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Accor reports record results for 2014

The group's new organization established at the beginning of last year appears to have born its fruit in 2014. Accor closed the year with 3.8% growth in its turnover on a like-for-like basis, and by 11.7% for its operating results.

A little over a year after the implementation of its new economic model divided into HotelServices, for its hotel operations divisions, and HotelInvest, for its role as hotel owner and investor, Accor posts growth in its annual results. The group ended 2014 with net results of 223 million euros, or more than the 126 million recorded in 2013. The year is marked by record growth in operating results (EBIT) that reached  602 million euros, or an 11.7% increase on a like-for-like basis. The group will distribute 218 million euros in dividends to its shareholders versus 183 in 2013 (+19%).

The year 2014 was particularly marked by a net investment of one billion euros in the Group's real estate supply, its strengthened partnership with Orbis in Central Europe, its acquisition of a stake in the capital of Mama Shelter, the launch of its 225 million euro Digital Plan, and the signature of a long-term alliance with the Chinese group Huazhu.

"The in-depth transformation being carried out by Accor started to pay off in 2014, with the Group posting excellent results in both its businesses - HotelServices and HotelInvest - and strengthening its leadership position. In 2015, the economic environment is expected to continue to vary significantly from one region to another. In addition, along with the rest of the industry, we must meet the challenges created by the digital transition, which is spurring us to rethink our businesses, strengthen our ties with our customers whose needs and habits are changing, and adjust our corporate culture and operating procedures. Accor is a robust company with strong brands, dedicated teams and clearly defined objectives. This year, we will demonstrate once again our capacity to deliver on our objectives with determination and discipline - driving further progress in our strategy and our operating and financial performance and becoming the best performing and most highly valued hotel group for our guests, our partners, our employees and our shareholders," said Sébastien Bazin, Chairman and CEO of Accor.

Accor's consolidated revenue for 2014 was 5,454 million euros, up 3.8% year-on-year at a constant scope of consolidation and exchange rates over 2013. These results reflect strong momentum in the group's key markets, with 9.8% growth in the MMEA (Mediterranean, Middle East, Africa), by 7.2% in America, 4.7% in the NCEE zone (Central, Northern and Eastern Europe) and by 1.9% in Asia Pacific. Growth remains limited in France (+0.4%), which nonetheless saw its results improve in the second second semester thanks to the Mondial de l'Automobile and other exhibitions. However, it was severely penalized by the 7% increase in the VAT to 10%, which had little influence on consumer prices. Thus, according to Sophie Stabile, CFO of the Group, the increase in the VAT in France "impacted the groups results by 42 million euros, which were not compensated for by the 14 million received through the CICE."

Regarding financial results, growth in 2014 is above all tied to the markets in Northern Europe, particularly Germany and the United Kingdom, that are part of Accor's NCEE zone. Of the 80 million euros growth in the operating results (EBIT), 70 come from this region:



It may also be observed that HotelInvest, the division dedicated to hotel ownership and investments, drove growth in the operating results in Northern and Eastern Europe. On a like-for-like basis, HotelInvest's revenue grew by 3%, to reach 4.8 billion euros. The division's EBIT increased by 26.9% to 292 million euros. This may be attributed to the improved dynamic on local markets as well as to restructuring operations carried out since HotelInvest's creation. In 2014, the Group acquired three hotel portfolios previously operated under variable lease management contracts. These portfolios (Moor Park, Axa and Tritax) were acquired for a total of 980 million euros and represent 110 hotels, or 14,072 rooms. Sophie Stabile, the group's CFO, estimates the savings on rent (and thus EBIT earnings) at "30 million euros on the second semester alone for the portfolios Moor Park and Axa." At the same time, 48 hotels were restructured, including 30 hotels under leases and 18 hotels under direct ownership, mostly Ibis units in France and Germany. In 2015, the group hopes to restructure more than twice as many properties under direct ownership [or surpass one hundred real estate operations, editor's note]. The goal is to make HotelInvest the leading real estate owner in Europe, with a portfolio focused on the economy and midscale segments.

Various refinancing strategies to support the Group's strategy were carried out for a total of 3.7 billion euros in 2014. As Accor had already invested 1 billion in 2014 to grow the group's portfolio, it had a cash reserve of 2.7 billion euros, which, according to Sophie Stabile "will not be used to refinance a debt." The group did not respond to questions regarding the future allocation of these funds.

As far as concerns the hotel operator activity, the business volume of HotelServices progressed by 3.9% to 11.9 billion euros at constant exchange rates, led by the rapid development of hotel facilities, particularly in emerging markets. 29,556 new rooms, for 208 hotels, joined the Accor network in 2014, 91% of which were through management and franchise contracts and 71% outside Europe, and the pipeline of the group now has 156,000 rooms. HotelServices closed the year with 1.2 billion euros in revenue, of 5.5% more than in 2013 on a like-for-like basis, and an EBIT of 376 million euros.
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