As it released its financial results for the first half of the year, Paris-based hotels group Accor says it currently has “no time and no will” to get involved in mergers and acquisitions.
“One hundred and fifty percent of our effort is on day-to-day actions,” said Deputy CEO Jean-Jacques Morin. The company, he said, was not interested in “distractions around consolidation.”
The comment, from a company with a reputation for active participation in industry consolidation, came as Sébastien Bazin, chairman and CEO, said “there is no question” that “rebound and recovery” is on its way. “Since May, we have seen a clear recovery. Positive signs including the ramp-up of vaccine roll-out and the progressive reopening of borders will continue throughout the summer.”
Revenue per available room improved by 5 percentage points in each of April, May and June and the trend is likely to continue in July. Consolidated first-half revenue totaled €824 million, down 10 percent as reported and down 6 percent like-for-like versus first-half 2020, 53 percent compared with first-half 2019. RevPAR fell 60 percent versus H1 2019.
Different Markets, Different Results
The outcomes, however, are geographically uneven. The company said that a rebound was underway in the U.S., China and Australia but was being delayed in Thailand, Vietnam and Argentina. France, Germany, Brazil and the U.K. were, it said, “ready for rebound.” Bazin said the state of business is closely associated with vaccination figures.
Accor hotels are doing better in countries with strong domestic demand and less well where there is a dependence on international travel. In the Americas, RevPAR was down 63 percent in Q2 with Brazil and the U.S. strongly accelerating in June. North/Central America and the Caribbean reported improvements with RevPAR down 62 percent in Q2 2021 driven by the U.S. where activity accelerated over the past months, while Canada continued to suffer from major restrictions. The borders between the two countries are expected to open on Aug. 9.
In South America where RevPAR fell 62 percent in Q2 2021, the situation improved mainly during the end of the second quarter due to the acceleration of the vaccination and the decline in the number of COVID cases, notably in Brazil.
Consolidated earnings before interest, taxes, depreciation and amortization was -€120 million in H1 2021, up 58 percent like-for-like compared with H1 2020. Sensitivity of EBITDA to RevPAR changes amounted to less than -€16 million for each percentage point decline in RevPAR vs. 2019 thanks to permanent cost savings initiatives which are delivering results, close monitoring of the variable costs, exposure to Australia where the activity strongly rebounded and the recovery of incentives over the period.
Portfolio Strength
Changes in the scope of consolidation (acquisitions and disposals) had a negative impact of -€19 million, largely due to the disposal of Mövenpick leased hotels in early March 2020.
Currency effects had a negative impact of -€16 million, mainly due to the U.S. dollar (up 10 percent) and the Brazilian real (up 21 percent).
During the first half, Accor opened 121 hotels, representing 15,000 rooms, i.e., net system growth of +1.9 percent over the 12-month period. The pace of the gross opening was subdued as the hotel owners are cautiously monitoring the activity rebound. Accor expects a net system growth in the low range between 3 percent and 4 percent.
At the end of June, the company had a portfolio of 762,000 rooms (5,199 hotels) and a stable pipeline of 211,000 rooms (1,203 hotels). As of July 26, 93 percent of group hotels were open, more than 4,800 units.
A version of this story appeared on Hotel Management's sister site Hospitality Insights.