Accor released full-year and Q4 2023 results. Driven by demand, Accor was able to set records in terms of operating and financial performance. All regions and segments experienced growth after 2022 was marked by the post-COVID pandemic recovery. All performance indicators were in line with or exceeded group guidance in 2023.
This performance and the group’s confidence in continued business growth enabled the group to return a total of €676 million to its shareholders during the year.
In 2023, Accor opened 291 hotels, corresponding to 41,000 rooms, i.e., net network growth of 2.4 percent in the last 12 months. In end-December 2023, the group had a hotel portfolio of 821,518 rooms (5,584 hotels) and a pipeline of 225,000 rooms (1,315 hotels).
Sébastien Bazin, chairman and CEO of Accor, said, “Accor generated record-high results in 2023, with EBITDA breaking the €1 billion mark for the first time in its history. While there were numerous reasons for this success, the solid performances were above all attributable to the group’s teams. I would like to thank them for their commitment and their know-how in an industry whose strength lies above all in the women and men on the ground daily who raise the profile of our brands with a passionate and generous sense of hospitality. Over the past year, the group achieved growth in all segments and geographies, illustrating the strength of its asset-light model, the efficiency of its organization based on the two divisions, Premium, Midscale, and Economy on the one hand, and Luxury and Lifestyle on the other, the desirability of its brands, the strength of its distribution and loyalty tools, as well as its financial discipline.
While the geopolitical backdrop remains complex, 2024 is set to be rich in major international events which should continue to fuel growth and we start this new year with confidence. Accor is ideally positioned to continue its bold expansion and bring to life its vision of a pioneering, responsible hospitality industry that creates value for its shareholders and its partners.”
Fourth Quarter RevPAR
The Premium, Midscale, and Economy (PM&E) division grew its RevPAR by 12 percent versus Q4 2022, still driven more by prices than the rise in occupancy rates.
- The Europe North Africa (ENA) region posted RevPAR up 8 percent relative to Q4
- In France, which represents 43 percent of the region’s room revenue, RevPAR growth stabilized. The Paris region has been impacted by an unfavorable calendar leveled off with major events in 2023, such as the Paris Motor Show, the SIAL food show, and the SIMA Agriculture show, which did not take place during the year. The provinces continued to enjoy steady business levels.
- The United Kingdom, which represents 13 percent of the region’s room revenue, posted solid and balanced growth in RevPAR between London and other
- In Germany, 14 percent of the region’s room revenue, RevPAR continued to improve compared with previous quarters through Christmas markets. Nevertheless, occupancy rates still harbor strong upside potential. Indeed, they remain behind pre-crisis levels.
- The Middle East, Africa, and Asia-Pacific region reported a 19 percent increase in RevPAR compared with Q4 2022, benefiting from a rebound in business in Asia.
- The Middle East Africa, 26 percent of room revenue in the region, continued to apply strong price increases buoyed by leisure demand despite the conflict in Israel.
- South-East Asia, 29 percent of room revenue in the region, saw RevPAR growth comparable to the Middle East, mainly driven by prices and supported by leisure demand.
- The Pacific, 26 percent of room revenue in the region, is now entering a normalization phase with more measured RevPAR growth, driven by occupancy rates in the fourth quarter.
- In China, 19 percent of hotel room revenue in the region, the recovery continued with marked RevPAR growth compared with Q4 business is now slightly higher than the level seen in 2019, as was the case in the third quarter.
- The Americas region, which mainly reflects the performance of Brazil (65 percent of room revenue for the region), reported RevPAR growth up 15 percent compared with Q4 business continued to benefit from price increases, notably supported by congresses and events that took place over the period.
The Luxury & Lifestyle (L&L) division reported an 8 percent increase in RevPAR compared with Q4 2022, driven mainly by higher occupancy rates.
- The Luxury segment, which accounts for 77 percent of the division’s room revenue, posted a 10 percent increase in RevPAR compared with Q4 2022. This increase was driven by the Asia-Pacific region. Although occupancy rates improved clearly, they are still lagging pre-crisis levels by 5 points.
- Lifestyle RevPAR was stable compared with Q4 2022. The more rapid recovery in this segment in 2022 led to a less favorable basis of comparison, amplified by the soccer World Cup which took place in Qatar in Q4 2022. Adjusted from this event, RevPAR in the Lifestyle segment increased by 6 percent over the quarter.
Consolidated Revenue
The group reported revenue of €5,056 million in 2023, up 18 percent like-for-like (LFL) compared with 2022. This growth breaks down into a 17 percent increase for the PM&E division and 22 percent for the Luxury & Lifestyle division.
Scope effects, linked mainly to the full-year effect of Paris Society (acquired in 2022) and the takeover of Potel & Chabot (in October 2023) in the Luxury & Lifestyle division (the Hotel Assets & Other segment), positively contributed €285 million.
Currency effects had a negative impact of €228 million, stemming mainly from the Australian Dollar (down 7 percent), the Egyptian Pound (down 40 percent), and the Turkish Lira (down 32 percent).
Premium, Midscale, and Economy Revenue
PM&E includes fees from Management & Franchise (M&F), Services to Owners, and Hotel Assets & Other activities of the group’s PM&E brands and generated revenue of €2,960 million, up 17 percent LFL versus 2022. This increase reflects the solid business levels recorded over the period.
M&F revenue stood at €854 million, up 27 percent LFL versus 2022 and in line with the increase in RevPAR over the period (up 24 percent).
