The overall first-quarter performance was good for Accor. In upscale and midscale hotels, growth was driven by the favorable impact of the shift in the Easter vacation calendar and by business in Germany. The economy segment in Europe continued to expand. In the United States, the economy segment was lifted by a favorable market environment.

The services business posted sharp increases. The Group is continuing to implement its strategic initiatives, as reflected in the asset disposal and expansion programs.

Accor’s consolidated revenue rose 10.4% to 1,850 million euros in the first three months of 2006. At constant scope of consolidation and exchange rates, the increase was 5.9%.

In the Hotels business, the solid 5.2% like-for-like increase in revenue was due partly to a shift in the Easter vacation dates in a number of European countries, which had a positive 0.6-point impact on growth. Fees from management and franchise contracts for the quarter were up 13.3% at constant exchange rates.

The Services business posted a substantial 15.9% like-for-like increase in revenue.

Business expansion accounted for 3.4% of reported growth. Expansion in the Hotels business represented 3.8% of revenue growth, with the opening of 57 hotels, whereas in Services, it accounted for 5.3% of growth, mainly through four acquisitions: Hungastro in Romania, Delicard in Sweden, Stimula in France and Commuter Check in the United States.

Asset disposals had a negative 2.9-point impact on growth. As part of the disposal of 200 non-priority hotels, 52 hotels were sold during the past 12 months, as well as two non strategic activities: facilities management business in Brazil and public catering operations in Luxembourg.

The currency effect added 3.9 points to revenue growth and primarily reflected the appreciation of the Brazilian real and the US dollar against the euro.

Upscale and Midscale Hotels

Revenue in the Upscale and Midscale segment rose by 7.8% as reported and 5.5% like-for-like.

Excluding the impact of the shift in the Easter holiday period, revenue was up 4.5% like-for-like for the period.

In Europe (excluding France), the trend was favorable, with revenue rising 8.1% like-for-like. Germany reported a 10.9% like-for-like increase, thanks to an improved economy, the favorable impact of the Easter holidays, and the fact that business seminars and conventions were moved forward because of the FIFA World Cup to be held, beginning of June. Revenue in the United Kingdom was up 9.5% like-for-like, reflecting a still favorable business cycle. Growth was led by an increase in business customers and a strong performance by hotels in London. In Italy, the 13.3% like-for-like increase was due mainly to the Winter Olympics.

In France, like-for-like growth in revenue, which was just 0.9%, was affected by the program to renovate 128 hotels as part of the Fonciere des Murs transaction. Growth was greater in Paris (up 1.8%) than in other regions (up 0.3%).

In the rest of the world, the 8.5% like-for-like increase in revenue was led by strong demand, especially in North America, where revenue grew by 4.7% (11.5% when restated to take into account the Sofitel Los Angeles, currently being fully renovated), and in emerging markets, where the increase was 9.7%.

Economy Hotels (outside the United States)

In the Economy segment (excluding the US), revenue rose by 9.2% as reported and 3.6% like-for-like.

The segment was relatively unaffected by the shift in the Easter vacation calendar, which had a positive but modest 0.4-point impact on growth.

In Europe (excluding France), the strong 4.9% like-for-like increase was led by Germany, which reported 6.0% growth due to the same reasons as already mentioned (more favorable economy and positive impact of the Easter holiday schedule).

In France, revenue growth (1.8% like-for-like) was held back by a three-point decline in the Formule 1 and Etap Hotel occupancy rate, specially outside the Greater Paris area.

Economy Hotels in the US

The sharp rise in revenue was confirmed during the period, with a like-for-like increase of 6.6%. The currency effect accounted for 9.6 points of the 15.4% increase in reported revenue.

Like-for-like revenue was up 6.6% for Motel 6 and 5.2% for Red Roof Inn. Fees from franchise contracts for the quarter were up 29.8% at constant exchange rates

Implementation of the Red Roof Inn renovation program continued, with 107 hotels completed and 16 underway.

Services

Revenue from the Services business climbed by 15.9% like-for-like and 28.4% as reported.

This strong performance, especially in Belgium (up 22.1% like-for-like), the United Kingdom (up 27.4%) and Venezuela (up 33.7%), was led by favorable changes in regulations and new product launches over the past months.

Like-for-like revenue increased by 12.5% in Europe and 21.5% in Latin America.

The currency effect, mainly linked to the appreciation of the Brazilian real, was a positive 9.2%.

Other businesses

For the period, travel agency revenue was up 4.3% as reported and 4.1% like-for-like.

Revenue from the casino business rose by 0.8% like-for-like and 1.2% as reported.

Revenue from the restaurant business increased 8.9% like-for-like and 19.9% as reported.

Revenue in the onboard train service business declined by 0.1% like-for-like and by 0.5% as reported.
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