With more than half its branded hotels closed worldwide—likely two-thirds in the coming weeks, it said—Accor announced Thursday steps it is taking to mitigate the COVID-19 pandemic’s impact on business.
Given the current situation, Accor is reducing schedules and/or furloughing 75 percent of its global head office teams for Q2, as well as implementing a travel ban and a hiring freeze. These actions, it estimated, will result in a minimum €60 million reduction in general and administrative expenses for 2020.
Additionally, Accor reviewed its recurring investment plan for 2020, resulting in a €60m reduction in capital expenditure. The company is further streamlining all other costs, such as sales, marketing and IT, in line with lower systemwide revenues.
Accor said it currently has more than €2.5 billion in cash on hand and an undrawn revolving credit facility of €1.2 billion. Though uncertainty remains, the company said it expects a severe impact on its 2020 performance but remains bullish on the long-term perspective of the hospitality industry, for Accor, its employees, its owners and shareholders.
Accor is also withdrawing its proposal for a 2019 dividend payment of around €280 million. It decided to allocate 25 percent of the planned dividend to the launch of the ALL Heartist Fund, which will assist:
- The group’s 300,000 employees, pledging to pay for the COVID-19-related hospital expenses of those who do not have social security or medical insurance
- On a case-by-case basis, furloughed employees “suffering great financial distress”
- On a case-by-case basis, individual partners facing financial difficulty
- Health-care professionals and nonprofit organizations
Accor board members have collectively decided to reduce their attendance fees by 20 percent to the benefit of this fund. Additionally, Chairman/CEO Sebastien Bazin will forgo 25 percent of his compensation during the crisis with the cash equivalent to also be contributed to the fund.
“Welcoming, protecting and taking care of others is at the very heart of what we do,” Bazin said in a statement. “In light of the urgency and the scale of the situation, we have decided to act in an immediate and meaningful way, in the spirit of our values and commitments. Through this impactful gesture, we wish to express our solidarity and gratitude to all those demonstrating courage and selflessness during this crisis. On behalf of the board, I would like to thank the group’s main shareholders. Without them, the “ALL Heartist Fund” would not have been possible. I also want to pay a special tribute to the Accor teams around the world. They are facing the current crisis with admirable courage, dedication and professionalism. As our industry is going through tough times, we have to make tough decisions, but Accor has a strong balance sheet which will enable it to withstand this crisis and emerge with strength during the recovery period. I am confident that Accor will soon rediscover the road to growth.”