Worsening business conditions in Hotels, with an 8.7% decline despite resistance in Economy Hotels in France (down 3.2%).
Consolidated revenue for the first three months of 2009 totaled EUR1,616 million, down 5.8% like-for-like over the same period of 2008 and down 9.6% on a reported basis.
(in EUR millions) 2008 2009 % change % change
as reported like-for-like
(1)
Hotels 1,282 1,182 -7.8% -8.7%
Upscale and 757 687 -9.2% -9.2%
Midscale
Economy 388 358 -7.7% -6.8%
Economy US 137 137 0.0% -11.5%
Prepaid Services 227 231 +2.0% +8.3%
Other businesses 278 203 -27.2% -3.8%
Total 1,787 (2) 1,616 -9.6% -5.8%
(1) At constant scope of consolidation and exchange rates.
(2) Adjustment related to loyalty program: impact of the IFRIC 13
application, retroactive to January 1st, 2008.
Upscale and Midscale Hotels: down 9.2% like-for-like
In the Upscale and Midscale segment, revenue was down 9.2% as reported for the period.
In general, the Midscale segment was relatively less affected than the Upscale segment. This was the case in France, where RevPAR declined 10.1% in the Midscale and 13.4% in the Upscale. Moreover, business in Paris was more affected than in the rest of the country, with RevPAR down 14.7% in the capital versus 6.6% elsewhere.
In Germany, revenue declined by 1.9% like-for-like over the period, or by 8.1% adjusted for the shift in the Easter vacation period.
In the United Kingdom, business was harder hit outside London, with RevPAR down 16.5%, than in London, down 7.0%.
Economy Hotels outside the US: down 6.8% like-for-like
RevPAR volatility in this segment is typically around twice the change in GDP, which is notably lower than in the Up and Midscale segments (where elasticity is 4 to 6). Given the unprecedented drop in GDP in most European countries, Economy Hotels revenue declined by 7.7% as reported and 6.8% like-for-like during the first quarter.
In France, revenue was down 3.2% like-for-like, or just 2.7% adjusted for the impact of the F1 hotels renovation program. As was the case in the Upscale and Midscale segment, business outside Paris fared better than in the capital, with RevPAR down 5.1% in Paris but up 0.9% in the rest of the country.
Revenue in Germany was down 5.0% like-for-like, of which 4.6% for Ibis as well as for Etap Hotel.
In the United Kingdom, business in London was more affected than in the rest of the country, with RevPAR down 15.1% and RevPAR down 11.5% elsewhere.
Revenue was more severely affected in certain other European countries, such as Spain (down 29.3% like-for-like), Italy (down 17.5%), the Netherlands (down 10.9%) and Belgium (down 10.5%).
Economy Hotels in the US: down 11.5% like-for-like
The Economy segment experienced an 11.5% decline like-for-like, but remained less affected than the Upscale and Midscale segments in the United States. Furthermore, Motel 6 outperformed its competitive-set, in a segment that saw a decline in business for the second year in a row.
The opening of approximately 50 hotels in 2008 drove a 19.4% increase in fees from franchised hotels during the first quarter on 2009.
New cost-saving initiatives in the midst of an unprecedented recession
In a first-quarter business environment shaped by a faster decline in revenue compared with fourth-quarter 2008, particularly in Europe, Accor has decided to reduce its 2009 and 2010 annual renovation budget to EUR315 million, or EUR175 million less than in 2008.
In addition to the already announced program to reduce support costs by EUR75 million in 2009 and a further EUR25 million in 2010, Accor is already planning to increase its cost-saving program.
Quarterly Information
Significant transactions and events of the period
Creation of a leading joint venture with MasterCard Europe in the European prepaid market
In mid February, Accor Services and MasterCard Europe announced a strategic alliance resulting in the creation of PrePay Solutions, which is owned 67% by Accor Services and 33% by MasterCard Europe.
PrePay Solutions will provide services to Accor Services and MasterCard, enabling each firm to offer its respective customers - corporates, local authorities and government agencies for Accor Services, banks and other financial institutions for MasterCard - solutions leveraging the partners' closely related expertise in prepaid services and electronic payments. These customers will therefore be able to take advantage of the strong growth in the European prepaid market, which is estimated at EUR130 billion. At the same time, PrePay Solutions will market prepaid solutions directly to its own customers, such as retailers.
Financial position and results
Successful bond issue in January 2009
On January 28, 2009, Accor successfully placed a EUR600 million issue of fixed-rate, five-year bonds, maturing February 4, 2014 and paying 7.50% interest. The bonds were placed with more than 200 European institutional investors. The transaction enabled the Group to diversify its financing sources and increase the average maturity of its debt.
CIWLT dispute
On December 12, 2008, the Cergy Pontoise Administrative Court handed down a ruling against CIWLT, which was immediately enforceable even in the event of an appeal, thereby lifting the suspension previously applied to claims for the years from 1998 to 2002. As a result, Accor settled the claims and late interest on February 27, 2009, in a total amount of EUR242.5 million.
Stake in Groupe Lucien Barriere raised to 49%
Under the January 2004 agreements signed by Colony Capital, the Desseigne Barriere family and Accor, Colony Capital held a put option to sell its 15% stake in Groupe Lucien Barriere SAS to Accor for a price to be determined by five independent banks. In November 2008, Colony Capital informed Accor that it intended to initiate the valuation process.
The process resulted in a price of EUR153 million, corresponding to the average valuation of the independent experts, excluding both the highest and the lowest valuation in accordance with the 2004 agreements. Following the valuation process, Colony Capital decided to exercise its put for EUR153 million, which was paid on April 15, 2009.
The transaction is expected to increase Accor's consolidated net debt by EUR270 million, following the proportional consolidation of 49% of Groupe Lucien Barriere's debt in the second half.
Financial resources
The cash position is solid with EUR1.5 billion in unused committed credit lines as of mid-April 2009, after taking into account the above items.
During the period, Fitch has confirmed its BBB long-term rating with stable outlook, and Standard & Poor's its BBB long-term rating with negative outlook.
Accor, a major global group and the European leader in hotels, as well as the global leader in services to corporate clients and public institutions, operates in nearly 100 countries with 150,000 employees.
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