AccorHotels Releases Results for First-half of 2017

ACCORHOTELS RELEASED its results for the first-half of 2017. Revenues were up 33.5% to €922 million; EBIT up 68.0% to €226 million; and the company had opened 23,000 rooms in this period.

Sébastien Bazin, Chairman and Chief Executive Officer of AccorHotels, said. “AccorHotels' results for first-half 2017 are particularly solid. They reflect growth in our hotel business, the rapid integration of recently acquired brands, our persistently dynamic development and the ramp-up of our new businesses. In this way, we are increasing our market share and consolidating our global leadership while profoundly transforming our business model. The separation of AccorInvest into a stand-alone legal entity has been completed. Discussions about the opening of this business to outside investors are on going. Our pursuit of this growth strategy enables us to aim for another year of record growth in

2017”.

The group showed solid results in most key markets, particularly with the recovery in France & Switzerland.

The group has a portfolio of 4,195 hotels (597,132 rooms) at the end of June 2017 with a pipeline of  910 hotels  and  167,000 rooms,  of  which  81%  in  emerging markets and 45% in the Asia-Pacific region.

HotelServices reported a 6.0% increase in like-for-like revenue (30.1% on a reported basis) to €839 million. This increase reflected strong activity in Asia- Pacific (+9.3%), Europe (+8.1%), Middle East & Africa (+4.7%) and France & Switzerland (+3.7%). The North America, Central America & the Caribbean and South America regions were down 2.9% and 5.1% respectively.

In France & Switzerland, revenue was up 3.7% on a like-for-like basis. Up

2.0%, RevPAR was buoyed by an occupancy rate up 2.7 points thanks to the return of foreign tourists to Paris. As a result, Paris posted the strongest increase in RevPAR (+4.3%), driven notably by very positive trends in the luxury/upscale segment (+7.2%).

Europe posted like-for-like revenue growth of 8.1% thanks to RevPAR growth of 5.9%.

Business was once again extremely strong in the United Kingdom (+7.1%), a market that remains attractive to British and foreign tourists, especially London.

RevPAR increased by 1.1% in Germany on a weak trade fair calendar in April and June. In Eastern Europe, it grew by 7.8%, reflecting sustained development in that region.

The Iberian Peninsula continued its recovery, recording strong business levels once again, with RevPAR growth of 14.9%.

The Asia-Pacific region also performed very well, posting 9.3% growth driven by   the   luxury  segment  (RevPAR  up 6.5%)  and   persistently  dynamic development.

The Middle East & Africa region recorded a 4.7% increase in revenue, driven by a 3-point rise in the occupancy rate and a 4.5% increase in RevPAR. The Middle East posted a record level of revenue during the first half (+6.6%), thanks notably to the Sofitel Gezirah, where RevPAR doubled during the period. Africa's performance (-0.7%), on the other hand, was impacted by challenging security conditions, particularly in Côte d'Ivoire and Angola.

North America, Central America & the Caribbean experienced a slowdown due to a significant decline in arrivals of foreign tourists in major cities in the United States. The 2.9% like-for-like decline in revenue does not include Fairmont; it only takes into account the hotels included in the scope of consolidation in  H1 2016,  which  are  more  exposed to  markets  such  as New York and Miami. Fairmont, which benefits from the good balance of its portfolio between the United States and Canadian markets and a strong presence in American cities with less exposure to international customers, recorded RevPAR growth of 7% in the United States and 15% in Canada.

Lastly, the situation remains difficult in South America, and more precisely in Brazil (-9,7%). Regional revenue was down 5.1%, with Rio facing a particularly challenging situation (occupancy rate down 13 points), reflecting the overcapacity generated by the Olympic Games and a depressed socioeconomic environment.

HotelServices’ development continues at a rapid pace. AccorHotels opened

115 new hotels in the first half, representing more than 23,000 rooms; it is forecasting organic growth of 40,000 rooms in 2017. At the end of June 2017, the Group’s pipeline comprised 910 hotels and 167,000 rooms, of which 81% in emerging markets and 45% in the Asia-Pacific region.

Consolidated EBITDA amounted to €303 million in first-half 2017, up 27.4% like- for-like on the year-earlier period and 62.1% as reported. The EBITDA margin was 32.9%, up 3.9 points on a like-for-like basis.

First-half 2017 EBIT rose by 68.0% as reported, and by 33.9% like-for-like to

€226 million, up from €134 million in the first half of 2016.

HotelServices’ EBIT was up 52.4% on a reported basis and 21.4% on a like-for- like basis at €270 million in first-half 2017, compared with €177 million in first- half  2016,  driven  by  Raffles,  Fairmont  and  Swissôtel  in  the  amount  of

€54 million, thanks to stronger business and to synergies.

Up 4.7 points at 32.2%, HotelServices’ EBIT margin also expanded significantly from 27.5% in first-half 2016. The increase can be attributed in large part to the sound activity levels, to the fast ramp-up of synergies on FRHI, and a favorable calendar for digital expenses in the semester.

In line with the good levels of business recorded in the first half, HotelServices posted strong EBIT growth in France & Switzerland (+9.4%), as well as in Asia- Pacific (+36.8%), driven by development (32 hotels opened in first-half 2017), and in Europe (+6.6%), particularly in the United Kingdom and in Poland.

By contrast, EBIT fell by (16.5)% and (8.1)% respectively in the Middle East & Africa and South America regions.