“With several of our key markets, including France and Brazil, shaken by crises and violent events, the Group showed remarkable resilience in the first half of 2016. We continued to invest heavily in order to grow, transform and gain a foothold in new businesses that are destined to become fundamental for the Group.
We will pursue this offensive strategy in the coming months. Our presence in 95 countries, our leadership positions in Europe, Asia-Pacific, Latin America, Africa and the Middle East, and our strength as the world’s leading hotel operator covering all segments from economy to luxury give us a major competitive edge. Combined with the launch of a project to turn our property division into a subsidiary and a strategy that gives priority to customer-focused innovation, these strengths will be the drivers of our future growth.
First-half 2016 highlights
- Robust growth in all of the Group’s key markets, except France and Brazil
- Record development, with the opening of 19,366 rooms, 90% of which under franchise or management contracts
- HotelInvest: Considerably improved performance, driven by restructuring
- HotelServices: Stable operating performance in the first half, before the impact of commitments relating to the digital plan, the deployment of onefinestay and the AccorHotels marketplace
Strategic transactions in first-half 2016
HotelInvest
- Further asset restructuring, with the restructuring of 120 hotels, of which 85 hotels in Europe transferred to Grape Hospitality
- 12 hotels transferred to Huazhu
- Preparation of the project to turn HotelInvest into a subsidiary
HotelServices
- Acquisition of the Fairmont Raffles Hotels International Group, with 98% support at the Shareholders’ Meeting of July 12, 2016
- Recruitment of 1,600 independent hotels, gradually integrated into the marketplace accorhotels.com
- Continued implementation of the digital plan
Creation of a world leader in luxury residential rentals
- Acquisition of onefinestay, the world leader in luxury serviced home rentals
- Acquisition of 30% of Oasis Collections, a digital platform offering a selection of apartments and associated services
- Acquisition of 49% of Squarebreak, an innovative digital platform offering upscale villas in France
Sustained revenue growth
Consolidated first-half 2016 revenue amounted to €2,598 million, up 2.0% year-on- year at constant scope of consolidation and exchange rates. The increase resulted from favorable business levels in most of the Group’s key markets: Northern, Central and Eastern Europe (NCEE: +4.1%), Asia- Pacific (ASPAC: +4.8%), Americas (+1.7%) and the Mediterranean, Middle East, Africa (MMEA: +3.2%).
- Germany and the United Kingdom were the main drivers in Northern, Central and Eastern Europe, delivering revenue growth of 4.3% and 4.4% respectively in the first half.
- The Iberian Peninsula drove growth in the MMEA area, with revenue up 11.5%.
Revenue was down 2.6% in France (RevPAR: -2.2%), with a very pronounced drop in Paris (RevPAR: – 12.0%), still affected by the events of November 13, 2015, as well as floods and strikes more recently, in May and June 2016. Regional cities reported excellent first-half activity (RevPAR: +6.0%), thanks to Euro 2016.
Revenue in the Americas was up 1.7%, driven chiefly by dynamic growth in Argentina (+57.2%), Mexico (+20.6%), Canada (+9.7%), Peru (+4.6%) and Chile (+1.4%), offsetting slower business in Brazil (-5.5%).
Revenue by business and region in H1 2016
Reported revenue for the period reflected the following factors:
- Development, which added €47 million to revenue and 1.7% to growth, with the opening of HotelInvest properties and acquisitions during the first half.
- Disposals, which reduced revenue by €143 million and growth by 5.2%.
- Currency effects, which had a negative impact of €86 million (-3.2%), resulting mainly from declines in the Brazilian real (€29 million), the British pound (€17 million) and the Australian dollar (€13 million).
First-half 2016 results
(1) Like-for-like: at constant scope of consolidation and exchange rates
(2) Earnings before interest, taxes, depreciation, amortization and rental expense
HotelServices & HotelInvest results – first-half 2016
The consolidated EBIT margin was down slightly at 9.2%. The HotelServices margin contracted by 4.9 points due to the ramp-up of the digital plan, and investments related to the marketplace and onefinestay.
