Bangkok--18 Mar--AccorHotels
Revenue up 16.9% to EUR3,610 million (+8.8% L/L)
EBITDA up 14.5% to EUR712 million (+8.0% L/L)
Recurring free cash flow of EUR529 million Net profit, Group share of EUR2,233 million 588 hotels and 100,000 rooms developed
Sebastien Bazin, Chairman and Chief Executive Officer of Accor, said: "Accor 2018 results reflect a profound transformation, marked foremost by the sale of our real estate division and a large number of acquisitions. Our results are clearly improving, with EBITDA, free cash flow generation and organic development all once again at record highs. They are also perfectly in line with our medium-term objectives. Accor' growth continues: we are increasing our global market share and consolidating our balance sheet. In 2019, the Group will continue along this path. With the launch of ALL, Accor gives life to its augmented hospitality model servicing both its customers and partners. This ambitious and unique initiative in the hotel industry will help promoting the Group and its brands, increasing customer loyalty and optimize its mid-term performance."
In 2018, Accor benefitted from solid business momentum in most of its markets and continued its transformation toward an asset-light model through the disposal of 64.8% of AccorInvest and the swift redeployment of the cash proceeds from core acquisitions. Capitalizing on a record organic increase of its network with 43,905 rooms opened (300 hotels), the Group ended 2018 with a hotel portfolio of 703,806 rooms (4,780 hotels) and a pipeline of 198,000 rooms (1,118 hotels), 78% of which in emerging markets and 49% in the Asia-Pacific region alone.
Solid growth in revenue
Consolidated 2018 revenue amounted to EUR3,610 million, up 8.8% at constant scope of consolidation and exchange rates (like-for-like) and up 16.9% as reported compared with 2017. The difference between the like-for-like and reported changes stems primarily from the acquisitions completed over the year (including Mantra and Moevenpick), partly offset by a negative currency effect.
Reported revenue over the year reflected the following factors:
- Changes in the scope of consolidation (acquisitions and disposals) had a positive impact of EUR394 million (+12.8%), due to the contributions of Mantra, Moevenpick, Atton, Gekko, ResDiary and Adoria.
- Currency effects had a negative impact of EUR144 million, attributable chiefly to declines in the US dollar (EUR37.1 million), the Brazilian real (EUR31.9 million) and the Australian dollar (EUR28.4 million). The decline in currencies against the euro was felt primarily in H1 2018, with a residual impact in H2 2018.
Management & Franchise revenue by region
The combination of solid RevPAR growth and rapid development drove the robust like-for-like M&F revenue growth for Europe and Asia-Pacific of 8.7% and 8.4%, respectively. In Middle East & Africa, revenue declined by 1.1% following the closing of some hotels and despite a slight 1.8% improvement in RevPAR. Conversely, the continued buoyant trading conditions in North America, Central America & the Caribbean and in South America translated into strong revenue growth of 17.1% and 13.8%, respectively.
The Luxury segment accounted for 38% of the Management & Franchise fees in 2018. This segment's contribution to revenue generation will continue to grow over the next years through the opening of many upscale hotels currently in the pipeline.
Group RevPAR was up 5.6% overall in 2018.
Asia-Pacific continued to perform well, posting RevPAR growth of 4.3% over the full year, with a clear inflexion in Q4, following signs of a slowdown observed early in the year. China remains solid with a 6.8% RevPAR growth over the year.
New Businesses (concierge services, luxury home rentals, private sales of luxury hotel stays, and digital services for hotels) recorded like-for-like revenue growth of 2.4% to EUR149 million in the 12 months to December 2018, compared with EUR100 million in 2017. On a reported basis, growth came to 49% on the back of the acquisition of Gekko, ResDiary and Adoria. Completed in 2018, the three acquisitions made a positive contribution to the Group's earnings.
Availpro and Fastbooking, which have been grouped together under the d-edge brand, also reported positive results for the first time since their acquisition.
Regarding onefinestay and John Paul, the Group is continuing its work to turn the two businesses around, primarily through rationalization programs.
Revenue derived from the Group's Hotel Assets & Other segment grew by 8.4% like-for-like, reflecting the economic recovery in Brazil and excellent performances in Central Europe (Orbis). On a reported basis, the 44.5% growth was driven by the consolidation of Mantra and Moevenpick.
Robust increase in EBITDA
Consolidated EBITDA amounted to EUR712 million in 2018, up 8.0 % like-for-like and up 14.5% as reported compared with 2017, in line with the Group's guidance of between EUR700 million and EUR720 million published in October. The EBITDA margin was roughly stable on a like-for-like basis at 19.7%.
EBITDA by business in line with expectations
Up 11.0% as reported and 12.3% like-for-like, HotelServices' 2018 EBITDA was EUR705 million, compared with EUR635 million in 2017. The New Businesses reported an EBITDA loss of EUR28 million in line with the guidance of between EUR25 million and EUR30 million announced. Hotel Assets & Other delivered a good performance, with growth of 9.4%, well above the range of 5% to 7% expected over the medium term and presented during the Capital Market Day in November.
HotelServices and Holding & Intercos (corporate overheads) together reported 10.7% like-for-like EBITDA growth, well in line with the guidance of 10% to 12% by 2022.
Record recurring free cash flow and robust financial position
In the 12 months to December 31, 2018, recurring free cash flow increased by 22%, reflecting 83% cash conversion (EBITDA – recurring investment). This performance results mainly from EBITDA growth and lower recurring investment.
Recurring investments, which include HotelServices' key money and digital and IT investments, as well as maintenance investments in remaining owned and leased hotels, came to EUR124 million in 2018, down from EUR161 million in 2017, mainly due to calendar effects.
