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Accor announces a new development strategy

The Accor hotels group has announced the creation of two new structures within its business model that will help it maximize profitability by improving relations on both owner and client sides of the equation. The two new structures are HotelServices and HotelInvest.HotelServices will be a fee-oriented operator and brand franchisor, with a portfolio of 3,600 hotels for 460,000 rooms under 14 brands worldwide. The segment breakdown consists of 46% in economy, 40% in the midscale, and 14% in luxury/upscale. The division will look to increase fees through improving services offered to hotel owners, to increase loyalty through higher customer satisfaction and better management of OTAs, and to further differentiate the three hotel segments. Because of the nature of this division, its reporting tools will be similar to those of a franchisor brand, with a focus on hotel supply and pipeline, demand metrics (occupancy, ADR, RevPAR), profitability offered to investors (EBITDAR, EBITDA, Free Cash-Flows) and fees generated.HotelInvest will be an owner and investor, with a goal to position itself as the first hotel investor in the economy & midscale segments. Its portfolio includes 1,400 hotels, 85% located in Europe, with 300 in full ownership. HotelInvest will be oriented towards delivering cash-flow and reducing volatility, managing and rationalizing the asset portfolio, developing through a selective and profitable asset strategy.  The group also announced a significant strategic shift: it will cease to develop through leases and to sell owned hotels (except for structurally underperforming assets), and focus back on selective hotel ownership. Its 300 owned hotels generated 50% of the division's pro forma NOI in 2012, and the group seeks to bring this ratio to 75%. Key performance indicators for HotelInvest will mirror its real estate investor profile, with a focus on NOI, Capital Expenditures allocation to existing and new assets, net present value of portfolio assets, leverage ratio and rate of Return on Investments.Based on 2012 pro forma figures, HotelServices' revenue stands at 1,119 million euro, with a 387 M€ EBITDA (34.6% of revenue); HotelInvest's revenue stands at 5,122 million euro with a 531 M€ EBITDA (10.4% of revenue, and 58% of the total for the two divisions).Accor also reshuffles its management structure with a new geographical division and three segment profiles: Budget & Economy; Midscale; Upscale & Luxury. To oversee the implementation of this new strategy, Accor will be managed by a new 10-member Executive Committee which will include the five regional heads of operations. The new team will implement this model to enhance clarity, agility and accountability in the decision process. Sven Boinet, a former Key Executive of the group, joins the Executive Committee as Group Managing Director, Chief Transformation Officer, Human Resources and Legal Affairs.“Accor is a strong and unique group poised to derive benefit from rich opportunities. However, it deserves a much higher ambition to create sustained value. It requires the in-depth, rapid transformation of both its business model and its organization, as well as a clear and long term vision, and to stay the course. With this new strategy, our aim is to unlock Accor’s full potential through its two core activities and maximize value creation for shareholders.”, said, Sébastien Bazin, Chairman and CEO of Accor.


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