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It can be such a dilemma, can’t it, working out what to do with the sacks of cash one has piling up in the bank, or in the vault, or, in the case of the hotel sector, under the mattress. After you’ve got past feeding yourself and keeping the home fires burning, where to disperse?

Do you give it back to shareholders? Do you spend it on filling white space to make your brand offering whole? Do you use it to pick up a whole new territory? Or do you save it for a rainy day?

At Accor, the ongoing gripe has been that the market isn’t valuing the company properly and at the time of writing the group’s share price was more than €10 off its five-year high. Shareholders have been mithering and gnashing that they want to sell off the luxury portfolio. The group needs to pull something out of the bag and this week announced a partnership with Visa for a card which should put a spring in the step of ALL, its relaunched loyalty programme. Will this be enough? The CEO told analysts that it was extending its share buyback programme. Will this be enough? We hear rumours it has bough Rotana. This is unlikely to be enough.

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At Choice, the company was considering deploying cash to fill out its portfolio at the upper end and we wonder whether it will do as it has before and come shopping in Europe, where the strong dollar can buy so very much. As much as Accor? We’d like to at least entertain the notion. At Pandox the shopping never ends and speculation settles on a new territory - maybe somewhere in the sun - or a new asset type, perhaps hostels? Extended stay?

As for that rainy day, this week provided investors with a good deal more clarity on what impact the coronavirus was having on performance and the view was that a speedy bounceback was more than likely once the danger was past, with IHG CEO Keith Barr harking back to his time living in the country during the Sars outbreak. With new instances of the virus now dropping off, the hope is that the light is looming. Both Accor and IHG remarked on the powers of the Chinese government to inject some enthusiasm into the country’s economy when a jumpstart was required and it is hoped that it will just be a matter of lever pulling when the time comes. In the meantime, in the words of Accor chairman & CEO Sébastien Bazin: “You have to keep pedalling”.

 

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