Strong increase in earnings* in 2017
driven by robust business
and very dynamic development
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Business volume up 19% to €17.9 billion
Revenue up 17.7% to €1,937 million (+7.9% LFL)
EBIT up 23.9% to €492 million (+10.1% LFL)
Net profit up 66.4% to €441 million
301 hotels and 51,413 rooms opened
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Sébastien Bazin, Chairman and Chief Executive Officer of AccorHotels, said:
“AccorHotels’ earnings for 2017 mark another leap in performance, with excellent operating results and record development. The Group continues to benefit from positive market trends with a confirmed increase in volumes. Against this buoyant backdrop, AccorHotels continues to pursue its dynamic trajectory, consolidate its market share and enrich its range of services for customers and partners. The Group has never been so strong. By developing our "augmented hospitality" model, we are at the forefront of an industry that is constantly transforming and has unlimited prospects.”
*AccorHotels Group excluding AccorInvest (IFRS 5)
In 2017, AccorHotels benefited from very strong business in the majority of its key markets, significantly increasing its operating margins and results on the back of tight cost control, the synergies resulting from its acquisition of FRHI and the careful management of digital expenses. Capitalizing on record development with the opening of 51,413 rooms (301 hotels), of which 94% operated under management and franchise contracts (including 10,000 rooms for Rixos Hotels and BHG), the Group ended 2017 with a hotel portfolio of 616,181 rooms (4,283 hotels) and a pipeline of 161,000 rooms (874 hotels), 78% of which in emerging markets and 47% in the Asia-Pacific region.
Solid growth in revenue
Consolidated 2017 revenue amounted to €1,937 million, up 7.9% at constant scope of consolidation and exchange rates (like-for-like) and 17.7% as reported compared with 2016. The difference between the like-for-like and reported changes stems primarily from the consolidation of FRHI and from the new businesses (+12.9%).
Reported revenue for the period reflected the following factors:
HotelServices reported business volume of €17.9 billion, up 19% (at constant exchange rates), and revenue of €1,746 million, up 14.6% as reported and 5.1% like-for-like.
This robust growth reflects sustained business in key regions, namely Asia-Pacific (+7.7%), Europe (+7.2%), France & Switzerland (+2.5%), but also North America, Central America & the Caribbean (+5.2%) and the Middle East & Africa (+2.7%).
The only region to post a decline was South America (-3.3%), although it was less pronounced than expected thanks to a very strong recovery in Q4 2017 (+13.4%).
HotelServices also benefited from the fact that the Luxury/Upscale segment represents a higher proportion of its portfolio since 2014, with 41% of its fees derived from this segment in 2017, compared with only 22% in 2014.
HotelServices’ RevPAR was up 4.7% overall.
In France & Switzerland, revenue was up 2.5% on a like-for-like basis, driven by a 4.2% increase in RevPAR. The difference between these growth rates stems from the closure in the third quarter of 2017 of 62 F1 hotels and closure for work of the Pullman Paris Montparnasse hotel since the summer. RevPAR was buoyed by a 6-point improvement in the occupancy rate resulting from the return of foreign tourists to Paris, especially for leisure stays (+20%). RevPAR was up 6.1% in Paris.
Europe posted like-for-like revenue growth of 7.2% on RevPAR growth of 6.5%.
Very well oriented, the Asia-Pacific region turned in revenue growth of 7.7%, thanks to excellent trends in the Economy (+14%) and Luxury/Upscale (+12%) segments.
With a 0.8% increase in RevPAR, the Middle East & Africa region posted solid revenue growth of 2.7%, driven by the Middle East (+7.1%) and sustained business in Egypt, Morocco and Tunisia.
North America, Central America & the Caribbean posted revenue up 5.2%. The region’s RevPAR (+5.7%) reflected very strong activity in the Leisure and Business segments in Canada (+13.6%).
Lastly, the situation was varied in South America, with RevPAR down 3.4% for the region. Regional revenue was down 3.3%, with Brazil facing a challenging situation, particularly in Rio which continued to be affected by a depressed socioeconomic environment and was impacted by the overcapacity generated by the Olympic Games. However, RevPAR trends observed in the fourth quarter are very encouraging for the future, all segments combined (+13.9%).
Organic development reached new record levels in 2017. AccorHotels opened 264 new hotels, representing more than 40,802 rooms; it enjoys very encouraging prospects, with a pipeline of 874 hotels and 161,000 rooms.
New Businesses (concierge services, luxury home rentals, private sales of luxury hotels and stays, and digital services for independent hotels) recorded like-for-like revenue growth of 6.9% to €100 million in the 12 months to December 2017, compared with €44 million in 2016.
