Accor reports Q1 revenue drop of 15.8%

At the end of March 2020, Accor had a portfolio of 746,903 rooms (5,085 hotels), including the Sofitel Washington DC Lafayette Square. Photo credit: Accor

That the COVID-19 pandemic has delivered a body blow to the hotel industry is not in question, but as first-quarter reports are released we will start to see the full extent of the damage.

Accor was up first, sharing that consolidated first-quarter 2020 revenue totaled €768 million, which was down 17 percent as reported and 15.8 percent like-for-like. Revenue per available room fell 25.4 percent, reflecting the sharp deterioration in the environment due to the worldwide spread of the COVID-19 epidemic, first in Asia-Pacific (-33.7 percent) and then in other regions, including Europe (-23.2 percent) and North America (-22.2 percent).

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During Q1, Accor opened 58 hotels, representing 8,000 rooms. At the end of 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 percent were in emerging markets.

As of April 22, more than 3,100 of the group’s hotels are closed.

“The world is facing an unprecedented health crisis that is having massive and unique impacts on the tourism industry,” according to Sébastien Bazin, Accor’s chairman/CEO. “Nearly two-thirds of our hotels are currently closed, and most of the others are being used to support health-care 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.”

According to Bazin, the company’s 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,” he said. “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.”


HotelServices, which operated 5,085 hotels (746,903 rooms) under franchise agreements and management contracts at the end of March 2020, reported a 17.5 percent 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 business was down 34.9 percent, with performance hit by the gradual spread of the virus in various regions.

Consolidated RevPAR was down 25.4 percent overall in the quarter, including a 62.6 percent decline in March alone, after a 2.0 percent increase in January and a 10.2 percent 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 percent like-for-like in Europe, reflecting a 23.2 percent deterioration in RevPAR.

  • In France, RevPAR fell 22.4 percent in first-quarter 2020. Paris and the regional cities saw similar declines of -22.3 percent and -22.4 percent, respectively. The lockdown implemented since March 17 led to the temporary closure of more than 75 percent of Accor hotels in France.
  • In the United Kingdom, RevPAR declined by 22.1 percent. London was more affected than the regional cities with RevPAR down 23.9 percent and 19.7 percent, 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 percent decline for the quarter.
  • Spain, which went into lockdown on March 14, reported a 29 percent drop in RevPAR in the first quarter.
  • In Asia-Pacific RevPAR was down 33.7 percent, reflecting the deterioration that began a month earlier than in Europe.
  • In China, RevPAR fell 67.7 percent 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 percent. 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 percent. 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 percent.

According to the report, business has so far proven more resilient in South America, with a RevPAR decline of 11.2 percent. However, this resilience reflects the time lag in the spread of the pandemic.

The group 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 percent in emerging markets.

Hotel Assets

Revenue derived from the “Hotel Assets & Other” segment was down 13 percent 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 percent 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 Businesses

New 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 percent like-for-like from €37 million in 2019. The decline was 13.3 percent as reported due to currency effects.

Covid-19’s Impact on Business

The 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 earnings before interest, taxes, depreciation and amortization 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 percent 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.

The report stated that the group can rely on its very strong financial position, with more than €2.5 billion in available liquidity at the end of March 2020 and an undrawn revolving credit facility of €1.2 billion with no covenant testing before June 2021.