French hotel and services group Accor has managed to ‘limit margin erosion’ in a first half which saw an overall 40.6% drop in pretax profits, or 22.8% on a like-for-like basis, to €180m.
Its hotel operations were hit by the usual suspects of war in Iraq, SARS and the general economic slowdown. It also adds ‘social unrest in France in May and June’ into the equation. This half. hotels recorded revenues of €2.4bn resulting in an EDITDAR of €659m, an 86% drop on H1 02’s. The €2.4bn revenue was only 5% shy, or 1.1% like-for-like. Like-for-like turnover in the half was 53% down.
Accor went into more detail at this morning’s analyst presentation than it did in its press release. It reported a sharp decline in leisure numbers over the Q2, with an 11.2% drop in the number of rooms sold to leisure customers compared with 4.3% fewer business guests. Accor’s mix of business to leisure is 70:30.
April was the lowest point in its hotels’ performance. RevPAR at its European upscale and midscale hotles were 15.6% down on 2002.
‘Limiting margin erosion’ was Accor’s self-picked highlight, and this angle was used at the analysts’ presentation. Despite ‘the combination of events unprecedented in the tourism industry’ it reported an EDITDAR margin of 24.7% compared with 26% in the first half. Accor puts this down to ‘a balanced business portfolio and efficient management costs’.
Accor splits its hotel ops into three reporting units. Economy hotels in the US, including Motel 6 and Red Roof Inns, reported EDITDAR of €169m giving it margin of 34.6% compared with 37.6% last time. Economy hotels outside the US, include the UK-present Ibis, saw EDITDAR of €185m on a 34.5% margin, only 0.3% off last year. Upscale and midscale Sofitel, Novotel and Mercure brands made €305m on a 25% margin compared with 02’s 24.8% margin.