New Accor boss plans aggressive expansion

New Accor boss plans aggressive expansion

The new chief executive of Accor Hotels has pledged a more aggressive expansion as part of his new plan to drive Europe’s largest hospitality chain.

Denis Hennequin says the group will also be “more ambitious” in branding and image, whilst also adding 101,000 new rooms across Asia-Pacific and Europe.

He replaced Gilles Pélisson last month after the nephew of the group’s co-founder resigned following “strategic differences” with the board and its main shareholders.

The private equity firms, Colony Capital and Eurazeo, collectively own 29 percent of Accor and have progressively built stakes in the chain after an initial investment of €1bn in 2005. However the shares have stagnated since their initial investment.

Hennequin on Wednesday said Accor would follow a dual strategy. It is expanding, with 101,000 new rooms planned for the next few years, 42 percent of which will be in Asia-Pacific and 32 percent in Europe. It will also accelerate asset sales to strengthen the balance sheet, in favour of management contracts and franchises.

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Pélisson is the second chief executive to have lost his job since the arrival of Colony and Eurazeo. However he was able to oversee the demerger of Accor’s service vouchers business last year in a move supported strongly by the two shareholders.

The exceptional €4bn gain on the spin-off resulted in net income last year of €3.6bn against a net loss of €282m in 2009. Operating profit was €6m above the group’s recent guidance, at €446m.

Hennequin said Accor would pursue a dual strategy. It is expanding, with 101,000 new rooms earmarked for the next few years, 42 per cent of which will be in Asia-Pacific and 32 per cent in Europe. It will also accelerate asset sales to strengthen the balance sheet, in favour of management contracts and franchises.

Accor has 507,000 rooms in 4,229 hotels, making it Europe’s largest hotel chain on room numbers. It increased its target for asset sales to €1.2bn by the end of 2012, up from €800m previously.

Mr Hennequin acknowledged criticism of the large number of brands but said it was “too soon” to say whether he would reduce the range, which spans the upmarket Sofitel to Formule 1, a basic hotel. He also would not comment on whether the group would sell Motel 6, the underperforming US economy chain.