Accor, the world’s leading hotel operator and market leader in Europe, is continuing to strengthen its portfolio through further acquisitions and disposals in the UK. Since CEO Sebastien Bazin announced the creation of two strategic divisions in November 2013, the ownership and investment arm, HotelInvest, has been extremely active in the UK completing the sales and acquisitions of 20 hotels in the UK and Ireland.
HotelInvest priorities
HotelInvest has four priorities: to strengthen its position as the lead hotel investor in the economy and midscale segments; to optimize the capex allocation strategy; deliver cash flow and reduce volatility; and selectively invest in profitable assets.
Accor will no longer expand through leases and is actively looking to buy in or reposition many existing rental agreements. These ambitions were realised in a number of successful transactions in the last 12 months.
13 hotels acquired from Tritax
The biggest deal of the year, worth £70.2m, completed on 22nd December 2014, with HotelInvest team acquiring 13 hotels with a total of 1,446 rooms, previously leased from real estate investor Tritax. The hotels, in eight important locations across the UK, including London, Manchester, Birmingham and Liverpool, immediately move from variable lease arrangements to group ownership. HotelInvest UK will actively asset manage each individual hotel dependent on its location and profitability. This may include individual sales and management or franchise opportunities.
Continuing the long line of deals undertaken in the UK, HotelInvest has also converted the ibis budget hotels in Leicester and Derby from fixed leases to less volatile franchises. The UK team has also raised capital by selling two Novotel hotels in Nottingham and Stevenage with a total of 209 rooms to Fairview which are now franchised back to Accor UK and through the sale of the ibis Styles in St Andrew’s Square Edinburgh to St James’s Hotel Ltd, whilst retaining the management contract.
Furthermore, whilst continuing to make selective investments, HotelInvest has just completed the acquisition of a site in London where a 196-room ibis hotel will open in 2017, as part of the Canning Town and Custom House Regeneration Programme developed by property group Bouygues UK. HotelInvest has already announced a new-build 310 room Novotel at Canary Wharf, also due to open that year.
20 acquisitions or sales
Herve Deligny, Chief Operating Officer HotelInvest, Accor UK & Ireland, said: “The HotelInvest team at Accor UK has been extremely active in its first year, completing the acquisition or sale of 20 hotels across the ibis and Novotel brands whilst retaining Accor’s presence through direct ownership, management contracts or franchises. The group will continue to assess the best structure for each hotel based on profitability and location.”
Accor record results in 2014
Accor delivered 3.8% like-for-like revenue growth, and 77% increase in net profit for 2014, leading Sébastien Bazin, Chairman and Chief Executive Officer of Accor, to comment:
“The in-depth transformation being carried out by Accor started to pay off in 2014, with the Group posting excellent results in both its businesses – HotelServices and HotelInvest – and strengthening its leadership position.
“In 2015, the economic environment is expected to continue to vary significantly from one region to another. In addition, along with the rest of the industry, we must meet the challenges created by the digital transition, which is spurring us to rethink our businesses, strengthen our ties with our customers whose needs and habits are changing, and adjust our corporate culture and operating procedures.
“Accor is a robust company with strong brands, dedicated teams and clearly defined objectives. This year, we will demonstrate once again our capacity to deliver on our objectives with determination and discipline – driving further progress in our strategy and our operating and financial performance and becoming the best performing and most highly valued hotel group for our guests, our partners, our employees and our shareholders.”
Financials
- Growth in revenue: up 3.8% like-for-like to €5,454 million
- Strong recurring free cash flow of €304 million
- Improved EBIT, up 11.7% like-for-like at €602 million
- Operating profit before tax and non-recurring items up 22.1% like-for-like at €578 million
- Net profit of €223 million: +77%
- Dividend of €0.95 per share: +19%
- Solid operating performance in second-half 2014, thanks to a steady business level, including in France, and the measures taken as part of the cost-savings plan.
2014 highlights
- Complete reorganization of the Group around the HotelServices and HotelInvest businesses
- Various refinancing transactions carried out in support of the Group’s strategy, for a total amount of €3.7 billion
- Investment of €1 billion in the Group’s property portfolio
- Stronger partnership with Orbis in Central Europe
- Acquisition of a 36.6% stake in Mama Shelter
- Launch of the Digital Plan of €225 million
- Signature of a long-term alliance with Huazhu (China Lodging) to step up the development of the Group’s brands in China
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