Services to Owners revenue, which includes the Sales, Marketing, Distribution, and Loyalty division as well as shared services and the reimbursement of hotel costs, came to €1,076 million up 11 percent LFL compared with 2022. This increase, which was more measured than RevPAR growth, reflects the comparison basis from the previous year which included the rebilling of costs incurred by Accor as part of its reception services for supporters during the soccer World Cup in Qatar.
Hotel Assets & Other revenue was up 15 percent LFL relative to 2022. This segment, closely linked to business in Australia, was impacted by a less favorable base effect owing to the recovery in leisure tourism which materialized earlier than for the rest of the group.
Luxury & Lifestyle Revenue
Luxury & Lifestyle includes fees from M&F, Services to Owners, and Hotel Assets & Other activities of the group’s Luxury & Lifestyle brands and generated revenue of €2,175 million, up 22 percent LFL versus 2022. This increase also reflects business levels over the period, as was the case for the PM&E division.
M&F revenue stood at €446 million, up 32 percent LFL versus 2022, driven by the increase in RevPAR (up 20 percent) and a sharp acceleration in hotel incentive fees in management contracts.
Services to Owners revenue, which includes the Sales, Marketing, Distribution, and Loyalty division as well as shared services and the reimbursement of hotel costs, came to €1,359 million, up 18 percent LFL, compared with 2022.
Hotel Assets & Other revenue was up 32 percent LFL relative to 2022. It included a scope effect following the takeover of Paris Society in November 2022 and Potel & Chabot in October 2023.
Management & Franchise Revenue
M&F revenue came to €1,300 million, up 29 percent LFL compared with 2022. This change reflects RevPAR growth in the group’s different geographic regions and segments (up 23 percent compared with 2022) amplified by the sharp increase in incentive fees under management contracts.
Consolidated EBITDA
Consolidated EBITDA came to €1,003 million for 2023, a record-high level. The performance stemmed from the recovery in revenue and discipline in costs of Services to Owners, enabling the group to post marginally positive EBITDA for the period as expected.
Premium, Midscale, and Economy EBITDA
The PM&E division generated EBITDA of €750 million, up 35 percent LFL compared with 2022.
M&F reported EBITDA of €611 million, up 23 percent LFL compared with 2022, despite the transfer of staff from the holding to the PM&E division as part of the new organization.
Services to Owners EBITDA came to €24 million in 2023, slightly positive as a result of strict cost control.
Hotel Assets & Other EBITDA was down 10 percent LFL relative to 2022. The decline in the EBITDA margin reflected cost inflation in activities in Australia after the sharp increase in room prices reported in 2022. This decline was also amplified by the sharp increase in revenue from variable-rent assets in Brazil and Turkey with a lower EBITDA margin owing to the nature of these assets.
Luxury & Lifestyle EBITDA
The Luxury & Lifestyle division generated EBITDA of €354 million, up 82 percent LFL relative to 2022.
M&F business posted EBITDA of €298 million, up 43 percent LFL versus 2022, reflecting the benefits of the operating leverage of the business.
Services to Owners EBITDA came to €25 million in 2023, also slightly positive as a result of strict cost control.
Hotel Assets & Other EBITDA mostly reflected the integration of Paris Society since end-2022.
Net profit
Net profit group share was €633 million in 2023, compared with €402 million in 2022.
In 2023, the share of net profit of equity-accounted investments increased to €44 million, versus €33 million in 2022, primarily driven by AccorInvest, which enjoyed a rebound in business, particularly in Europe.
Cash Flow Generation
During FY 2023, group recurring free cash flow improved from €373 million in 2022 to €596 million in 2023. The cash conversion rate therefore came to 59 percent, in line with the group’s objective of “higher than 55 percent.”
The interest paid decreased from 2022 to 2023, benefiting from the rise in interest rates on cash investments.
Recurring expenditure, which includes “key money” paid by HotelServices for development as well as digital and IT investments, was slightly higher than in 2022 at €218 million, given the group’s acceleration in the Luxury & Lifestyle segment, in line with the guidance provided at the Investor Day on June 27, 2023.
The change in working capital, which was positive, reflects the reimbursement of the balance of the fees by AccorInvest which had been subject of a deferral of payment in the context of the COVID-19 pandemic.
Group net financial debt at Dec. 31, 2023, came to €2,074 million, versus €1,658 million at Dece. 31, 2022.
At December 31, 2023, Accor’s average cost of debt was 2.5 percent with an average maturity of around three years, with no major repayments due before 2026.
At end-December 2023, combined with the undrawn credit facility of €1 billion signed in 2023, Accor had a liquidity position of €2.3 billion.
Outlook
The group confirmed its medium-term growth prospects as disclosed during the Investor Day on June 27, 2023:
- Annualized RevPAR growth of between 3 percent and 4 percent (CAGR 2023-27)
- Average annual network expansion of between 3 percent and 5 percent (CAGR 2023-27)
- M&F revenue growth of between 6 percent and 10 percent (CAGR 2023-27)
- A marginally positive EBITDA contribution from Services to Owners
- EBITDA growth of between 9 percent and 12 percent (CAGR 2023-27)
- Recurring free cash flow conversion in excess of 55 percent
A shareholder payout of around €3 billion over 2023-2027 including notably a share buy-back program for an amount of around €400 million to be launched during 2024.
