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Accor releases 2009 earnings, hotels revenue down 10.1 percent
In a business environment still severely hit by recession Accor reports:
Prepaid Services revenue was up 1.4% for the year, in line with the objective set last August, but was down 3.8% in the final quarter.
Hotels revenue declined by 10.1% over the year and 8.3% in the fourth quarter, which showed a slight improvement compared with previous quarters, mainly due to the first signs of stabilization in occupancy rates in December in Europe.
Full-year 2009 target for operating profit before tax and non-recurring items confirmed at between €400 million and €450 million
Consolidated revenue for 2009 totaled €7,065 million, down 7.9% like-for-like and 8.5% on a reported basis compared with 2008.
Download Accor’s fourth-quarter 2009 earnings as a PDF.
2009 revenue performance was shaped by the following factors:
-A 7.9% like-for-like decline in revenue;
-The expansion strategy, which increased revenue by €337 million, adding 4.4% to reported growth. The increase was led by the consolidation of Orbis and the opening of 27,300 rooms over the year, as well as by the €103 million impact of consolidating 49% of Groupe Lucien Barrière’s revenue since July 1, 2009.
-The impact of refocusing on Hotels and Prepaid Services (which led to the disposal of the Brazilian foodservice business), the ongoing deployment of the asset-right strategy and the loss of the onboard train services contract in France. All these factors reduced revenue by €271 million and reported growth by 3.5%.
-The 1.4% negative currency effect, which trimmed €111 million from revenue and was primarily due to the euro’s appreciation against the British pound and the Brazilian real and to the 50% devaluation in the Venezuelan bolivar. On the upside, the euro/US dollar exchange rate had a positive 0.4% impact on reported growth.
-Fourth quarter revenue came to €1,806 million, down a reported 7.2% on the year-earlier period.
On a like-for-like basis, revenue was down 7.1% year-on-year, reflecting an 8.3% contraction in the Hotels business and a 3.8% decline in Prepaid Services.
Hotels: Revenue down 10.1% like-for-like for the year
Hotels revenue for the year amounted to €5,186 million, down 9.8% as reported, reflecting the following factors:
-A 10.1% like-for-like contraction in revenue illustrates the firmer resistance of the European economies compared with the US economy.
-The impact of the Group’s expansion strategy, with 1) the opening of 27,300 rooms in 2009, attesting to the sustained expansion momentum despite the recession in the hospitality industry, and 2) the consolidation of Orbis hotels, which added 3.0% to reported growth.
-A negative 1.8% impact from the sale of hotel properties under the asset-right strategy.
-A negative 0.9% currency effect.
-Revenue for the fourth quarter alone totaled €1,296 million, a year-on-year decline of 9.6% as reported and 8.3% like-for-like.
December saw signs that occupancy rates were beginning to stabilize in every segment except Motel 6.
Upscale and Midscale Hotels
-In 2009, revenue in the Upscale and Midscale segment declined by 11.7% as reported and 11.5% like-for-like.
-While falling back 9.4%, fourth-quarter revenue showed a slight improvement in business compared with previous quarters as occupancy rates began to stabilize in December.
-The fourth-quarter improvement was less perceptible in France than in the rest of Europe, where revenue fell 11.7% during the period, compared with declines of 8.8% in the third quarter, 14.8% in the second and 10.1% in the first. Note that in France third-quarter revenue
was lifted by relatively sustained demand from leisure guests during the summer.
December RevPAR (down 5.3% like-for-like versus like-for-like declines of 9.3% in November and 19.7% in December) nevertheless showed the first signs that occupancy rates are beginning to level off, with a decline of just 1.0-point compared with declines of 4.7 points and 8.1 points in the prior two months.
-Compared with the rest of the year, Upscale and Midscale Hotel performance improved considerably in Germany (like-for-like revenue down 6.0% versus declines of 14.0% in the third quarter and 11.6% in the first half) and in the United Kingdom (up 2.1% in the fourth quarter versus declines of 8.6% in the third quarter and 10.2% in the first half).
-In Germany, like-for-like RevPAR turned sharply upward month after month in the final quarter, from a decline of 12.1% in October to a decline of 1.9% in December, with a swing to growth in the occupancy rate in December (up 0.6 points).
-In the United Kingdom, RevPAR rose a strong 9.3% in December (versus declines of 0.2% in November and 4.2% in October), while the occupancy rate increased 3.8 points during the month (versus a decline of 0.2 points in November and a gain of 2.3 points in October).
These figures demonstrate the firm resistance of operations in the leading European countries in this segment, particularly in comparison with operations in North America.
Economy Hotels
-In the Economy Hotels segment, 2009 revenue was down 5.7% as reported and 6.1% like-for-like, reflecting the economy segment’s solid resilience in Europe.
-Fourth quarter revenue, which was down 4.0% like-for-like, offers an even more compelling demonstration of the segment’s resistance, as the like-for-like decline slowed to 3.3% in France, 4.4% in Germany and 2.4% in the United Kingdom.
Like the Upscale and Midscale segment, Economy Hotels began seeing the first signs of stabilization in occupancy rates in December. Year-on-year, these rates were down just 2.0 points in France, 1.0 points in Germany and 0.5 points in the UK in December, compared with declines of 5.3 points, 3.6 points and 3.1 points respectively in November and 7.2 points, 5.9 points and 2.5 points respectively in October.
Economy Hotels in the United States
-Motel 6’s revenue for 2009 fell by 10.9% year-on-year on a reported basis and by 13.8% like-forlike.
During the year, the chain opened a record 67 new hotels under franchise agreements, driving a 21.1% increase in franchise revenue at constant exchange rates over the period.
-Fourth-quarter revenue was down 14.4% like-for-like, reflecting the lack of any signs of improvement in the hospitality business environment in the United States, contrary to Europe.
In this challenging environment, Motel 6 continued to gain market share from the competition.
Conclusion and 2009 earnings guidance
In 2009, the Prepaid Services business reported a slight 1.4% like-for-like increase in revenue, in line with the target set last August.
In the fourth quarter alone, operating revenue was up 0.2% like-for-like, while interest income, hard hit by the steep drop in interest rates, was down 31.1% like-for-like.
In the Hotels business, the fourth quarter saw an improvement in business compared with previous quarters, with the occupancy rate showing the first signs of stabilizing in December. Revenue for the quarter has demonstrated the firmer resistance both of the Hotels business in Europe compared with the United States and of the Economy segment compared with the Upscale and Midscale
segment.
Accor confirms its target for 2009 operating profit before tax and non-recurring items of between €400 million and €450 million, as indicated last August, despite the negative €40 million impact from the 50% devaluation in the Venezuelan bolivar announced on January 8, 2010.
Upcoming events
- February 24, 2010: publication of 2009 annual results
http://www.accor.com/
