Accor plans to open more than 1,200 hotels as travel demand picks up

Wednesday, June 28, 2023

Accor (ACCP.PA) plans to open more than 1,200 hotels in the next five years, increasing the number of its resorts by more than one-fifth, it said on Tuesday, the latest sign the industry is betting on strong travel demand long-term following the pandemic.

Europe’s biggest hotel group also said it plans to return around 3 billion euros ($3.3 billion) to shareholders in the 2023-2027 period via dividends and share buybacks, and raised its 2023 core earnings outlook.

The hospitality industry has benefited from higher prices and a rebound in travel demand in the wake of the pandemic, with consumers rushing to travel even as rising interest rates stoke fears of a recession and inflation erodes household purchasing power.

Accor forecast 2023 revenue per room (RevPAR) to grow by 15% to 20% amid reorganisation plans implemented in January, and expects core earnings before interests, taxes, depreciation and amortisation (EBITDA) of 920-960 million euros.

In the first quarter of 2019, Accor estimated the average price of a room at 89 euros per night. After the reorganisation, the average price was 106 euros, marking an increase of around 19%.

Chief Executive Officer Sébastien Bazin attributed growth to the confirmation of very broad international demand across different countries, and said he expected swelling demand in almost all of the group’s segments and geographies.

The French-listed company’s shares were, however, up 0.5% at 1042 GMT with analysts and traders underwhelmed by its 2023 outlook upgrade.

Accor also said it aims to grow EBITDA by 9-12% annually from 2023 through 2027, and its revPAR by 3-4% per year over the same period.

The firm plans to expand worldwide, but particularly in the Asia Pacific and Middle East.

In May it said it planned to double its presence in Saudi Arabia by 2027, opening hotels in, among other cities, the capital Riyadh, as well as Jeddah.

Peers such as Spanish Melia Hotels (MEL.MC), Stockholm-listed Scandic (SHOTE.ST), and Pandox (PANDXb.ST) have also planned an increase in the number of hotels, as the sector outlook brightens.

This is despite inflation hitting customers throughout the leisure industry on purchases such as concert tickets or cruises.

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