Revenue up 2.0% (LFL) to 2,598 million euros; EBIT down 4.0% (LFL) to 239 million euros; Net profit, group share of 74 million euros; Full-year 2016 EBIT target: between 670 million euros and 720 million euros.
Sebastien Bazin, Chairman and Chief Executive Officer of AccorHotels, said: "With several of our key markets, including France and Brazil, shaken by crises and violent events, the Group showed remarkable resilience in the first half of 2016. We continued to invest heavily in order to grow, transform and gain a foothold in new businesses that are destined to become fundamental for the Group.
We will pursue this offensive strategy in the coming months. Our presence in 95 countries, our leadership positions in Europe, Asia-Pacific, Latin America, Africa and the Middle East, and our strength as the world's leading hotel operator covering all segments from economy to luxury give us a major competitive edge. Combined with the launch of a project to turn our property division into a subsidiary and a strategy that gives priority to customer-focused innovation, these strengths will be the drivers of our future growth."
First-half 2016 highlights
- Robust growth in all of the Group's key markets, except France and Brazil
- Record development, with the opening of 19,366 rooms, 90% of which under franchise or management contracts
- HotelInvest: Considerably improved performance, driven by restructuring
- HotelServices: Stable operating performance in the first half, before the impact of commitments relating to the digital plan, the deployment of onefinestay and the AccorHotels marketplace
Strategic transactions in first-half 2016
HotelInvest
- Further asset restructuring, with the restructuring of 120 hotels, of which
– 85 hotels in Europe transferred to Grape Hospitality
– 12 hotels transferred to Huazhu - Preparation of the project to turn HotelInvest into a subsidiary
HotelServices
- Acquisition of the Fairmont Raffles Hotels International Group, with 98% support at the Shareholders’ Meeting of July 12, 2016
- Recruitment of 1,600 independent hotels, gradually integrated into the marketplace accorhotels.com
- Continued implementation of the digital plan
Creation of a world leader in luxury residential rentals
- Acquisition of onefinestay, the world leader in luxury serviced home rentals
- Acquisition of 30% of Oasis Collections, a digital platform offering a selection of apartments and associated services
- Acquisition of 49% of Squarebreak, an innovative digital platform offering upscale villas in France
First-half 2016 revenue
Consolidated first-half 2016 revenue amounted to 2,598 million euros, up 2.0% yearon-year at constant scope of consolidation and exchange rates. The increase resulted from favorable business levels in most of the Group’s key markets: Northern, Central and Eastern Europe (NCEE: +4.1%), Asia-Pacific (ASPAC: +4.8%), Americas (+1.7%) and the Mediterranean, Middle East, Africa (MMEA: +3.2%).
- Germany and the United Kingdom were the main drivers in Northern, Central and Eastern Europe, delivering revenue growth of 4.3% and 4.4% respectively in the first half.
- The Iberian Peninsula drove growth in the MMEA area, with revenue up 11.5%.
Revenue was down 2.6% in France (RevPAR: -2.2%), with a very pronounced drop in Paris (RevPAR: -12.0%), still affected by the events of November 13, 2015, as well as floods and strikes more recently, in May and June 2016. Regional cities reported excellent first-half activity (RevPAR: +6.0%), thanks to Euro 2016. Revenue in the Americas was up 1.7%, driven chiefly by dynamic growth in Argentina (+57.2%), Mexico (+20.6%), Canada (+9.7%), Peru (+4.6%) and Chile (+1.4%), offsetting slower business in Brazil (-5.5%).
Reported revenue for the period reflected the following factors:
- Development, which added 47 million euros to revenue and 1.7% to growth, with the opening of HotelInvest properties and acquisitions during the first half.
- Disposals, which reduced revenue by 143 million euros and growth by 5.2%.
- Currency effects, which had a negative impact of 86 million euros (-3.2%), resulting mainly from declines in the Brazilian real (29 million euros), the British pound (17 million euros) and the Australian dollar (13 million euros).
HotelServices & HotelInvest results – first-half 2016
The consolidated EBIT margin was down slightly at 9.2%. The HotelServices margin contracted by 4.9 points due to the ramp-up of the digital plan, and investments related to the marketplace and onefinestay.
The HotelInvest margin increased by 1.0 points to 6.6%, driven by further restructuring of the asset portfolio. AccorHotels recorded strong EBIT growth in the majority of its markets, with double-digit increases in the NCEE and MMEA regions. By contrast, France and Brazil adversely affected the Group’s profitability, as did HotelServices’ worldwide structures, which bear the impact of the commitments related to the digital plan, and the acquisition and development of onefinestay and FastBooking.