Net debt amounted to EUR1,153 million at December 31, 2018, down EUR735 million over the year. The EUR4.8 billion in cash proceeds from the disposal of 65% of AccorInvest were mostly reinvested in 2018
At December 31, 2018, the average cost of the Group's debt was 1.9% and average maturity was 3.6 years.
Further efforts to consolidate Accor' expansion in 2019
Now focused totally on its asset-light model, Accor is concentrating on the key areas of distribution, loyalty and brand strength. The Group today announces the launch of a new customer promise embodied by the "ALL-Accor Live Limitless" program which will combine our distribution platform and a new experiential loyalty program. ALL will centralize all the Accor offer within a unique platform giving birth to its Augmented hospitality model. Members of the program will get access to a global range of experiences "Live, Work, Play", well beyond the hotel stay. In this context, Accor today announces a signing of several global partnerships notably with AEG, IMG and the Paris Saint Germain football club, as ALL will notably become the main shirt sponsor as of the next season. To support these initiatives, the Group will invest EUR225 million from the EUR4.8 billion cash proceeds generated by the Booster transaction with a view to create EUR75 million of incremental EBITDA per year in the mid-term.
These investments will facially weight on the Group's consolidated accounts, by c.EUR(55) million in 2019 and c.EUR(45) million in 2020. Given their exceptional nature, they will be specifically identified in the Group's accounts and they will be restated to assess dividend.
The program is expected to reach breakeven in 2021, then generate an incremental EUR60 million in 2022 and EUR75 million per year from then on. The Group will therefore exceed its 2022 EBITDA target of EUR1.2 billion that was presented last November
Accor will unveil the details of this strategy during its FY18 results presentation this morning, then at the International Hotel Investment Forum (IHIF), which is due to open in Berlin on March 4. Accor and Paris Saint Germain will hold a joint press conference on February 22 at the Parc des Princes in Paris.
Events in 2018
Governance
On September 20, Chris Cahill, until that date CEO Luxury Brands and CEO North America, Central America & the Caribbean region, assumed the role of Deputy CEO responsible for Hotel Operations. Jean-Jacques Morin, until that date Chief Financial Officer, was appointed Deputy CEO responsible for Finance, Communications and Strategy.
Financing
On July 2, the Group announced that it had established a new EUR1.2 billion revolving credit facility for which the Group's environmental, social and governance (ESG) performance would be taken into account in calculating the margin.
AccorInvest
On May 31, Accor sold 57.8% of the capital of AccorInvest to sovereign wealth funds Public Investment Fund (PIF) and GIC, institutional investors Colony NorthStar, Credit Agricole Assurances and Amundi, and other private investors.
On July 25, Accor received a binding offer from Colony NorthStar to acquire an additional tranche of 7% of AccorInvest's share capital, for EUR250 million.
Hotel activities
On April 5, signature of a strategic agreement to acquire a 50% stake in Mantis Group, a South African hospitality and travel conglomerate.
On April 19, signature of a memorandum of understanding with Ctrip to offer the best possible experience to Chinese travelers.
On April 30, signature of an agreement with Moevenpick Holding and Kingdom Holding to acquire Moevenpick Hotels & Resorts, for EUR482 million.
On May 14, signature of an agreement between Accor, Algeciras and the shareholders of Atton Hoteles for the acquisition of Atton Hoteles.
On May 31, acquisition of the Mantra Group for EUR830 million.
On June 29, signature of a letter of intent with sbe Entertainment and entry into exclusive negotiations to acquire a 50% stake in the sbe group.
OnJuly 23, Katara Hospitality and Accor created an investment fund with an investment capacity of over USD 1 billion dedicated to hospitality in Sub-Saharan African countries.
On July 31, the Group signed an agreement to acquire 85% of 21c Museum Hotels. The transaction was completed at the end of September.
On September 4, Accor completed the acquisition of Moevenpick.
On October 5, Accor completed the acquisition of a 50% stake in sbe Entertainment.
On November 26, Accor announced the launch of a tender offer for 100% of Orbis' shares.
New businesses
On April 9, acquisition of ResDiary, a leading platform for restaurant reservation and table management.
On June 6, acquisition of Adoria, a SaaS platform that enables the catering industry to optimize supply management.
Other
On October 25, Accor announced the acquisition of the "Tour Sequana" building, its head office since 2016 located near Paris in Issy-Les-Moulineaux, for an amount of EUR363 million.
Events after December 31, 2018
In January 2019, Accor successfully completed two liability management operations:
On January 24, Accor successfully placed two new bonds, for EUR1.1 billion:
- a EUR500 million perpetual hybrid bond with a 4.375% coupon;
- a EUR600 million 7-year senior bond with a 1.75% coupon.
Both transactions were oversubscribed by about 6 times, reflecting investors' strong confidence and the success of the Group's new business model, its growth potential and its attractive risk profile.
On January 31, Accor successfully closed two tender offers and partially repurchased two bonds, of which a perpetual hybrid bond (4.125% coupon) and a senior bond maturing in 2021
(2.625% coupon), for a total amount of EUR736 million:
- EUR386 million on the perpetual hybrid bonds (EUR900 million bond issue in June 2014);
- EUR350 million on the 2021 bonds.
On January 23, Accor confirmed the acquisition of 33.15% of Orbis for around EUR339 million. Accor now owns, directly and indirectly, 85.84% of Orbis' share capital. As a result, Accor has strengthened its control of Orbis and consolidated its leadership in the region. As announced on November 26, the Group shall explore options to increase the value of Orbis' asset portfolio.
Upcoming events in 2019
April 18, 2019: Publication of first-quarter 2019 revenue
April 30, 2019: Ordinary Shareholders' Meeting
Other information
The Board of Directors met on February 20, 2019 and approved the financial statements for the year ended December 31, 2018. 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 availablefrom the www.Accor.group website.