact on RevPAR.
In Middle East & Africa, RevPAR was down 21.4%. The trend was similar to Europe’s due to the closure of the holy cities since the end of February.
RevPAR in North America, Central America & the Caribbean was affected by the closure of numerous hotels since mid-March due to the COVID-19 pandemic and was down 22.2%.
Lastly, business has so far proven more resilient in South America, with a RevPAR decline of 11.2%. However, this resilience reflects the time lag in the spread of the pandemic.
The Group nevertheless continues to expand at a rapid pace. During Q1, Accor opened 58 hotels, representing nearly 8,000 rooms. At end-March 2020, the Group’s pipeline was stable and comprised 1,202 hotels and 208,000 rooms, of which 76% in emerging markets.Hotel AssetsRevenue derived from the “Hotel Assets & Other” segment was down 13.0% like-for-like, reflecting the lesser impact of COVID-19 in Australia and the time lag in the spread of the pandemic in Brazil. The 20.4% decline in revenue as reported was exacerbated by the sale of the Mövenpick leased hotels early March 2020.
At the end of March 2020, this segment, which includes owned and leased hotels, represented 167 hotels and 29,930 rooms.New BusinessesNew Businesses (concierge services, luxury home rentals, private sales for luxury hotel stays, and digital services for hotels) generated revenue of €32 million, down 13.8% like-for-like from €37 million in 2019. The decline was 13.3% as reported due to currency effects.Covid-19’s impact on businessThe rapid changes in the environment, with the virus spreading to all continents, and their impact on the hotel business are unprecedented. Visibility is currently not high enough for the Group to estimate the financial impact this crisis will have on its results and financial position for fiscal year 2020.
For the first quarter, Accor estimates a €170 million EBITDA shortfall. This amount reflects the gradual closure of a majority of its portfolio in March. It only very partially incorporates the positive impacts of the cost-saving measures taken in end-March. These are ramping up and will produce most of their results in the coming months.These measures include: - A travel ban, hiring freeze, and reduced schedules or furloughing for 75% of global head office teams for Q2, resulting in a minimum €60 million reduction in G&A for 2020.
- A review of the recurring investment plan for 2020, resulting in a €60 million reduction in capital expenditures for the year.
- The significant cost reduction (sales, marketing, IT, etc.) to offset drastic fee decrease.
April and May are expected to be the most difficult months of the year, with very low occupancy rates and strong uncertainty about timing and lockdown relaxation as well as the pace for border reopenings. However, a few markets are showing some positive signs, primarily China, where there are first indications of recovery.
In these extraordinary times, the Group can rely on its very strong financial position, with more than €2.5 billion in available liquidity at end-March 2020 and an undrawn revolving credit facility of €1.2 billion with no covenant testing before June 2021.
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