Sustained growth and solid results in 2012 - Accor enters a deep transformation process to drive further growth

PR Newswire/Les Echos/ 
Press release
February 20, 2013 

                  Sustained growth and solid results in 2012
      Accor enters a deep transformation process to drive further growth
                             Solid results in 2012

* Growth in revenue, up 2.7% like-for-like(1) to EUR5,649 million
* Improvement in EBIT, up 3% like-for-like to EUR526 million
* Operating profit before tax and non-recurring items, up 4.1% like-for-like to
  EUR468 million
* Net profit of EUR80 million, before the impact of the Motel 6 disposal
* Ordinary dividend of EUR0.76 a share, up 17% compared with 2011 (subject to
  shareholder approval)
* Record expansion with the opening of more than 38,000 rooms, 85% of which
  under management or franchise agreements
* EUR1,402 million reduction in adjusted net debt thanks to the asset 
  management strategy, of which EUR606 million from the asset management 
  program and EUR796 million from the disposal of Motel 6.
                          2013-2016: a new ambition

* Confirmed expansion plan of 30,000 rooms per year through organic growth, 
  with an EBIT margin above 15%
* Extended Asset Management plan, with 800 hotels to be restructured, for a
  total negative impact of EUR2 billion on the Group's revenue, and a 
  EUR2 billion reduction in Adjusted Net Debt
* About EUR30 million annual investment plan to consolidate the Group
  distribution systems
* A EUR100 million savings plan between 2013 and 2014, to maintain the Group's
  competitiveness, in an environment shaped by increasing operating costs and
  accrued competition in Europe
* A clear improvement in the Group's economic performance by 2016-end, implying
  a structurally strong cash-flow generation 1At constant scope of 
  consolidation and exchange rates

(1) At constant scope of consolidation and exchange rates

Accor's performance in 2012 was shaped by:

* Sustained revenue growth in every segment, driven by steadily rising room
* An improvement in EBIT, to EUR526 million, at the upper end of the target
  range announced in August 2012
* The generation of positive free cash flow before non-recurring items, at
  EUR150 million
* The disposal, on October 1st, of Motel 6 to Blackstone
* The effective launch of the ibis megabrand program, with the rebranding of
  more than 1,500 hotels
* The issue in June of EUR600-million in five-year, 2.875% bond, with a further
  EUR100 million tranche successfully added in September.

2012 full-year results

(in EUR millions)                                   
                                   2011             % change          % change
                            adjusted(1)    2012  adjusted(1)   like-for-like(2)

Revenue                           5,568   5,649        +1.5%         +2.7%
EBITDAR(3)                        1,759   1,788        +1.7%         +1.9%
EBITDAR margin                    31.6%   31.7%      +0.1 pt         -0.3 pt
EBIT                                515     526        +2.0%         +3.0%
Operating profit before tax 
and non-recurring items             428     468        +9.4%         +4.1%
Net profit before loss from 
discontinued operations             248      80         N/A           N/A
Loss from discontinued     
operations                        (221)   (679)         N/A           N/A
Net profit/(loss), 
Group share                          27   (599)         N/A           N/A

(1) Following signature of the sales agreement with Blackstone, the 
    consolidated income statements for the two periods presented have been 
    adjusted for the reclassification of Motel 6's income statement items in 
    the loss from discontinued operations.

(2) At constant scope of consolidation and exchange rates

(3) Earnings before interest, taxes, depreciation, amortization and rental

Consolidated revenue for the year ended December 31, 2012 totaled EUR5,649
million, up 1.5% year-on-year on a reported basis and 2.7% at comparable scope 
of consolidation and exchange rates (like-for-like).

Business in emerging markets remained robust throughout the year. Revenue was
stable overall in Europe, with key markets holding firm (led by a good
performance in the capital cities) and the situation in Southern Europe
remaining difficult.

By segment, like-for-like growth came to 2.7% in the Upscale & Midscale and 
2.6% in Economy hotels. The gains were due to rising room rates across every 
segment and a 16.5% organic growth in management and franchise fees.
    * A new record year for development

In 2012, 266 hotels, or 38,085 rooms, were opened, of which:
   - 85%(2) were under management contracts or franchise agreements.
   - 48% were in the Asia-Pacific region, 28% in Europe, 14% in Latin America
     and 10% in Africa Middle East.

