FULL-YEAR 2020 RESULTS: ACCOR DEMONSTRATES RESILIENCE AND ADAPTABILITY
Tangible signs of improvement in Asia, Middle East & Africa and SouthAmerica in Q4
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FULL-YEAR 2020 RESULTS: ACCOR DEMONSTRATES RESILIENCE AND ADAPTABILITY
Tangible signs of improvement in Asia, Middle East & Africa and SouthAmerica in Q4
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Category: Worldwide - Industry economy -
Figures / Studies
This is a press release selected by our editorial committee and published online for free on 2021-02-24
MONTHLY CASH BURN HALVED IN H2
STRENGTHENING OF THE LIQUIDITY POSITION AT €4.2BN
SWIFT ROLLOUT OF €200M RECURRING COST SAVINGS PLAN
REVENUE DOWN 60% TO €1,621 MILLION (-55% LFL)
EBITDA: €(391) MILLION
RECURRING FREE CASH FLOW: €(727) MILLION
NET LOSS, GROUP SHARE: €(1,988) MILLION
Sébastien Bazin, Chairman and Chief Executive Officer of Accor, said: “In 2020, the hotel industry navigated an unprecedented crisis. In response to the pandemic, Accor, its employees and its owners made an extraordinary effort across the globe to support those most affected, continuing to uphold their values of generosity, hospitality and sharing. At the same time, the Group’s rollout of measures to protect its financials was quick and disciplined. The measures delivered benefits over the second half of the year, and helped to limit the impact of the health crisis. The Group also continued with the rollout of large-scale initiatives to plan ahead for the economic recovery and consolidate its leadership position in lifestyle: implementation of a new streamlined and agile organization, a merger with Ennismore through the creation of a dedicated entity comprising 12 unique hotel brands, and the signing of a strategic partnership with the Faena brand. In 2021, while the vaccine is ensuring a gradual rebound in tourism—largely driven by leisure guests—Accor is ideally positioned to benefit from the recovery and press ahead with its roadmap.”
Against the unprecedented backdrop of the global health crisis, RevPAR was down 62.0% in 2020. This marked decline reflects the dramatic deterioration in the industry linked to the spread of the Covid-19 virus worldwide, as well as lockdown measures and border closures implemented by governments throughout the world.
Nevertheless, we saw signs of significant recovery in all regions in the third quarter, with a strong summer season in Europe, after the low point seen in the second quarter (RevPAR down 88.2% in Q2). The new restrictions implemented by European governments in response to the resurgence of the epidemic in the last quarter halted the summer recovery. Consolidated RevPAR was down 66.2% in Q4 and RevPAR in Europe was down 73.1%, while the gradual recovery continued in other regions.
During full-year 2020, Accor opened 205 hotels, i.e., 28,942 rooms, confirming the appeal of the Group’s brands to hotel owners. At year-end 2020, the Group had a hotel portfolio of 753,344 rooms (5,139 hotels) and a pipeline of 212,000 rooms (1,209 hotels), of which 73% in emerging markets.
As of December 31, 2020, 82% of Group hotels were open, i.e., more than 4,000 units.Consolidated revenueConsolidated full-2020 revenue totaled €1,621 million, down 54.8% like-for-like and down 60.0% as reported compared with full-year 2019.Reported revenue for the period reflects the following factors: - Changes in the scope of consolidation (acquisitions and disposals) had a negative impact of €155 million, largely due to the disposal of Mövenpick leased hotels.
- Currency effects had a negative impact of €53 million, mainly due to the Australian dollar (-2.7%) and the Brazilian real (-24.7%).
HotelServices revenueHotelServices, which includes fees from Management & Franchise (M&F) and Services to Owners, reported revenue of €1,142 million, down 59.8% like-for-like reflecting the decline in RevPAR as a result of the health crisis and government lockdown measures implemented worldwide.
Management & Franchise (M&F) revenue amounted to €292 million, down 71.4% like-for-like. The sharper decline in this item compared with RevPAR reflects the collapse in incentive fees based on the hotel operating margin generated from management contracts.