John Paul continues its integration within the Group, taking charge of Customer Care and the rollout of AccorLocal in France, after very successful year-long tests in pilot hotels. At the same time, the acquisitions of Travel Keys and Squarebreak have rounded out onefinestay’s offer, which now spans a network of nearly 10,250 luxury destinations worldwide. Lastly, since January 2018, the New Businesses have included Gekko, a specialist in hotel distribution solutions dedicated to business customers.
The new businesses’ EBITDA was broadly stable in 2017. EBIT was affected by an increase in amortization linked to the acquisitions made in 2017. The Group expects to halve the loss in 2018 and to break even in 2019.
Revenue derived from the Group’s Hotel Assets also grew by 7.0% like-for-like. This good performance nevertheless masks a contrasting situation between Central Europe, which remains very buoyant, and Brazil, where the situation is still challenging, although the strong growth seen in the fourth quarter is very encouraging (+13.9%).
Strong increase in net profit, Group share
Sustained increase in EBIT
Consolidated EBITDA amounted to €626 million in 2017, up 8.1% like-for-like and 23.6% as reported compared with 2016. Stable on a like-for-like basis, the EBITDA margin was 32.3%.
EBIT totaled €492 million in 2017, compared with €397 million in 2016, an increase of 10.1% like-for-like and 23.9% as reported.
Results by business
Up 23.4% as reported and 8.6% like-for-like, HotelServices’ 2017 EBIT was €576 million, compared with €467 million in 2016. FRHI contributed 20% or €117 million of HotelServices’ EBIT, including €55 million in synergies.
Gaining 2.3 points, HotelServices’ EBIT margin firmed to 33.0%, compared with 30.7% in 2016. The increase can be largely attributed to improved business, the synergies related to the acquisition of FRHI and phasing of digital expenses to €42 million in 2017, compared with €54 million in 2016.
HotelServices’ EBIT by region
In line with the good business levels recorded in its various regions over the year, HotelServices posted very strong growth in EBIT in Asia-Pacific (+18.1%) and North America, Central America & the Caribbean (+22.3%), thanks to synergies with FRHI, and healthy increases in Europe (+6.1%) and France & Switzerland (+4.1%). By contrast, the Middle East & Africa region (-28.0%) underperformed amidst political tensions and an oil crisis in the Gulf region, as did South America (-28.1%) due to a persistently challenging situation in Brazil.
Record recurring cash flow and robust financial position
In the 12 months to December 31, 2017, funds from operations increased by 43% to €559 million, compared with €391 million in 2016, due to good levels of business in the majority of the Group’s markets.
Recurring investments, which include HotelServices’ digital and IT investments, as well as maintenance and Hotel Asset development investments, mainly related to the Orbis scope, edged down to €161 million, compared with €188 million in 2016.
As a result, and including a €37 million increase in working capital, the Group’s recurring cash flow rose to €435 million in 2017, compared with €199 million in 2016.
Net debt amounted to €1,888 million, up €206 million over the year, due primarily to acquisitions of €357 million and the dividend paid in respect of 2016 in the amount of €163 million.
At December 31, 2017, the average cost of the Group’s debt was 2.04%. In January 2017, AccorHotels issued a €600 million 7-year bond with a coupon of 1.25%. The Group also redeemed a €250 million 8-year bond with a coupon of 6.039%, and a second €367 million 5-year bond with a coupon of 2.875%.
Operating profit before tax and non-recurring items came to €538 million. On the basis of this result, AccorHotels will ask shareholders at the General Meeting of April 20, 2018 to approve the payment of a dividend of €1.05 per share.
Opening up of the capital of AccorInvest
Discussions are ongoing with tier-one French and international investors. They are now in their final stages.
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Presentation of the 2017 results
On July 12, 2016, AccorHotels announced its intention to spin off and dispose of its real estate operations, united under AccorInvest. In accordance with IFRS 5, the assets held for sale have been placed in a separate line item on the balance sheet and in the income and cash flow statements. The financial data presented in this press release reflect this accounting treatment.
AccorHotels is now structured around the following segments:
HotelServices is divided into six operating regions:
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Events in 2017
Upcoming events in 2018
April 18, 2018: Publication of first-quarter 2018 revenue
April 20, 2018: Combined Ordinary and Extraordinary Shareholders' Meeting
The Board of Directors met on February 20, 2018 and approved the financial statements for the year ended December 31, 2017. The consolidated financial statements have been audited and the Auditors' report is being issued. The consolidated financial statements and notes related to this press release are available from the www.accorhotels-group.com website.
RevPAR excluding tax by segment – 2017
MEA: Middle East & Africa
NCAC: North America, Central America & the Caribbean
MEA: Middle East & Africa
NCAC: North America, Central America & the Caribbean
Carina Alfonso Martin
Vice President Media Relations Worldwide
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