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With robust FY18 results, the Group confirms its steady path toward its medium-term targets

February 23, 2019 Financial No Comments

Sébastien Bazin, Chairman and Chief Executive Officer of Accor, said: “Accor 2018 results reflect a profound transformation, marked foremost by the sale of our real estate division and a large number of acquisitions. results are clearly improving, with EBITDA, free cash flow generation and organic development all once again at record highs. They are also perfectly in line with our medium-term objectives. Accor’ growth continues: we are increasing our global market share and consolidating our balance sheet. In 2019, the Group will continue along this path. With the launch of ALL, Accor gives life to its augmented hospitality model servicing both its customers and partners. This ambitious and unique initiative in the hotel industry will help promoting the Group and its brands, increasing customer loyalty and optimize its mid-term performance.”

In 2018, Accor benefitted from solid business momentum in most of its markets and continued its transformation toward an asset-light model through the disposal of 64.8% of AccorInvest and the swift redeployment of the cash proceeds from core acquisitions. Capitalizing on a record organic increase of its network with 43,905 rooms opened (300 hotels), the Group ended 2018 with a hotel portfolio of 703,806 rooms (4,780 hotels) and a pipeline of 198,000 rooms (1,118 hotels), 78% of which in emerging markets and 49% in the Asia-Pacific region alone.

Solid growth in revenue

Consolidated 2018 revenue amounted to €3,610 million, up 8.8% at constant scope of consolidation and exchange rates (like-for-like) and up 16.9% as reported compared with 2017. The difference between the like-for-like and reported changes stems primarily from the acquisitions completed over the year (including Mantra and Mövenpick), partly offset by a negative currency effect.

(1) Proforma financial information. (2) Like-for-like: at constant scope of consolidation and exchange rates.

Reported revenue over the year reflected the following factors:

Changes in the scope of consolidation (acquisitions and disposals) had a positive impact of €394 million (+12.8%), due to the contributions of Mantra, Mövenpick, Atton, Gekko, ResDiary and Adoria. – Currency effects had a negative impact of €144 million, attributable chiefly to declines in the US dollar (€37.1 million), the Brazilian real (€31.9 million) and the Australian dollar (€28.4 million). The decline in currencies against the euro was felt primarily in H1 2018, with a residual impact in H2 2018.

HotelServices reported business volume of €20 billion, up 13.4% at constant exchange rates, and revenue of €2,618 million, up 8.4% like-for-like, reflecting the solid trading conditions over the year and the development of the hotel portfolio, in line with the Group’s targets (5% organic growth). Reported revenue growth amounted to 5.4%, impacted by a negative currency effect.

Management & Franchise revenue by region

The combination of solid RevPAR growth and rapid development drove the robust likefor-like M&F revenue growth for Europe and Asia-Pacific of 8.7% and 8.4%, respectively. In Middle East & Africa, revenue declined by 1.1% following the closing of some hotels and despite a slight 1.8% improvement in RevPAR. Conversely, the continued buoyant trading conditions in North America, Central America & the Caribbean and in South America translated into strong revenue growth of 17.1% and 13.8%, respectively. The Luxury segment accounted for 38% of the Management & Franchise fees in 2018. This segment’s contribution to revenue generation will continue to grow over the next years through the opening of many upscale hotels currently in the pipeline.

Group RevPAR was up 5.6% overall in 2018.

Europe posted RevPAR growth of 6.5%.

– This performance was predominantly driven by France, where RevPAR grew by 6.9% over the year, lifted by strong gains in Paris of 12.2%.

– In the UK, RevPAR grew by 2.9% due particularly to strong demand in London, which report 4.8% RevPAR growth.

– In Germany, excellent business volumes thanks to the Christmas markets in December boosted RevPAR at the end of the year, resulting in full-year growth of 3.2%.

– Spain saw a good recovery in Catalonia after the political tensions in 2017. The inflow of foreign tourists in the country reached a record level at 86 million, enabling RevPAR to grow by 3.8% over 2018.

Asia-Pacific continued to perform well, posting RevPAR growth of 4.3% over the full year, with a clear inflexion in Q4, following signs of a slowdown observed early in the year. China remains solid with a 6.8% RevPAR growth over the year. Middle East & Africa delivered more mixed results, posting moderate RevPAR growth of 1.8%, which is nevertheless a very good performance in a hotel market that was down overall. The region is impacted by oversupply in certain key cities. North America, Central America & the Caribbean reported RevPAR growth of 4.0%, notably reflecting strong activity in Canada, where RevPAR was up by 7.1% over the full year.

South America experienced a strong recovery throughout 2018, on the back of the steady improvement of the Brazilian activity seen since Q4 2017. RevPAR in the region was up 12.3% over the full year.

New Businesses (concierge services, luxury home rentals, private sales of luxury hotel stays, and digital services for hotels) recorded like-for-like revenue growth of 2.4% to €149 million in the 12 months to December 2018, compared with €100 million in 2017. On a reported basis, growth came to 49% on the back of the acquisition of Gekko, ResDiary and Adoria. Completed in 2018, the three acquisitions made a positive contribution to the Group’s earnings. Availpro and Fastbooking, which have been grouped together under the d-edge brand, also reported positive results for the first time since their acquisition. Regarding onefinestay and John Paul, the Group is continuing its work to turn the two businesses around, primarily through rationalization programs.

Revenue derived from the Group’s Hotel Assets & Other segment grew by 8.4% like-forlike, reflecting the economic recovery in Brazil and excellent performances in Central Europe (Orbis). On a reported basis, the 44.5% growth was driven by the consolidation of Mantra and Mövenpick.

Robust increase in EBITDA

Consolidated EBITDA amounted to €712 million in 2018, up 8.0 % like-for-like and up 14.5% as reported compared with 2017, in line with the Group’s guidance of between €700 million and €720 million published in October. The EBITDA margin was roughly stable on a like-for-like basis at 19.7%.

EBITDA by business in line with expectations

Up 11.0% as reported and 12.3% like-for-like, HotelServices’ 2018 EBITDA was €705 million, compared with €635 million in 2017. The New Businesses reported an EBITDA loss of €28 million in line with the guidance of between €25 million and €30 million announced. Hotel Assets & Other delivered a good performance, with growth of 9.4%, well above the range of 5% to 7% expected over the medium term and presented during the Capital Market Day in November. HotelServices and Holding & Intercos (corporate overheads) together reported 10.7% like-for-like EBITDA growth, well in line with the guidance of 10% to 12% by 2022.


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