skift take
Despite early skepticism, the Paris Olympics brought a sugar rush to AccorHotels. But the company may need more than Olympic-sized live tourism events to sustain its rapid growth ambitions around the world.
sean o’neil
Accor raised its profit outlook after luxury hotels and the Paris Olympics boosted growth even as the French hospitality giant struggles with a weak Chinese domestic market.
“In luxury hotels, both room rates and occupancy increased, and RevPAR (revenue per available room) growth remained at +7%,” CFO Martine Gerow said in a meeting with analysts on Thursday. said during the third quarter conference call.
Accor’s strategy of diversifying its markets and price ranges appeared to be working.
The company raised its profit forecast for this year. The company now expects annual EBITDA, a measure of profit, to be between $1.18 billion and $1.22 billion (€1.1 billion to €1.125 billion).
💎 Luxury leads the way
Sales at Accor’s Luxury & Lifestyle division increased by 18% compared to the same period last year. Luxury resort hotels in Türkiye and Egypt performed very well. “Dubai was relatively flat.” Accor’s lifestyle hotels saw a 14% increase in revenue per available room.
🗼It was a wonderful summer in Paris
Due to the Olympics, room rates doubled on average and occupancy rates increased by 15 percentage points. “We expected revenue per available room to increase by about 2 percentage points on a full-year basis in France, and that’s pretty much what we’ve achieved,” Gerow said. In response to the excitement surrounding the 2023 Rugby World Cup, regional hotel sales in France slumped compared to the previous year.
🌏 Two stories told by Asia
Chinese tourists are increasing the number of overseas destinations they travel to. For example, Southeast Asia achieved double-digit growth in revenue per available room thanks to Chinese tourists. However, the Chinese domestic market remains in a difficult situation due to sluggish consumption. The region experienced a high-single-digit decline in revenue per available room compared to the same period last year.
👀 Trends to watch
Pricing power remains intact. Annual revenue growth per available room is projected to be 4-5%. The company’s transformation strategy is accelerating. Accor said 62% of the new rooms were converted from existing hotels from other brands or independent operators, compared to 50% of its previous rooms.
🔮What’s next?
Some analysts have speculated that Accor may sell its luxury goods and lifestyle division. “When it comes to luxury and lifestyle, we have absolutely no plans to do any capital transactions with this sector,” Gerow said, echoing previous comments from other Accor executives this year. Demand for business and group travel is currently growing twice as fast as demand for leisure travel. Gerow said major cities are estimated to see a “20% year-over-year increase in event attendance” in the fourth quarter. Netroom growth of 3.2% year over year suggests that Accor’s expansion machine is roaring, if not roaring. The increase in cancellation rates in the medium-sized sector reflects the fact that properties that do not meet quality standards are being excluded more than usual. Cleanup will slow down by the end of the year. The company’s two-axis strategy is clear from the numbers. Revenue per available room in the Luxury and Lifestyle segment increased 7%, outpacing the 5% growth in the Premium, Midscale and Economy segments. Although the segment remains small compared to mass-market brands, the numbers demonstrate management’s focus on the luxury market. Executives expect revenue growth per available room will likely “normalize” towards 3% to 4% in the long term, from the 4% to 5% range expected this year. I am doing it. Asked about hotel deals and competition from other hotel groups, management indicated that it was in the process of shifting its geographic mix away from its original European footprint. Regarding competition from other hotel groups, Gerow said: “We can protect ourselves and continue to grow our net unit numbers, including in Europe, but our priority growth markets are the Middle East and Southeast Asia.” .
Year-to-date performance of the Lodging Sector Stock Index
What am I looking at? Performance of hotel and short-term rental sector stocks within the ST200. The index includes publicly traded companies in global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations, and timeshares.
The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than $1 trillion into one number. See more performance in the hotel and short-term rental finance sector.
Read the complete methodology behind Skift Travel 200.