Consolidated RevPAR was down 62.0% overall for the full-year, and down 64.5% for the second semester.
M&F revenue was down by a sharp 74.3% like-for-like in Europe, reflecting a 63.3% decline in RevPAR that was generally consistent across all segments. - In France, RevPAR was down 57.6% like-for-like over the full-year 2020. After a promising third quarter driven by the regional cities (RevPAR down 49.1% in 2020) compared with Paris and the Paris region (RevPAR down 68.9% in 2020), the RevPAR recovery stalled in the fourth quarter with the second lockdown. The lack of foreign visitors continues to have a significant impact on the capital city;
- In the United Kingdom, RevPAR fell by 73.3%. RevPAR in London was down 78.5%, slightly harder hit than the rest of the country (-67.3%) where domestic activity was stronger. The United Kingdom was affected by longer lockdowns than the rest of Europe as the resurgence of the pandemic was more virulent there;
- In Germany, where lockdown measures were reinstated in the fourth quarter, RevPAR was down 64.7% in 2020;
- In Spain, RevPAR fell by 74.9% in 2020.
M&F revenue in Asia-Pacific was down 63.8% like-for-like as a result of a 54.9% decline in RevPAR. - In China, the recovery observed from the second quarter onwards gathered pace quarter after quarter, resulting in a 44.2% decline in RevPAR over the year (-18.1% in the fourth quarter). The Luxury & Premium segment outperformed the Economy and Midscale segments, reflecting the deep desire among the Chinese population to travel again. The new travel restrictions in place since the beginning of 2021, notably for the Chinese New Year, nonetheless highlight the fragility of the health situation and its impact on the recovery;
- In Australia, where the health crisis has by and large been well managed, RevPAR fell by 53.3% in full-year 2020. The recovery that began in December, the start of the summer season, continued. The country has kept its borders closed but benefits from strong domestic activity, like that seen in Europe in the third quarter, which has boosted leisure destinations. This was particularly positive for Mantra hotels.
The Africa & Middle East region reported Management & Franchise revenue down 74.6%, with RevPAR declining 59.9%. Business recovered slowly and gradually, particularly with a strong December for the United Arab Emirates thanks to the resumption of air travel.
North America, Central America & the Caribbean reported a 72.0% decrease in M&F revenue, in line with the drop in RevPAR of 73.9% in 2020. This sharp decline reflects the nature of Accor’s portfolio, with its many business hotels targeting group guests and MICE (Meeting, Incentives, Conferences & Events).
Lastly, activity in South America also enjoyed a gradual recovery with RevPAR down 61.9% in 2020. Management & Franchise revenue was down 65.3%.
Services to Owners revenue, which includes the Sales, Marketing, Distribution and Loyalty divisions, as well as shared services and the reimbursement of hotel staff costs, came to €850 million, versus €1,867 million in full-year 2019.Hotel Assets & Other revenueHotel Assets & Other revenue was down by 45.8% like-for-like to €398 million. This segment saw a more moderate decline in business thanks to a more limited Covid-19 impact in Australia in the first quarter, and the delayed spread of the pandemic to Brazil. The Strata businesses in Australia (room distribution and management of common areas) also proved more resilient and benefited from leisure demand along the eastern coast of the country. The 63.0% decline in revenue as reported was exacerbated by the disposal of the Mövenpick leased hotel portfolio in early March 2020.
The division’s hotel base included 161 hotels and 29,102 rooms at December 31, 2020.New Businesses revenueNew Businesses (luxury home rentals, private sales for luxury hotel stays, and digital services for hotels) generated revenue of €91 million at year-end 2020, down 42.9% on a like-for-like basis. This change masks disparities between the hard-hit businesses directly related to the Travel segment, such as onefinestay private home rentals, and the digital businesses, such as D-Edge services.
Lowered operating leverage
Consolidated EBITDA was €(391) million at December 31, 2020. Sensitivity of EBITDA to RevPAR changes amounted to €(18) million for each percentage point decline in RevPAR in H2 versus €(19) million in H1, due mainly to better cost control.
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