Accor Operating Profit Rises 68% Amid Asset Divestment Strategy

The Tip Desk · June 30, 2017 · 2 min read

The hotel group is restructuring its business model to separate management services from property ownership.

Accor, the hotel operator, reported a 68.0% increase in consolidated operating profit for the first half of 2017. The company attributed this growth to a 33.9% increase in activity and a 33.8% increase in development, which included 54 million euros from FRHI.

The company is executing a strategic reorganization to separate its business into two poles: HotelServices, which focuses on management and franchising, and HotelInvest, which handles property ownership. Accor has moved to legally separate these activities across 26 countries into a holding company called AccorInvest Group. This entity includes approximately 940 hotels.

Accor intends to finalize the sale of a majority stake in AccorInvest by the end of 2017. The company said it will remain the preferred manager for the hotels owned by the new entity and will retain ownership of the brands. Because of this pending sale, the company has presented AccorInvest activities separately in its financial statements under IFRS 5.

Parallel to the divestment, the company expanded its luxury and digital offerings through several acquisitions. Accor acquired a 75% stake in the luxury private sales platform VeryChic on March 31, 2017, for 24 million euros. It also acquired Travel Keys on May 3, 2017, for 7 million euros. In April 2017, the company acquired 83.3% of Availpro, a digital solutions provider for independent hoteliers.

Further diversification into high-end services included a 39.5% stake in the prestige catering group Potel & Chabot on May 17, 2017. The company also acquired a 31% stake in the Parisian event and entertainment group Noctis on June 6, 2017. In the luxury resort segment, Accor entered a long-term joint venture with Rixos Hotels, acquiring 50% of the venture on June 14, 2017, and adding 15 hotels to its network.

To support its financing, the company issued 600 million euros in 7-year bonds on January 18, 2017, with a coupon of 1.25%. In terms of property assets, Accor purchased the walls of five hotels in Budapest for 68 million euros.

Following the reporting period, the company announced the acquisition of a 50% stake in Nextdoor on July 25, 2017, in partnership with Bouygues Immobilier. On July 26, 2017, Accor acquired 100% of the villa rental company Squarebreak. The company also announced it will merge Travel Keys, Squarebreak, and onefinestay under the onefinestay brand by the end of 2017 to provide access to more than 10,000 residences.