Accor‘s half-year report shared information including Q2 2022 RevPAR was above 2019 levels with improvement in profitability and cash flow generation. In addition, Accor’s revenue was up 109 percent.
The group’s business rebounded significantly in H1 2022 after two years of pandemic-related disruptions in the tourism and hospitality industry. In Q2 2022, activity recovered to levels close to, if not above, the 2019 levels in almost all Accor geographies. The only laggards were China, which is impacted by travel restrictions as part of its strict enforcement of a “zero-COVID” policy, and South East Asia, which is dependent on Chinese visitors.
This rebound reflects both the recovery of the number of business and leisure domestic guests and border reopenings, which accelerated the return of international travelers. It was accompanied by a sharp increase in prices, driven by demand, and emphasized by inflation.
During H1 2022, Accor opened 85 hotels, representing 11,700 rooms with net system growth of 1.8 percent in the last 12 months. As of June 30, 2022, the group had a hotel portfolio of 777,945 rooms (5,300 hotels) and a pipeline of 212,000 rooms (1,215 hotels). For 2022, the group is confirming its forecast of net unit growth in the network of around 3.5 percent.
Consolidated Revenue
The group reported H1 2022 revenue of €1,725 million, up 97 percent like-for-like compared with H1 2021. By activity, this growth breaks down into a 119 percent increase for HotelServices and 57 percent for Hotel Assets & Other. To provide a comparison with RevPAR (change presented versus 2019 throughout this release), the like-for-like decline in revenue versus H1 2019 is 10 percent.
Changes in the consolidation scope, mainly due to the consolidation of Ennismore and the reopening of Pullman Montparnasse, contributed positively by €31 million. Currency effects had a positive impact of €69 million, mainly due to the U.S. dollar (9 percent).
HotelServices Revenue
HotelServices, which includes fees from Management & Franchise (M&F) and Services to Owners, reported €1,276 million in revenue, up 119 percent like-for-like versus H1 2021 (down 12 percent like-for-like versus H1 2019). This increase reflects the significant recovery seen in the first half of the year.
Revenue in Management & Franchise (M&F) stood at €434 million, up 153 percent like-for-like versus H1 2021 (down 15 percent like-for-like versus H1 2019), with regional performances correlated to the business recovery in the considered countries. In general, the slightly sharper decline in M&F revenue compared with RevPAR (down 11 percent in H1 2022 versus H1 2019) can be attributed to the decrease in incentive fees based on the hotel operating margin generated from management contracts.
Consolidated RevPAR was down 11 percent overall in H1 2022 versus H1 2019 and up 1 percent in Q2 2022 versus Q2 2019. These figures reflect a month-after-month sequential improvement in business with a sharp increase in prices, driven by demand and emphasized by inflation. Therefore, activity reached levels close to, or even higher than 2019 levels in almost all of our regions in the second quarter.
In Q2 2022, RevPAR in South Europe was 2 percent above the Q2 2019 level:
- In France, Q2 2022 RevPAR was 3 percent above the Q2 2019 level. The recovery of international travelers helped Paris to close the gap with the province, both now above 2019 levels in Q2. Prices were higher than those of the same period in 2019, with a favorable combination of public events in May.
- In Spain, RevPAR was up 2 percent in Q2 2022 versus Q2 2019.
In Q2 2022, RevPAR in North Europe was down 7 percent versus Q2 2019, but business improved sequentially month after month:
- In the United Kingdom, the strength of the recovery was comparable to that seen in France. Both London and the province recovered to RevPAR levels above those of Q2 2019.
- In Germany, which took longer to lift its health restrictions related to COVID, business recovered at a slower pace. Nevertheless, in June, the country’s RevPAR performance came close to the levels recorded in neighboring countries.
RevPAR continued to improve sequentially in Asia-Pacific (up 25 percentage points between Q1 2022 and Q2 2022). It was down 18 percent in Q2 2022 versus Q2 2019.
- Pacific confirmed the recovery already seen in Q1 2022 and ended the second quarter up 9 percent versus Q2 2019. The reopening of internal and external borders by the end of 2021 accelerated this recovery.
- China saw a slight month-after-month pick-up in business in Q2 2022. However, the restrictions implemented as part of the strict enforcement of its “zero-COVID” policy adversely affected its performance and resulted in a 38 percent decline in RevPAR versus Q2 2019.
- In South East Asia, RevPAR was down 31 percent in Q2 2022 versus Q2 2019. Although the main travel restrictions have been lifted, the region’s dependence on Chinese visitors had an adverse impact on the recovery speed.
In the India, Middle East, Africa, & Turkey region, the rebound in RevPAR, which exceeded 2019 level (up 32 percent in Q2 2022), was confirmed for a third consecutive quarter.
- The United Arab Emirates continued to outperform after a strong Q1 boosted by the world Expo 2020.
- In Saudi Arabia, the broader reopening of the holy cities for pilgrimages has led to a sharp rebound in activity, particularly during the April Ramadan period. This recovery is also expected to continue with the Hajj in July.
In the Americas, Q2 2022 RevPAR was 5 percent higher than in Q2 2019.
- In North/Central America and the Caribbean, RevPAR was in line with 2019 levels in Q2 2022, driven by a sharp increase in prices.
- In South America, and particularly Brazil, the pick-up in business volumes was notably impressive, with occupancy rates above the 2019 level throughout Q2 2022.
Services to Owners revenue, which includes the Sales, Marketing, Distribution, and Loyalty division, as well as shared services and the reimbursement of hotel staff costs, came to €842 million in H1 2022, down 10 percent compared with 2019, in line with consolidated RevPAR for the period.
