Thursday, February 22, 2024
“Accor generated record-high results in 2023, with EBITDA breaking the €1 billion mark for the first time in its history. While there were numerous reasons for this success, the solid performances were above all attributable to the Group’s teams. I would like to thank them for their commitment and their know-how in an industry whose strength lies above all in the women and men on the ground daily who raise the profile of our brands with a passionate and generous sense of hospitality. Over the past year, the Group achieved growth in all segments and geographies, illustrating the strength of its asset light model, the efficiency of its organization based on the two divisions, Premium, Midscale and Economy on the one hand, and Luxury and Lifestyle on the other, the desirability of its brands, the strength of its distribution and loyalty tools, as well as its financial discipline.
While the geopolitical backdrop remains complex, 2024 is set to be rich in major international events which should continue to fuel growth and we start this new year with confidence. Accor is ideally positioned to continue its bold expansion and bring to life its vision of a pioneering, responsible hospitality industry that creates value for its shareholders and its partners.”
Fueled by robust demand throughout 2023, Accor achieved unprecedented levels of operational and financial success. Following the post-Covid recovery period in 2022, all regions and sectors experienced substantial growth. Performance metrics either met or surpassed the Group’s expectations for 2023.
Building on this strong performance and the Group’s optimistic outlook for future growth, Accor distributed a total of €676 million to its shareholders over the course of the year.
In 2023, Accor expanded its portfolio by opening 291 hotels, adding 41,000 rooms—a net network growth of 2.4% over the past year. As of December 2023, the Group boasted a hotel portfolio comprising 821,518 rooms across 5,584 hotels, with an additional pipeline of 225,000 rooms spanning 1,315 hotels.
Fourth quarter RevPAR
The Premium, Midscale, and Economy (PM&E) division experienced a 12% growth in RevPAR compared to Q4 2022, primarily driven by price increases rather than occupancy rate upticks.
The Europe North Africa (ENA) region saw an 8% increase in RevPAR relative to Q4. In France, constituting 43% of the region’s room revenue, RevPAR growth stabilized despite an unfavorable calendar due to the absence of major events like the Paris Motor Show and SIAL food show. The provinces maintained steady business levels. The United Kingdom, representing 13% of the region’s room revenue, demonstrated solid and balanced RevPAR growth between London and other areas. In Germany, accounting for 14% of the region’s room revenue, RevPAR continued to improve, particularly due to Christmas markets, although occupancy rates remained below pre-crisis levels.
The Americas region, primarily reflecting Brazil’s performances (65% of room revenue for the region), reported a 15% increase in RevPAR compared to Q4, benefiting from price increases, notably supported by congresses and events.
The Luxury & Lifestyle (L&L) division reported an 8% increase in RevPAR compared to Q4 2022, primarily due to higher occupancy rates.
The Middle East, Africa & Asia-Pacific region witnessed a notable 19% increase in RevPAR compared to Q4 2022, primarily fueled by a substantial resurgence in business across Asia. Despite the conflict in Israel, the Middle East Africa segment, comprising 26% of room revenue in the region, maintained robust price hikes. Similarly, South-East Asia, representing 29% of room revenue, saw RevPAR growth akin to the Middle East, largely driven by price adjustments and buoyed by leisure demand. Conversely, the Pacific, contributing 26% of room revenue, experienced more tempered RevPAR growth influenced by fourth-quarter occupancy rates. Meanwhile, China, contributing 19% of hotel room revenue in the region, continued its recovery trajectory with significant RevPAR growth compared to Q4, now slightly surpassing pre-crisis levels observed in the third quarter.
The Luxury segment, constituting 77% of the division’s room revenue, saw a 10% increase in RevPAR compared to Q4 2022, driven by the Asia-Pacific region. Although occupancy rates improved, they still lagged pre-crisis levels by 5 points. Lifestyle RevPAR remained stable compared to Q4 2022, with a 6% increase when adjusted for the soccer World Cup held in Qatar in Q4 2022, leading to a less favorable basis of comparison.
Revenue from the Premium, Midscale, and Economy Segment
The revenue from the Premium, Midscale, and Economy segment, inclusive of fees from Management & Franchise (M&F), Services to Owners, and Hotel Assets & Other activities of the Group’s brands in these categories, reached €2,960 million, marking a 17% increase on a like-for-like (LFL) basis compared to 2022. This growth underscores the consistent business performance observed throughout the period.
Management & Franchise (M&F) revenue amounted to €854 million, up 27% LFL compared to 2022, aligning with the increase in Revenue per Available Room (RevPAR) over the period (+24%). Further details on the regional performance of Management & Franchise are provided in subsequent pages.
Services to Owners revenue, encompassing Sales, Marketing, Distribution, and Loyalty divisions, along with shared services and hotel cost reimbursements, totaled €1,076 million, up 11% LFL compared with 2022. This increase, though more moderate than the RevPAR growth, reflects the comparison basis from the previous year, which included the rebilling of costs incurred by Accor for providing reception services during the soccer World Cup in Qatar.
Hotel Assets & Other revenue increased by 15% LFL relative to 2022. This segment, closely tied to business in Australia, was affected by a less favorable base effect due to the earlier recovery of leisure tourism compared to the rest of the Group.
Revenue generated from the Luxury & Lifestyle segment, encompassing earnings from Management & Franchise (M&F), Services to Owners, and Hotel Assets & Other activities of the Group’s Luxury & Lifestyle brands, totaled €2,175 million. This signifies a robust 22% increase on a like-for-like (LFL) basis compared to 2022. This growth mirrors the solid business performance observed over the period, mirroring the trends seen in the Premium, Midscale, and Economy divisions.