The development momentum remains very strong, with 112,600 rooms in the 
pipeline as of December 31, 2012, of which 84% were under management contracts 
or franchise agreements and 77% in emerging markets (52% in the Asia-Pacific
region, 17% in Latin America and 8% in Africa Middle East). 
* Stable performance in Upscale & Midscale hotels 
In the Upscale & Midscale segment, revenue increased by 1.4% as reported and by
2.7% like-for-like in 2012. 
The segment's EBITDAR margin was stable at 28.8% of revenue (down 0.1 point as
reported and 0.5 point like-for-like). This represented a satisfactory
performance given, in particular, the renovation of several Pullman hotels and
the continued deterioration in the Southern European economies. 
* Good performance in Economy hotels 
Revenue from Economy hotels increased 3.4% as reported and 2.6% like-for-like. 
EBITDAR margin stood at a record high 38.6%, up 0.4 point as reported and 
stable like-for-like, supported by robust demand and the segment's sustained
development under asset-light agreements, particularly in emerging markets. A
total of 15,000 rooms were opened in the ibis family during the year. 
Solid improvement in EBIT 
Consolidated EBITDAR(3) totaled EUR1,788 million, up 1.9% year-on-year
like-for-like and 1.7% as reported. EBITDAR margin widened by 0.1 point as
reported to 31.7% of consolidated revenue. 
EBIT rose by 3.0% like-for-like over the year, to EUR526 million (2011: EUR515
million), led by the reduction in depreciation and amortization charges due to
the asset management program. 
Operating profit before tax and non-recurring items rose to EUR468 million from
EUR428 million in 2011, a like-for-like gain of 4.1% that partly reflected the
significant improvement in net finance expense, to EUR75 million from EUR92
million in 2011, due to a reduction in the average cost of debt. 
Net profit excluding the impact of the Motel 6 disposal was EUR80 million.
Reported net profit was impacted by the non-recurring EUR679 million accounting
loss on the Motel 6 disposal, including asset write-downs and the exercise of
call options on fixed-lease hotels. As a result of this non-recurring loss,
Accor posted a net loss of EUR599 million. 
Funds from operations rose to EUR694 million (2011: EUR670 million). Recurring
expansion expenditure amounted to EUR245 million for the year, while hotel
maintenance and renovation expenditure totaled EUR299 million, including EUR39
million related to the ibis megabrand program. 
(2) In number of rooms 
(3) Earnings before interest, taxes, depreciation, amortization and rental 
In 2012, cash flow was positively impacted by assets disposals totaling EUR352
million. The acquisitions of Mirvac for EUR193 million and of Grupo Posadas'
Latin American operations for EUR217 million, combined with the payment of
EUR114 million in a special dividend and the EUR158 million change in working
capital, had a EUR195 million impact on consolidated debt in 2012, with the
result that net debt amounted to EUR421 million at December 31, 2012. 
Consolidated return on capital employed rose to 14% at December 31, 2012 from
13.9% a year earlier. ROCE improved to 11.4% in the Upscale & Midscale segment,
due to the successful deployment of the asset disposal program, and ended the
year stable at 19.5% in the Economy segment, reflecting the roll-out of the 
ibis megabrand and the ongoing room renovation work in ibis budget hotels. 
At December 31, 2012, Accor had EUR1.5 billion in unused, confirmed long-term
credit lines. The Group also optimized its cost of debt over the year with the
successful issue of EUR600-million in 2.875% bonds, with a further EUR100
million tranche added in September. These EUR700 million bond issue will be 
used in 2013 to retire EUR700 million in bonds and other loan debentures 
carrying an average 6.14% in interest, thereby leading to a significant 
decrease in financial expenses. 
Continued deployment of the asset management program 
In 2012, 79 hotels changed ownership structure and are now operated under
variable-rent leases, management contracts or franchise agreements. Another 20
hotels were sold during the year. These transactions had the effect of reducing
adjusted net debt by EUR606 million. 
As of February 20, 2013, following the announced sale and management-back of 
the Sofitel Paris Le Faubourg and a variety of other transactions, the impact 
of property disposals on adjusted net debt amounted to EUR111 million. As a 
result, Accor has now met its objective of a EUR1.2 billion impact on adjusted 
net debt over the 2011-2012 period. 
These transactions have confirmed Accor's ability to pursue a dynamic asset
management strategy. 
A new ambition for 2016 
As part of the ongoing transformation of its business model, which is being
driven both by fast growth under management and franchise contracts and by a
dynamic asset management strategy, Accor is now committed, by the end of 2016,
to operating its portfolio a room base 40% under franchise agreements, 40% 
under management contracts and 20% in owned or leased hotels. 
This transformation will also lead to a geographical shift in the income stream,
with the target of earning 50% of EBIT from emerging markets by the end of 2016
(15% of EBIT was earned from emerging markets at the end of 2011.) 
This process will involve consolidating the Group's existing leadership in
emerging markets, restructuring the portfolio in Europe to focus on a majority
of management and franchise contracts, and strengthening the Group's expertise
and accountability. 
It will be supported by five key drivers: 
1. Strengthening the brands and distribution
2. Maintaining the fast pace of development
3. Stepping up the asset management program
4. Improving organizational efficiency
5. Achieving operational excellence to improve competitiveness 
1. Strengthening brands and distribution 
Today, Accor has a comprehensive portfolio of strategically related brands,
covering the entire market from Luxury to Economy. It intends to strengthen 
this strategy, which is essential in an asset light model for both guests and 
owners. The other critical challenge in an asset-light model is distribution, 
which is constantly evolving. Accor will invest about EUR30 million a year 
between now and the end of 2016 to increase online bookings to 50% of the total
and to limit the influence of online travel agents. 