Hotel Assets & Other Revenue
At end-June 2022, this segment, which includes owned and leased hotels, represented 114 hotels and 22,417 rooms. Revenue in the Hotel Assets & Other segment was up 57 percent like-for-like in H1 2022 versus H1 2021 and down 8 percent like-for-like versus H1 2019. This segment, which is closely tied to activity in Australia, benefited in particular from renewed leisure and business tourism demand.
Since early 2021, this segment has included concierge services, luxury home rentals, private sales of hotel stays, and digital services for hotel owners. All these activities benefited from the uptrend in tourism.
Positive EBITDA
Consolidated EBITDA was €205 million in H1 2022, versus €120 million in H1 2021. This performance was linked to an activity recovery. The EBITDA margin came to 12 percent in H1 2022 versus 15 percent in H1 2021.
HotelServices EBITDA by Business
HotelServices EBITDA was positive at €208 million in H1 2022. This performance breaks down as positive EBITDA for M&F and a negative contribution from Services to Owners. This negative contribution reflects both marketing expenses incurred to capture the pick-up in business and general cost inflation. Rebilling of hotel costs (with revenue at €497 million), included in Services to Owners, structurally remains at breakeven at the EBITDA level.
M&F EBITDA by Region
The M&F division of HotelServices reported an EBITDA of €297 million in H1 2022, significantly higher than in H1 2021 (at €55 million) but still below H1 2019 (19 percent like-for-like). All regions are now generating positive EBITDA.
Hotel Assets & Other EBITDA
Hotel Assets & Other EBITDA came to €58 million in H1 2022 versus €25 million in H1 2021. This segment is mainly driven by Australia, where the activity has recovered. New businesses, included in this segment since early 2021, reported positive EBITDA in the first half of the year.
Net Profit
Net profit, Group share was €32 million in H1 2022, compared with €67 million in H1 2021. The share of net profit of associates and JVs came to €27 million in H1 2022, stemming largely from AccorInvest’s contribution, which was much more limited than in H1 2021. AccorInvest’s results improved significantly due to the business pick-up in Europe. Non-recurring items in H1 2021 mainly included a €649 million positive impact recognized following the partial sale of a 1.5 percent stake owned in Huazhu in February 2021.
Cash Flow Generation
During H1 2022, the group’s recurring free cash flow improved from €260 million in H1 2021 to €41 million in H1 2022. Cost of net debt was stable between H1 2021 and H1 2022. The group’s recurring expenditure, which includes “key money” paid by HotelServices for its development, digital, and IT investments, remained under control to end the period at €55 million. Change in working capital is seasonal in nature and reflects the activity recovery reported in H1 2022.
The group’s net financial debt as of June 30, 2022, reached €2,025 million, versus €1,844 million as of December 31, 2021. On June 30, 2022, the average cost of Accor’s debt was 1.9 percent (a decrease due to the redemption of bonds that had a higher coupon) with an average maturity of about four years and with no major repayments due before 2026. As of June 30, 2022, combined with the undrawn credit facilities of €1.2 billion, Accor had a liquidity position of €2.5 billion. The €560 million line negotiated in May 2020 matured in May 2022.
Structure Transformation
On July 5, 2022, the group announced that it is evolving its structure to capitalize on the transformation undertaken in recent years, consolidate its leadership positions, focus its efforts, strengthen its know-how, accelerate its growth, and continue to improve its profitability. As such, Accor will leverage two divisions comprising separate and distinctive expertise with the aim of further strengthening each of these business lines, improving their operational and financial performance, offering their owners and guests more relevant products and services, and attracting talent.
From October 1, 2022, Accor will be structured around two dedicated divisions:
- “Economy, Midscale & Premium Division”, comprising the group’s brands ibis, Novotel, Mercure, Swissôtel, Mövenpick, and Pullman.
- “Luxury & Lifestyle Division”, bringing together Accor’s luxury brands as well as the group’s Lifestyle entity, Ennismore.
To support the implementation and ensure the roll-out of this new structure, Accor’s Board of Directors has confirmed its support to the group’s leadership and unanimously decided to propose the renewal of Sébastien Bazin as Chairman and CEO at the next Annual General Meeting called to approve the 2022 financial statements.
EBITDA Guidance for FY22
Based on the activity recorded in the first half and considering the current macro-economic uncertainties in the second half-year, the group expects EBITDA to exceed €550 million for the full year of 2022.
Events in H1 2022
On June 21, 2022, Accor announced it is entering into exclusive negotiations to sell a 10.8 percent stake in Ennismore to a Qatari consortium for a total amount of €185 million. The envisioned also includes the preliminary contribution to Ennismore of the group’s stake in Rixos and Paris Society. Accor will retain a controlling stake of 62.2 percent in Ennismore with the remaining shares held by Sharan Pasricha founder and co-CEO of Ennismore and the new incoming investors. Closing is expected to occur in the second semester of 2022.
Board of Directors
At its meeting on February 23, 2022, and based on the recommendations of the Appointments, Compensation, and CSR Committee, the Board of Directors resolved to propose the renewal of Qionger Jiang, Isabelle Simon, Nicolas Sarkozy, and Sarmad Zok as directors of the company for a three-year duration.
The Board also decided to propose, in addition to the appointment of Hélène Auriol Potier, which was already announced, the appointments of Asma Abdulrahman Al-Khulaifi and Ugo Arzani as directors, for the same period of three years.
