(AOF) – Accor is preparing to end the year as the biggest riser in the CAC 40, posting growth of more than 35%. The hotel group dominated the index which it joined on March 18, replacing Alstom. It benefited from favorable operational dynamics, raising its annual revenue per available room target (key sector indicator) in July and then its gross operating surplus forecast in October. Accor accumulated good news during the year by convincing UBS, Jefferies then JP Morgan that its prospects are favorable
Three managers moved to purchase in 2024
UBS moved from Neutral to Buy on Accor in February. The broker cited positive trends in bookings, consensus among tourism professionals that demand will continue, a potential improvement in the hotel pipeline as interest rates are expected to fall, as well as its growing conviction that management will maintain focus on the 2023-2027 strategy.
Jefferies followed UBS in March by moving from Underperform to Buy. The broker praised the “clear growth and profitability trajectory” of the hotel group and the “clarity regarding the return for shareholders”.
In November JP Morgan joined this movement by moving from Neutral to Overweight. The broker judges that the hotel group’s more diversified geographical mix and its greater exposure to the high end “prove to be defensive.” The option to release more value via the sale of Accor’s remaining 30% stake in AccorInvest, even if it is well identified, will also support the shares, by triggering additional returns to shareholders (expected at the end of 2025/beginning of 2026)” adds JP Morgan.
Improved financial outlook
Revenue per available room (key indicator of the sector) has been anticipated since the end of July between 4% and 5%. Accor is also targeting a gross operating surplus of between 1.095 billion euros and 1.125 billion euros and network growth of between 3% and 4%.
Accor raised its outlook for group gross operating surplus at the end of October, now expected between 1.10 and 1.125 billion euros compared to 1.095 to 1.125 billion initially. During the third quarter of 2024, the group opened 47 hotels corresponding to 8,000 rooms, representing net network growth of 3.2% over the previous 12 months.
International expansion
Accor reached 700 hotels in China at the end of May, with the inauguration of the Sofitel Shanghai North Bund, which has 25 floors, branded Sofitel Hotels & Resorts. The group had opened on average more than one hotel per week over the past two years. At the end of September 2024, the group had a hotel portfolio of 838,826 rooms (5,638 hotels) and a pipeline of 231,000 rooms (1,380 hotels).
AOF – LEARN MORE
Key Points
– Leading global hotel operator, created in 1967, with more than 40% of the market (excluding France, 1/3 of the market), leader in Asia-Pacific, Middle East-Africa and Latin America;
– Hotel portfolio of 5,600 hotels operated under 45 brands, 10,000 restaurants & bars in 100 countries, from luxury for 26% of revenues under the Fairmont, Raffles, Sofitel brands… to mid-range (34%) and Adagio budget hotels , Ibis, Mercure, Novotel…;
– Activity of €5.1 billion balanced at global level and divided into two divisions: “Premium, Mid-Range & Economy” and “Luxury & Lifestyle”, bringing together concierge service, luxury residence rental or digital services for hoteliers, etc.;
– Two ambitions: in the hotel industry, consolidation of the leadership of Ibis, Novotel and Pullman and densification of the network via the Mövenpick, Mercure, Handwritten and Greet brands / in luxury & lifestyle, strong growth driven by the promotion of the Orient Express brands , Raffles and Fairmont, Sofitel, MGallery, Emblems and Ennismore;
– Capital characterized by the presence of Chinese hotel operators Jin Jiang and Huazhu (respectively 9.6% and 6.5%) and the Qatari fund QiA (8.9%), with a board of 13 directors chaired by general manager Sébastien Bazin.
Challenges
– Agility of the business model: based on the reduction in capital requirements through “asset light” / sale of assets and management control, asset disposal plan by 2025 at AccorInvest / designed for creation of traffic via an extensive portfolio of global brands, distribution maximizing conversion into overnight stays, loyalty and partnerships with distributors such as Amadeus / diversified in services to owners, whose contribution will be positive in 2024 for operating profit / supported by permanent innovation, in processes & tools and organizations: single shared services platform for the 2 divisions, distribution and reservation platform for the ALL loyalty program;
– “Planet 21” environmental strategy targeting 0 carbon in 2050 for Accor hotels: 2025: 25.2% reduction in internal emissions and 15% at suppliers / elimination of single-use plastics, “green loan…”;
– Benefits of the strategic partnership with the Chinese Huazhu Hotels Group, aimed at strengthening the Ibis, Mercure and Novotel brands in China, Taiwan and Mongolia and that with IDeaS for the management of revenues from the business portfolio;
– Controlled financial structure with, at the end of June, €1.9 billion in liquidity and recurring free self-financing of €120 million compared to €2.9 billion in net debt.
Challenges
– Strong exposure to Europe which contributes to almost 40% of operating profit;
– Achievement of strong ambitions in India – around thirty openings by 2028;
– After an 11% increase in turnover and earnings per share on 1
is
half-year, 2024 objectives noted: growth of 4 to 5% % of RevPar, gross operating surplus around €1.1 billion;
– 2023-2027 strategy with financial objectives for each of the divisions: “Premium, Mid & Eco”: annual increase of 2.5 to 3.5% of the network, of 2 to 4% of the RevPar, of 4 to 7% of the operating profit; “Luxury & Lifestyle”: annual growth of 8 to 3.5% of the network, of 3 to 5% of RevPar, of 11 to 13% of operating profit / for the group: annual growth of 3 to 5% of the network , 3 to 4% of RevPar and 6 to 10% of operating profit;
– 2023 dividend of €1.18 after share buyback during the 1
is
quarter and desire for a return to shareholders of approximately €3 billion between 2023 and 2027.
