Accor to Separate Operating From Investing Units in New Plan
Accor SA (AC), Europe’s largest hotel operator, announced a reorganization that will focus the business on operating and owning hotels, reversing a previous plan to divest properties. The stock fell as much as 5.5 percent in Paris trading.
Accor, based in the French capital, will build two businesses managed by a new executive committee with regional directors, the company said in a statement today. HotelServices will operate 3,600 properties, including Ibis, Novotel and Sofitel hotels. HotelInvest will own and purchase hotels.
The new strategy spells “the end of expansion through leases and no further disposals of hotels, unless they are structurally underperforming assets,” the company said in the statement.
The strategic change is Accor’s first since Chief Executive Officer Sebastien Bazin took office in August after Accor fired his predecessor, Denis Hennequin, in April. Accor was in the first year of a three-year reorganization that included reducing its share of leased or owned properties. Bazin is the former head of European investing at Accor shareholder Colony Capital LLC.
Accor was down 4.7 percent at 31.97 euros as of 9:09 a.m. That cuts this year’s gain to 20 percent and gives the company a market value of 7.28 billion euros.
Separating the units will allow Accor to improve its profitability and spend less on running the company, although cost-cutting is not the priority, Bazin said in a phone interview.
“I didn’t do the plan because of an additional 100 million euros ($136 million) in cost savings,” Bazin said. “The plan was done under the premise of how to be more pertinent and agile.”
The business now grouped under HotelServices had 1.1 billion euros of revenue at the end 2012, and 387 million euros in earnings before interest, taxes, depreciation and amortization, the company said. HotelInvest had 5.1 billion euros in revenue and EBITDA of 531 million euros.
Most of the new hotels will be acquired in Europe, where there is high demand for budget and mid-scale properties, with occasional purchases possible in emerging markets, Bazin said.
“It will be a different portfolio,” he said. “It’s not a question of the amount available, it’s a question of opportunities.”
Accor now has 31 percent of its hotels in France, 31 percent in the rest of Europe, 23 percent in Asia, 8 percent in Latin America and 6 percent in Africa and the Middle East, according to the company website.
Accor will be run by regional managers. Under the previous structure, businesses were managed across continents. The new focus will allow the company to reduce costs by giving managers more flexibility when making decisions, according to the statement.
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