    2. Maintaining the fast pace of development

After another year of record investment, Accor has confirmed its ambitious
objective of opening 30,000 new rooms and acquiring 5,000 others, with 85% of
them operated under asset-light structures.
The EBIT margin targeted for this expansion is close to 17%.
By 2016, development expenditure will decrease to between EUR100 million and
EUR150 million a year, from EUR250 million in 2012, and will be primarily
dedicated to economy hotels in strategic cities around the world.
    3. Stepping up the asset management program

Asset management is one of the core pillars of the Group's transformation. The
2013-2015 plan, designed to reduce adjusted net debt by EUR1 billion, has been
accelerated with a new plan for 2016 that will restructure some 800 hotels, of
which nearly 200 are owned and 600 leased. 83% of this restructuring process
will take place in Europe.
The total impact on revenue will amount to EUR2 billion. The impact on
consolidated adjusted net debt will total EUR2 billion by the end of 2016, of
which EUR1 .3 billion from owned hotels and EUR700 million from lease contracts,
including EUR600 million in exit costs for fix-leased hotels i.e. less than 3
years of rental charge. 

    4. Improving organizational efficiency 

To support the transformation, Accor is reorganizing its corporate functions
around two departments:

 - The Operations Department, with, since January 1st, 2013, an organization by
   brands in Europe committed to optimizing each one's identity, reputation,
   distribution and asset-light development.

 - The Property Management Department, which will be established in first-half
   2013. Its central objectives will be to implement the asset management plan,
   manage and optimize capital expenditure and manage property asset turnover.

Support functions will back activities in both departments.
    5. Achieving operational excellence to improve competitiveness

In response to the structural increase in operational costs, a more competitive
market environment (evolution of online distribution) and the sustained
deterioration in market conditions in Southern Europe, Accor has launched a
EUR100-million cost savings plan for the 2013-2014 period. In particular, the
plan will involve a strategic review and prioritization of projects, as well as
a reduction in operating costs for the Group and its subsidiaries in Europe. 
This will come as part of the Operational Excellence program already underway,
which notably implies disciplined cost management. The objective is to
systematically strengthen and optimize the strategic transformations launched 
by the Group. 
Through implementation of the above strategy by 2016 Accor is targeting to: 
- Reduce its adjusted net debt by EUR2 billion, of which EUR1.3 billion for
  owned hotels and EUR700 million for leased hotels.
- Improve consolidated operating margin above 15% and ROCE above 18%.
- Structurally reduce capital expenditure to an annual envelope of EUR300-400
  million, of which EUR100-150 million of expansion capex and EUR200-250 
  million   for maintenance and renovation capex.
- Reduce its sensitivity to cycles by 50% vs. 2010. 
Together, this will considerably optimize the structural generation of cash 
Besides, Accor confirms its commitment to keep its investment grade status. In
that frame, the Group will continue to explore opportunistic acquisitions
offering ROCE above 12% and will return cash to shareholders through ordinary
dividends (with a 50% pay-out ratio) and special dividends. 
Upcoming events 
- April 17, 2013: First-quarter 2013 revenue 
- April 25, 2013: Annual Shareholders' Meeting 
Other information
The Board of Directors met on February 19, 2013 and approved the financial
statements for the year ended December 31, 2012. The 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 on
the website. 
Accor, the world's leading hotel operator and market leader in Europe, is
present in 92 countries with nearly 3,500 hotels and 450,000 rooms. Accor's
broad portfolio of hotel brands - Sofitel, Pullman, MGallery, Grand Mercure,
Novotel, Suite Novotel, Mercure, Adagio, ibis, ibis Styles, ibis budget and
hotelF1 - provides an extensive offer from luxury to budget. With more than
160,000 employees in Accor brand hotels worldwide, the Group offers its clients
and partners 45 years of know-how and expertise. 
Agnès Caradec                             Elodie Woillez
Senior Vice President, Corporate          Phone: +33 (0)1 45 38 87 08
Communications and External 
Phone: +33 (0)1 45 38 87 52 
Sébastien Valentin                        Léa Ledermann
Vice President, Investor Relations        Investor Relations
and Financial Communication               Phone: +33 (0)1 45 38 86 36
Phone: +33 (0)1 45 38 86 25 
                    Adjusted 2011 Income Statement 
In EUR millions                     2011         2011         2011 
                            Reported      Motel 6     Adjusted  
Revenue                            6,100          532        5,568 
EBITDAR                            1,923          164        1,759 
EBIT                                 530           15          515 
Operating profit before tax 
and non-recurring items              438           10          428 
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-0- Feb/20/2013 08:02 GMT
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