Like for like third quarter 2017 revenue up
Third-quarter 2017 business activity was strong in the vast majority of the Group’s markets. Revenue totaled €504 million, up 6.4 percent at constant scope of consolidation and exchange rates, and up 7.2 percent as reported.
Commenting on the announcement, Sébastien Bazin, Chairman and Chief Executive Officer, said: “AccorHotels delivered another robust performance in the third quarter. The positive operating trends observed in our key markets in the first half were confirmed, and early signs of a recovery emerged in Latin America. The Group continued its rapid development. In the course of the quarter, our hotel base crossed the symbolic mark of 600,000 rooms and our pipeline reached a record level, reflecting the increasingly strong attractiveness of our brand portfolio, which now includes Orient Express and Nextdoor, and will soon extend to
Mantra, BreakFree and Peppers. This favorable trend is expected to continue until the end of the year, allowing us to reach the upper end of the target EBIT range announced in July.”
Highlights of the period
- Sustained growth in all of the Group’s markets
- Opening of 73 hotels and more than 11,000 rooms
- More than 600,000 rooms opened and a record pipeline of 178,000 rooms
- Signing of agreements for the acquisition of Gekko and Mantra Group
- Partnership with SNCF for the development of Orient Express
- Partnership with Bouygues Immobilier for the development of Nextdoor
On July 12, 2016, AccorHotels announced its intention to turn HotelInvest into a subsidiary and dispose of the majority of it, united under AccorInvest. In accordance with IFRS 5, the assets held for sale have been placed in a separate item on the balance sheet and in the income and cash flow statements. The 2017 data presented in this press release reflect this accounting treatment.
Accordingly, the Group is now structured around the following business lines:
- HotelServices, which houses the hotel franchisor and operator business, as well as activities related to hotel operations.
- New businesses, at this stage combining FastBooking, onefinestay and John Paul (previously part of HotelServices), as well as Availpro, VeryChic, TravelKeys and SquareBreak, consolidated since the current half-year.
- Hotel assets, which include HotelInvest assets not transferred to AccorInvest, mainly corresponding to Orbis, and hotels operated under lease agreements based on a percentage of EBITDAR (with no minimum guarantee, also known as management leases).
Solid Growth in Revenue
With solid growth for HotelServices (+3.5 percent) and the New Businesses (concierge services, luxury home rentals and digital services for independent hotel operators, +5.6 percent), the Group recorded revenue growth of 6.4 percent at constant scope of consolidation and exchange rates (LFL) in the third quarter of 2017. Revenue derived from the hotel assets held by the Group, mainly in Central Europe and
Brazil, grew by a substantial 7.2 percent.
Changes in the scope of consolidation (acquisitions and disposals) contributed €18.7 million (+4.0 percent) to revenue growth, thanks in particular to the New Businesses.
Currency effects had a negative impact of €15.1 million, attributable primarily to the Egyptian pound (-€9 million), the Turkish lira (-€2.2 million) and the US dollar (-€1.8 million).
Positive Momentum for Hotelservices
HotelServices, which operated 4,209 hotels (604,000 rooms) under franchise agreements and management contracts at the end of September 2017, reported a 3.5 percent increase in revenue like-for-like to €442 million. This growth reflected the impact of very strong business levels in the majority of regions, except South America, where Brazil appears to have reached the low point of the cycle, resulting in an increase in the region’s occupancy rate for the first time in three years.
Consolidated RevPAR was up 4.5 percent.
In France & Switzerland, revenue was up 2.3 percent on a like-for-like basis. This growth reflects sound levels of business, with RevPAR up sharply (+5.0 percent) driven by a 4.2-point increase in the occupancy rate, with a slight decline in prices (-0.9 percent) partially offset by changes in the scope of consolidation, including the sale of 62 hotelF1 venues.
- Paris reported a strong increase in RevPAR (+6.6 percent), particularly in the leisure segment (+21 percent), while volumes of corporate room nights remained robust (+3 percent).
