PARIS, 24 April 2020: Accor’s consolidated first-quarter 2020 revenue totalled EUR768 million, down 17% as reported and 15.8% like-for-like during the first quarter of 2020.
RevPAR fell by 25.4%, reflecting the sharp deterioration in the environment due to the worldwide spread of the Covid-19 pandemic, first in Asia-Pacific (-33.7%) and then in other regions, including Europe (-23.2%) and North America (-22.2%).
Changes in the scope of consolidation (acquisitions and disposals) had a negative impact of -EUR7 million largely due to the disposal of Mövenpick leased hotels.
As of 22 April 2020, 62% of the group’s hotels are closed representing more than 3,100 units. At end-March 2020, the group had a portfolio of 746,903 rooms (5,085 hotels) and a pipeline of 208,000 rooms (1,202 hotels), of which 76% in emerging markets.
Revenue drop
The group reported first-quarter 2020 revenue of EUR768 million, down 15.8% like-for-like. This decrease reached -17.5% for Hotel Services and -13.0% for Hotel Assets. New Businesses revenue was down 13.8% like-for-like.
Hotel Services
Hotel Services, which operated 5,085 hotels (746,903 rooms) under franchise agreements and management contracts at the end of March 2020, reported a 17.5% like-for-like decrease in revenue, to EUR€540 million. This decline reflects the rapid Covid-19-related deterioration in RevPAR.
Revenue in the Management & Franchise (M&F) business was down 34.9%, with the performance hit by the gradual spread of the virus in various regions.
In the Asia Pacific, RevPAR was down 33.7%, reflecting the deterioration that began a month earlier than in Europe.
In China, RevPAR fell by 67.7% in first-quarter 2020. The epicentre of the pandemic is still affected by Covid-19, but initial signs of an improvement can be seen in the pick-up in occupancy rates and in the restaurant business. Average prices remain low as the rooms are mainly being used by medical personnel or for quarantine measures.
In Australia, where Covid-19 has had a more limited impact, the decline in RevPAR was somewhat less pronounced at 18.2%. This decline was also mitigated by the hotels being used for quarantine, which had a positive short-term impact on RevPAR.
Despite the setbacks, the group continues to expand. During Q1, Accor opened 58 hotels, representing nearly 8,000 rooms. At the end-March 2020, the group’s pipeline was stable and comprised 1,202 hotels and 208,000 rooms, of which 76% in emerging markets.
New Businesses
New Businesses (concierge services, luxury home rentals, private sales for luxury hotel stays, and digital services for hotels) generated revenue of EUR32 million, down 13.8% like-for-like from EUR37 million in 2019.
Covid-19’s impact
The rapid changes in the environment, with the virus spreading to all continents, and their impact on the hotel business are unprecedented. Visibility is currently not high enough for the group to estimate the financial impact this crisis will have on its results and financial position for the fiscal year 2020.
For the first quarter, Accor estimates a EUR170 million EBITDA shortfall. This amount reflects the gradual closure of a majority of its portfolio in March. It only very partially incorporates the positive impacts of the cost-saving measures taken in end-March. These are ramping up and will produce most of their results in the coming months. These measures include:
A travel ban, hiring freeze, and reduced schedules or furloughing for 75% of global head office teams for Q2, resulting in a minimum EUR60 million reduction in G&A for 2020.
A review of the group’s recurring investment plan for 2020 that could result in a EUR60 million reduction in capital expenditures.
The significant cost reduction (sales, marketing, IT) to offset the drastic fee decrease.
April and May are expected to be the most difficult months of the year, with very low occupancy rates and strong uncertainty about the timing and lockdown relaxation as well as the pace for border reopenings.
However, a few markets are showing some positive signs, primarily China, where there are first indications of recovery.
Source: Accor
