Accor Shows Confidence With Dividend Increase

February 22, 2012

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French hotel group Accor showed confidence in its ability to tap recovering demand this year as it handed investors a bigger-than-expected dividend after beating full-year profit forecasts.

The world's fourth-largest player behind InterContinental, Marriott and Starwood Hotels, said on Wednesday robust emerging markets should underpin growth, with business holding up despite an uncertain economic climate.

"The trends observed in the fourth-quarter... continued into January... (with revenue per available room) figures stable in Europe and strong revenue growth in emerging markets," chief executive Denis Hennequin told reporters. "The economy segment in Europe and the United States is also continuing to benefit from rising room rates."

Chief financial officer Sophie Stabile said bookings for January and February were good, adding: "So far, we have not seen a dip in our main markets except southern Europe".

Some analysts worry that Accor, which makes 70 percent of its sales in Europe, is more exposed than peers to a region where the business climate might be tougher this year.

However, there have been few signs of a slowdown in hotel demand in most European markets, and Accor said it was banking on demand to be supported by events including the Olympic Games in London, the UEFA Euro 2012 football championship in eastern Europe, and business fairs in Germany.

Last week, the world No. 1 hotelier, InterContinental, said that, despite the euro zone crisis, it was upbeat about the future as people still wanted to travel for business and leisure, and emerging markets grow strongly.

Rivals Hyatt Hotels, Marriott International and Starwood have each reported increased revenue in recent weeks, having benefited from rising business travel.

Accor posted an 18.8 percent rise in 2011 operating profit, above forecasts, driven by higher occupancy rates and a gradual recovery in average room rates.


Earnings before interest and tax (EBIT) reached EUR€530 million (USD$703 million), at the top end of the company's guidance of EUR€510 million - EUR€530 million.

Accor, which owns 4,200 hotels worldwide, said it would pay a dividend of EUR€1.15, up from EUR€0.62.

It is to accelerate its expansion in fast-growing Asia-Pacific markets and its shift to a less cash-consuming asset-light business model while completing the rebranding of its Ibis economy hotel network.

"The growth story of Accor through a bigger and asset lighter pipeline is becoming more credible," a French broker said.

With operations in 90 countries ranging from the luxury Sofitel chain to budget Ibis and Motel 6 operations, Accor has a market capitalisation of EUR€5.8 billion.

It confirmed its objective of opening 40,000 rooms in 2012, having opened a record 38,700 last year, mainly under franchise and management contracts.

The group said it was confident about its 2011-15 asset disposal programme, which involves the sale of 400 hotels with a EUR€2.2 billion impact on adjusted net debt and restructuring of leased assets.

Accor more than halved net debt to EUR€226 million at the end of 2011, helped by the sale of its Lenotre gourmet catering unit and its stake in casino group Lucien Barriere.

In the United States, the troubled Motel 6 chain continued its restructuring and its shift to an asset-light model. Accor plans to sell or franchise 100 Motel 6 hotels this year.

While continuing to restructure Motel 6, Accor would review any offer to buy the chain it might get, CFO Stabile said.