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(in EUR millions) 2007 2008 Change as Change
reported like-for-like(1)
Hotels 1,323 1,286 -2.8% +3.7%
Upscale and midscale 742 762 +2.6% +3.9%
Economy 365 387 +6.1% +5.3%
Economy US 216 137 -36.4% +0.1%
Services 207 227 +9.5% +10.4%
Other businesses 357 279 -22.1% +5.6%
Total 1,887 1,791 -5.1% +4.8%
(1) At constant scope of consolidation and exchange rates.
First-quarter 2008 revenue performance reflects the impact of:
- The strategic refocusing on the Hotels and Services businesses (with the disposals of Go Voyages, the Italian foodservices operations and Red Roof Inn) and the continued deployment of the "asset-right" strategy of adapting hotel ownership structures, which had a negative 11.0% impact on revenue for the period,
- The expansion strategy, which added 3.0% to revenue growth,
- A negative 1.8% currency effect resulting from the appreciation of the euro against the dollar, the pound and most South American currencies,
- The solid 4.8% first-quarter growth at constant scope of consolidation and exchange rates and 5.8% growth adjusted for the impact of the shift in the Easter vacation.
Services revenue up 10.4% like-for-like
Revenue from the Services business increased by 9.5% as reported and 10.4% like-for-like. Adjusted for the impact of the loss of a Ticket Services contract in Belgium and the gradual elimination of tax breaks in Argentina, Services revenue was up 12.6% for the quarter.
Acquisitions added 4.5% to growth. However, the currency effect was a negative 2.3%, mainly due to the weakness of Latin American currencies.
In Europe, revenue rose by 9.5% like-for-like. Revenue gained 14.2% like-for-like in France, following the deployment of a special action plan to boost sales of meal vouchers, and 13.3% like-for-like in the United Kingdom. In Belgium, adjusted for the loss of the Onem contract, revenue was up 14.4% like-for-like, compared to a reported decline of 13.8%.
In Latin America, like-for-like growth totaled 10.6%. After a period of slow growth in 2007 (+0.4%), revenue in Brazil rose by 5.1% while other countries in the region saw an increase of 16.9% like-for-like.
In Argentina, revenue was up 17.3% like-for-like. Recent changes in the country's tax laws that call for a 10% reduction in payroll tax breaks every two months began to have a negative impact on revenue in March.
Hotels revenue up 3.7% like-for-like
Hotels revenue amounted to EUR1,286 million in the first quarter, a decline of 2.8% compared to the prior-year period (as reported). This figure takes into account the impact of:
- The sale of the Red Roof Inn chain and other hotel properties as part of the "asset-right" strategy of adapting hotel ownership structures, which reduced growth by 6.7%,
- The expansion strategy (with 4,600 rooms opened during the period), which added 2.7% to growth,
- The currency effect, which was a negative 2.5%,
- The 3.7% increase in hotels revenue at constant scope of consolidation and exchange rates. The shift in the Easter vacation calendar to March in 2008 from April in 2007 in most European countries (mainly Germany, the United Kingdom, Spain and the Benelux countries) had a negative 1.4% impact on revenue. Adjusted for the impact of the shift in the Easter vacation, revenue was up 5.1% for the period, reflecting a good start to 2008 in Europe.
Upscale and Midscale Hotels revenue up 3.9% like-for-like
In upscale and midscale hotels, revenue rose by 3.9% like-for-like in the first quarter (5.7% when adjusted for the earlier Easter vacation).
Business remained strong in France, where revenue rose by 6.5% like-for-like, led by a very good performance from the Novotel and Mercure chains. Results in the upscale segment were more mixed due to the brand repositioning of Sofitel and Pullman hotels.
Germany reported a 4.3% decline in revenue like-for-like. However, when adjusted for the earlier Easter vacations, revenue was up 3.2%, in line with 2007.
The same trend was apparent in the United Kingdom, where revenue rose by 5.8% excluding the vacation calendar effect, versus 3.3% as reported.
Economy Hotels (outside the US) revenue up 5.3% like-for-like
Economy hotels revenue outside the United States increased by 5.3% like-for-like (6.8% when adjusted for the earlier Easter vacation).
In France, the year got off to a very good start, with Economy hotels revenue gaining 4.9% like-for-like on the back of a strong performance at Ibis (a 6.8% increase in RevPAR).
The shift in the Easter vacation calendar also had a significant impact in the major European countries. In Germany, revenue declined by 0.2% but increased by 5.6% when adjusted for the earlier vacation. In the United Kingdom, revenue rose by 7.0% like-for-like and by 11.3% excluding the calendar effect.
Economy Hotels revenue in the United States up 0.1% like-for-like
Like-for-like, Motel 6 revenue rose by 0.1%, reflecting a more challenging economic environment in the United States as well as higher gas prices, which adversely impacted the chain's leisure customer base.
The 36.4% first-quarter decline in Economy hotels revenue in the United States as reported was due to the sale of Red Roof Inn in August 2007, which trimmed EUR60 million from revenue for the period, and the weaker dollar.
Significant transactions and events of the period
Acquisition by Accor Services of a 62% interest in Motivano UK, a leading online employee benefits provider
In January 2008, as part of its growth strategy, Accor Services acquired a 62% stake in Motivano UK, a leading online provider of employee benefit solutions. The shares were purchased from the venture capital firm Geocapital Partners. The current management team will retain an aggregate 38% interest. The medium-sized transaction is expected to yield an ROCE of around 20% in 2010.
Disposal of all of the Brazilian foodservices business
As part of its strategy of refocusing on its two core businesses, Services and Hotels, Accor announced the sale of its remaining 50% stake in the Brazilian foodservices business to Compass Group in the first quarter. Compass had already acquired 50% of the business from Accor in 1998.
Financial position and results
Changes in scope of consolidation
- Expansion
In Services, acquisitions accounted for 4.5% of revenue growth for the first three months, in line with the Group's medium-term objectives.
The expansion plan for the hotels business provides for 200,000 new rooms to be opened between 2006 and 2010. In first-quarter 2008, expansion (including the opening of 4,600 rooms during the period) added 2.7% to revenue growth.
- Disposals
The Brazilian foodservices business was sold for BRL 305 million (approximately EUR117 million). The business contributed EUR248 million to 2007 consolidated revenue.
Currency effect
The currency effect reduced revenue by 1.8%, or EUR34.3 million, for the period.
As a sensitivity analysis, every 10-cent decline in the dollar against the euro would have a EUR8 million impact on operating profit before tax and non-recurring items.
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