Management & Franchise (M&F) revenue reached €446 million, showing a 32% LFL increase compared to 2022, driven by the rise in RevPAR (+20%) and a significant acceleration in hotel incentive fees within management contracts. Detailed segment performance of Management & Franchise is provided in subsequent pages.
Services to Owners revenue, covering Sales, Marketing, Distribution, and Loyalty divisions, along with shared services and hotel cost reimbursements, amounted to €1,359 million, up 18% LFL compared with 2022.
Hotel Assets & Other revenue surged by 32% LFL relative to 2022, including a significant scope effect following the acquisitions of Paris Society in November 2022 and Potel & Chabot in October 2023.
Management and Franchise revenue reached €1,300 million in 2023, marking a significant 29% increase on a like-for-like basis compared to 2022. This growth is primarily attributed to the rise in Revenue Per Available Room (RevPAR) across the Group’s various geographical regions and segments, showing a 23% surge compared to the previous year. Additionally, the substantial uptick in incentive fees from management contracts further contributed to this change.
Consolidated EBITDA for the year 2023 reached an all-time high of €1,003 million. This remarkable performance was driven by the robust recovery in revenue and stringent cost management within the Services to Owners sector. Consequently, the Group achieved a slightly positive EBITDA margin for the period in line with expectations.
Premium, Midscale, and Economy EBITDA
In 2023, the Premium, Midscale, and Economy division recorded EBITDA of €750 million, marking a substantial 35% increase on a like-for-like basis compared to 2022.
Management & Franchise (M&F) EBITDA stood at €611 million, showing a noteworthy 23% rise on a like-for-like basis relative to 2022, despite the transition of personnel from the Holding to the PM&E division as part of the organizational restructuring.
Services to Owners achieved an EBITDA of €24 million for the year 2023, demonstrating slight positivity due to rigorous cost management.
Hotel Assets & Other EBITDA experienced a 10% decrease on a like-for-like basis compared to 2022. This decline in EBITDA margin was influenced by cost inflation in Australian operations following the significant rise in room rates reported in 2022. Additionally, the sharp increase in revenue from variable-rent assets in Brazil and Turkey, with lower EBITDA margins due to the nature of these assets, further exacerbated the decline.
In fiscal year 2023, the Group experienced a notable upswing in recurring free cash flow, soaring from €373 million in 2022 to €596 million in 2023, resulting in a cash conversion rate of 59%, aligning precisely with the Group’s objective of surpassing 55%. The decrease in interest paid from 2022 to 2023 was facilitated by higher interest rates on cash investments. Recurring expenditure, which encompasses “key money” from HotelServices for development alongside digital and IT investments, slightly exceeded the 2022 figure at €218 million. This uptick was consistent with the Group’s heightened focus on the Luxury & Lifestyle segment, as outlined during the Investor Day on June 27, 2023.
The positive change in working capital mainly stemmed from AccorInvest reimbursing deferred fees related to the Covid-19 crisis. Group net financial debt stood at €2,074 million as of December 31, 2023, compared to €1,658 million on December 31, 2022. As of December 31, 2023, Accor’s average cost of debt was 2.5%, with an average maturity of approximately three years, and no significant repayments due before 2026. Coupled with an undrawn credit facility of €1 billion signed in 2023, Accor held a liquidity position of €2.3 billion at the end of December 2023.
Looking ahead, the Group affirmed its medium-term growth prospects, as communicated during the Investor Day on June 27, 2023. This includes anticipated annualized RevPAR growth of 3% to 4%, average annual network expansion of 3% to 5%, and M&F revenue growth of 6% to 10% over the period from 2023 to 2027. Moreover, expectations include marginally positive EBITDA contribution from Services to Owners and EBITDA growth of 9% to 12% during the same period, with recurring free cash flow conversion exceeding 55%. The Group also plans a shareholder payout of around €3 billion over 2023-2027, including a share buy-back program of approximately €400 million scheduled for launch in 2024.
In light of the 2023 financial outcomes and the established dividend distribution strategy since 2019, which factors in recurring free cash flow and a 50% payout rate, Accor plans to propose a regular dividend of €1.18 per share at the Annual Shareholders’ Meeting scheduled for May 31, 2024. Subsequent to the Shareholders’ Meeting, the Accor Board of Directors endorsed the appointment of Anne-Laure Kiechel as an independent director, leveraging her extensive expertise in international geo-economic and financial domains. Additionally, the Board opted to extend the tenures of key executives, including Mr. Sébastien Bazin, who serves as Chairman and Chief Executive Officer, Ms. Iris Knobloch, holding positions as Vice-Chairman of the Board and Senior Independent Director, and Mr. Bruno Pavlovsky, who chairs the Appointments and Compensation Committee.
Accor’s strategic financial moves in 2023 showcased a significant shift towards its asset-light approach and portfolio optimization. The completion of divestments, including the disposal of its remaining stake in H World Group Limited and the Paris headquarters building to Valesco Group, amounted to substantial gains, totaling $1.2 billion and €460 million respectively. These transactions not only streamlined Accor’s balance sheet but also underscored its commitment to enhancing shareholder value through prudent asset management.
Furthermore, Accor’s proactive financial restructuring, marked by successful hybrid debt refinancing, share buyback programs, and securing a new €1 billion revolving credit facility, exemplified its robust financial discipline and adaptability. These initiatives were complemented by strategic acquisitions, such as Potel & Chabot, bolstering Accor’s Luxury & Lifestyle division. Looking ahead, Accor’s sale of Accor Vacation Club to Travel + Leisure signals continued focus on strategic partnerships and asset optimization, aligning with its overarching “Asset Light” strategy for sustainable growth and value creation.
Tags: Accor, ebitda, Sébastien Bazin
Sunday, April 28, 2024
Sunday, April 28, 2024
Sunday, April 28, 2024