The HotelInvest margin increased by 1.0 points to 6.6%, driven by further restructuring of the asset portfolio.
EBIT by region and businessAccorHotels recorded strong EBIT growth in the majority of its markets, with double-digit increases in the NCEE and MMEA regions. By contrast, France and Brazil adversely affected the Group’s profitability, as did HotelServices’ worldwide structures, which bear the impact of the commitments related to the digital plan, and the acquisition and development of onefinestay and FastBooking.
The very solid performance of the NCEE region (+10.5% LFL) was driven by strong business levels in Germany, the United Kingdom and Poland, and by the asset management strategy. The MMEA region continues to enjoy traction from the vigorous recovery in the southern European countries.
Lastly, the decline in earnings in France (-4.2%) was mainly attributable to lower demand in the wake of the 2015 terrorist attacks, particularly in Paris, while earnings in the Americas ( -54.5%) were dampened by the economic difficulties prevailing in Brazil over the past two years.
HotelServices
HotelServices detailed results – first-half 2016
The EBITDA margin excluding Sales, Marketing & Digital, the loyalty program and the acquisition of onefinestay was 49.1%, versus 48.4% in first-half 2015, a robust increase of 0.7 points.
As expected, the segment’s earnings were impacted by the implementation of the digital plan and commitments in the amount of €87 million this year, as well as by the acquisition of onefinestay. As such, HotelServices’ EBITDA declined to €163 million (-5.0% LFL); EBIT was €141 million, down 7.5% on a like-for-like basis.
HotelInvest
HotelInvest detailed results – first-half 2016
HotelInvest’s EBIT increased by 7.4% like-for-like to €145 million, putting the margin at a solid 6.6%, a significant improvement of 1.0 points compared with the year -earlier period. The increase is attributable to sustained hotel business, notably in the United Kingdom and Germany, but also to the dynamic management of the Group’s assets over the past two years.
Asset management policy
A total of 120 hotels were restructured in the first half of 2016, of which 81 leased hotels and 39 owned properties. These transactions had the effect of reducing adjusted net debt by €233 million.
The Group also sold a portfolio of 85 European hotels in the Economy and Midscale segments to the Grape Hospitality hotel platform, 70% owned by Eurazeo and 30% by AccorHotels.
Gross asset value
To ensure a detailed valuation of HotelInvest in the potential perspective of its transformation into a subsidiary before the end of first-half 2017, HotelInvest’s gross asset value will be subject to a new estimate in September 2016. As a reminder, its assets were valued at €6.9 billion at end-December 2015.
Robust cash-flow generation and sound financial position
In first-half 2016, funds from operations amounted to €320 million, versus €364 million in the year- earlier period. Recurring development expenditure was €135 million in H1 2016, versus €88 million in the prior-year period.
Renovation and maintenance expenditure was €84 million, versus €64 million in first-half 2015.
The Group’s recurring cash flow amounted to €102 million.
Consolidated net debt totaled €511 million at June 30, 2016, an increase of €705 million year-on-year, resulting mainly from acquisitions.
Following various bonds issued in 2014, the Group reduced the cost of its debt to an all-time low of 2.85% at end-June 2016.
As of June 30, 2016, AccorHotels also had an unused €1.8 billion confirmed long-term line of credit and €2.3 billion in cash.
Full-year 2016 EBIT target
The Group’s H1 2016 results reflect contrasting market situations. With the effectiveness of its strategic plan and substantial investments, its ability to generate robust cash flows and its sound financial position, AccorHotels was able to overcome the difficulties encountered in certain contracting markets, at a time when the relative impacts of Brexit, the terrorist attacks in France and Germany, and the situation in Turkey are still difficult to measure.
In this context, factoring in the consolidation of Fairmont Raffles Hotels International in the second half, the Group expects its 2016 EBIT to come within a broad range of between €670 million and €720 million. As in 2015, this range will be narrowed when the third-quarter revenue figures are published on October 18.