Hotel group Accor eyes return to normal as demand rebounds

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FILE PHOTO: The logo of French hotel operator AccorHotels is seen on top of the company's headquarters near Paris

By Anait Miridzhanian

-Europe’s biggest hotel group Accor said on Thursday it was “well on the way” to more normal levels of activity this year after its core earnings swung back to profit in 2021, helped by higher absorption of fixed costs.

The travel and hospitality industry is still recovering from the pandemic while European countries make plans to ease COVID-19 restrictions due to a drop in coronavirus infections.

Accor, which runs high-end chains Sofitel and Pullman, as well as budget brands such as Ibis, said its business had started to recover in April despite the impact from the pandemic, leading to a significant pick up in activity.

The rebound paused in January due to the Omicron variant outbreak, but the month of February represented “a turning point”, the French hotelier said.

By the end of 2021, average room rates came close to or even exceeded pre-COVID-19 levels thanks to an improvement in demand, Accor said.

It flagged an impressive recovery in the Middle East region, which has benefitted from the world’s fair Expo 2020 in Dubai.

TO HELP EMPLOYEES IN UKRAINE AND RUSSIA

Deputy CEO Jean-Jacques Morin told journalists the group owned seven hotels in Ukraine and about 55 in Russia, when asked about the ongoing crisis.

“We will follow last night’s situation but the direct impact is very limited,” Morin said.

Chairman and Chief Executive Officer Sebastien Bazin said on a call with analysts that the group will provide help to its employees in Ukraine and Russia.

“I am putting aside that Ukraine and Russia is less than 1% of the net worth, because that is absolutely irrelevant. What’s relevant is that we have 2000 people in Russia, we have a couple hundred people in Ukraine and we care for them”, Bazin said.

“The most important thing for me and the teams of Accor is to make sure the people are safe, to make sure you talk to them, to make sure you provide whatever they need and to make sure they know that you are there,” he added.

SHARES DROP

The group posted full-year earnings before interest, taxes, depreciation and amortisation (EBITDA) of 22 million euros ($24.69 million), bouncing back from a loss of 391 million a year earlier.

The group’s revenue per available room (RevPAR), a key gauge of performance for the hotel industry, was down 46% in 2021 compared with the pre-pandemic level in 2019, reflecting the resurgence of the COVID-19 pandemic.

For 2022, the group forecast a 3.5% net growth in its hotels network against a 3% growth last year.

“By the end of the first quarter we will be back to pre-Omicron levels that we had at year-end,”, deputy CEO and Chief Financial Officer Jean-Jacques Morin said referring to fourth-quarter numbers.

Morin added that the health situation is now significantly relaxed and said the company might provide new guidance with is first-half results.

Accor shares fell 7.4% to around 29 euros at 1012 GMT while France’s SBF 120 index dropped 3.5%.

($1 = 0.8912 euros)

(Reporting by Anait Miridzhanian; editing by Milla Nissi)

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