The very solid performance of the NCEE region (+10.5% LFL) was driven by strong business levels in Germany, the United Kingdom and Poland, and by the asset management strategy. The MMEA region continues to enjoy traction from the vigorous recovery in the southern European countries.
Lastly, the decline in earnings in France (-4.2%) was mainly attributable to lower demand in the wake of the 2015 terrorist attacks, particularly in Paris, while earnings in the Americas (-54.5%) were dampened by the economic difficulties prevailing in Brazil over the past two years.
HotelInvest detailed results – first-half 2016
The EBITDA margin excluding Sales, Marketing & Digital, the loyalty program and the acquisition of onefinestay was 49.1%, versus 48.4% in first-half 2015, a robust increase of 0.7 points.
As expected, the segment’s earnings were impacted by the implementation of the digital plan and commitments in the amount of 87 million euros this year, as well as by the acquisition of onefinestay. As such, HotelServices’ EBITDA declined to 163 million euros (-5.0% LFL); EBIT was 141 million euros, down 7.5% on a like-for-like basis.
HotelInvest’s EBIT increased by 7.4% like-for-like to €145 million, putting the margin at a solid 6.6%, a significant improvement of 1.0 points compared with the year-earlier period. The increase is attributable to sustained hotel business, notably in the United Kingdom and Germany, but also to the dynamic management of the Group’s assets over the past two years.
Full-year 2016 EBIT target
The Group’s H1 2016 results reflect contrasting market situations. With the effectiveness of its strategic plan and substantial investments, its ability to generate robust cash flows and its sound financial position, AccorHotels was able to overcome the difficulties encountered in certain contracting markets, at a time when the relative impacts of Brexit, the terrorist attacks in France and Germany, and the situation in Turkey are still difficult to measure. In this context, factoring in the consolidation of Fairmont Raffles Hotels International in the second half, the Group expects its 2016 EBIT to come within a broad range of between €670 million and €720 million. As in 2015, this range will be narrowed when the third-quarter revenue figures are published on October 18.
Events since January 1, 2016
On February 18, 2016, AccorHotels announced the acquisition of a 30% stake in Oasis Collections, the company that pioneered the “Home meets Hotel” category of accommodation, blending the value and authenticity of private rentals with high-quality hotel services.
On February 18, 2016, AccorHotels announced the acquisition of a strategic 49% stake in Squarebreak, which offers stays in private upscale properties in resort locations, primarily in France, Spain and Morocco.
On April 5, 2016, AccorHotels announced the acquisition of onefinestay, leader in luxury serviced home rentals in key worldwide gateways, for 150 million euros (£117 million). The Group plans to invest a further 64 million euros (£50 million) to accelerate the company’s international development.
On July 1, 2016, AccorHotels announced the sale of a portfolio of 85 hotels to Grape Hospitality, a European hotel platform 70% owned by Eurazeo and 30% by AccorHotels, for 504 million euros. The portfolio consists of 1 Pullman, 19 Novotel, 13 Mercure, 35 ibis, 3 ibis Styles and 14 ibis budget hotels, all of which will continue to be operated under franchise contracts and will benefit from an ambitious renovation program over the coming months.
On July 12, 2016, AccorHotels finalized the acquisition of the Fairmont Raffles Hotels International Group. This acquisition positions AccorHotels as a leading
8 player in the global luxury hotel market, giving it 154 facilities of the highest quality, 40 of which are under development, and provides the Group with solid expertise in luxury hotel management and marketing, and a substantial footprint in the North American market. A global luxury/upscale division has been created within AccorHotels, and Chris Cahill – a specialist in luxury hospitality who spent part of his career heading up Operations at FRHI – has been appointed to its helm. The deal resulted in an investment by the Qatar Investment Authority and Kingdom Holding Company of Saudi Arabia funds, and the allocation of seats on the AccorHotels Board of Directors to three of their representatives, as well as three independent directors.
On July 12, 2016, AccorHotels announced plans to turn HotelInvest into a subsidiary, with the aim of strengthening its financial resources in order to accelerate its growth, while also providing a legal structure that will ultimately enable third-party investors to hold the majority of HotelInvest’s capital. AccorHotels will use the additional financial leeway to develop its two business lines and seize new growth opportunities, thereby maximizing the Group’s overall value.
Tatiana is the news coordinator for TravelDailyNews Media Network (traveldailynews.gr, traveldailynews.com and traveldailynews.asia). Her role includes monitoring the hundreds of news sources of TravelDailyNews Media Network and skimming the most important according to our strategy.
She holds a Bachelor's degree in Communication & Mass Media from Panteion University of Political & Social Studies of Athens and she has been editor and editor-in-chief in various economic magazines and newspapers.