- Regions were also up (+3.8 percent), again with a pronounced recovery in the leisure segment (+6 percent), notably on the Côte d’Azur.
Europe posted strong like-for-like revenue growth (+7.9 percent), driven by RevPAR growth of 7.8 percent, all segments combined
- The United Kingdom performed very well, with RevPAR up 4 percent over the quarter. Performance was mixed between London (+0.9 percent), where the occupancy rate edged down, and Regions (+6.6 percent), with sustained business in most major cities driven by “staycations” as British holidaymakers opted for domestic stays in the wake of the decline in the sterling exchange rate.
- RevPAR increased by 2.9 percent in Germany, despite a weak trade fair calendar. Business was notably driven by the G20 meeting in Hamburg in July, not to mention the great success of the Munich Oktoberfest, a year after the attacks that affected the Bavarian capital. RevPAR in Eastern Europe grew by 8.0 percent, supported by an economy that is booming across the entire region, notably in Hungary (+18.8 percent), and by the renovations carried out in 2016.
- The Iberian Peninsula continued its recovery, recording strong business levels once again, with RevPAR growth of 12.3 percent.
The Middle East & Africa region recorded a 1.2 percent increase in revenue, with contrasting situations between Morocco and Egypt, where business was very robust, and a significantly more complex environment in the Gulf region.
The Asia-Pacific region performed very well, posting 4.1 percent growth driven by the luxury and midscale segments (RevPAR up 6.2 percent) and persistently strong development.
North America, Central America & the Caribbean enjoyed very strong growth (+14.6 percent), bolstered by a 6.4 percent increase in RevPAR, particularly in the Luxury segment (6.8 percent), thanks to the Fairmont hotels, which enjoyed a substantial increase in activity in Canada (+15.3 percent) thanks to a low Canadian dollar. Overall, Canada recorded a 14.0 percent increase in RevPAR, while business stabilized in the United States (+0.1 percent).
Lastly, despite early signs of a recovery, the situation remains challenging in South America and particularly in Brazil, notably in Rio. Revenue was down 15.3 percent across the region. However, there was an upturn in the average occupancy rate, which increased by 0.4 pt this quarter, ending a decline spanning three consecutive years.
AccorHotels Crosses the Threshold of 600,000 Rooms
The Group’s development continues at a rapid pace. During the third quarter, AccorHotels opened 73 hotels, representing more than 11,000 rooms. This took the Group across the threshold of 600,000 rooms, notably with the opening of its 800th hotel in the Asia-Pacific region. At the end of September 2017, the Group’s pipeline comprised 992 hotels and 178,000 rooms, of which 81 percent in emerging markets and 47 percent in the Asia-Pacific region. As indicated, organic development is expected to exceed 40,000 rooms in 2017, a record performance for the Group.
Strong Growth in New Business
In the nine months to end-September 2017, revenue from New Businesses amounted to €32 million, compared with €13 million at end-September 2016, an increase of 5.6 percent on a like-for-like basis and more than 150 percent as reported, following the consolidation of John Paul, SquareBreak, TravelKeys, VeryChic and Availpro since the third quarter of 2016. On October 2, AccorHotels announced the acquisition of Gekko to round out its range of hotel distribution solutions dedicated to business customers, thereby creating a global leader in B2B hotel distribution. John Paul’s integration into the Group is continuing at a fast pace; it has taken charge of Customer Care, and is managing the AccorLocal project, which will be launched soon.
Hotel Assets: Strong Performance in Central Europe
Overall, the Hotel Assets business generated revenue of €170 million, up 7.2 percent on a like-for-like basis. That growth is lead to particularly strong performance of Orbis in Central Europe, that widely offset very muted business level in Brazil, and especially in Rio.
In light of these factors and the expected continuation of the trends observed since the beginning of the year in its various markets, the Group expects to reach the upper end of the target EBIT range of between €460 million and €480 million announced in July.