By: Dominique Vidalon
PARIS: AccorHotels, Europe’s largest hotelier, reported a forecast-beating 3.8 percent rise in operating profit for last year, helped by restructuring efforts and robust demand in most markets.
The French company said earnings for its core, domestic market had been impacted as a result of weak demand following a spate of deadly, Islamist militant attacks in France, although the French market had started to recover in the fourth quarter.
AccorHotels, which has more than 4,000 hotels ranging from the budget Ibis to the luxury Sofitel brand, also recruited former French President Nicolas Sarkozy as a board member to chair an international strategy committee.
The group, which competes with InterContinental, Marriott and Starwood, is undergoing a reorganisation under Chief Executive Sebastien Bazin, who took over in August 2013.
The overhaul has entailed cutting costs, expanding in China and strengthening its presence in the luxury hotels market, with the acquisition of FRHI Holdings, owner of prestigious hotels such as London’s Savoy and New York’s Plaza.
AccorHotels has also struck several deals in order to strengthen its online and Internet offerings.
Earnings before interest and taxes (EBIT) rose to 696 million euros ($732 million) in 2016. This compared with Accor’s own guidance for EBIT between 670-690 million euros, while analysts polled by Financial Inquiry for Reuters expected 676 million.
Revenues also rose 2.2 percent on a like-for-like basis to 5.631 billion euros for 2016.
In France, which makes 30 percent of group profit, revenues fell 2.8 percent while EBIT also declined 13 percent on a like-for-like basis.
Business was very challenging in Paris where a key measure of revenue per available room (REvPar) fell 13.2 percent, although hotel demand outside the French capital was stronger.
In the Paris region alone, hotel owners welcomed 1.5 million fewer tourists in 2016 compared to 2015, costing local tourism 1.3 billion euros in lost revenue, the regional tourism committee said this week.
In July, AccorHotels announced a plan to turn property unit HotelInvest – whose assets are worth 6.6 billion euros – into a subsidiary in 2017 ahead of then selling the majority of its capital to institutional investors.
AccorHotels reiterated on Wednesday that the plan would give it significant headroom for expansion.
($1 = 0.9504 euros) (Editing by Sudip Kar-Gupta)
Source:Reuters