Accor more than doubles profit

Accor more than doubles profit - CEO to step down

September 09, 2005 |

Europe's largest hotel group Accor SA said its first-half net profit more than doubled, as it announced that CEO Jean-Marc Espalioux is to step down in January.

Europe’s largest hotel group Accor SA said Wednesday its first-half net profit more than doubled, as it announced that CEO Jean-Marc Espalioux is to step down in January.

Net profit at Europe’s largest hotel group jumped to 156 million euros ($195 million) in January through June from 64 million euros in the year-earlier period, boosted by stronger pricing in its hotel rooms and the sale of hotel properties.

Accor, which owns the upscale Sofitel hotels as well as chains including Novotel, Mercure, Ibis, Motel 6 and Red Roof Inns, said it will look for a new CEO to replace Espalioux, who has run the company for nine years, “with a view to overseeing the group’s new phase of development.”

The company plans to open about 200 new hotels this year, mostly in Europe and emerging markets, and 1,000 hotels by 2009.

Accor’s results are “in line and pretty solid,” said an equity strategist, who foresees “no major shift in strategy going forward” despite the upcoming management change.

Accor shares closed down 1.16 euros ($1.44), or 2.7 percent, to 42.33 euros ($52.59) in Paris trading.

Accor’s results, which were stated under the new International Financial Reporting Standards, reflect a recovery in the travel industry, with Europe being the last region to turn the corner.

Revenue per available room, a common measure in the hotel sector, has also risen at Accor’s competitors, including Hilton Group PLC and Starwood Hotels & Resorts Worldwide Inc.

Operating profit rose 23 percent to 230 million euros ($287 million) from 188 million euros, slightly ahead of the consensus forecast. Revenue rose 6.8 percent to 3.64 billion euros ($4.55 billion) from 3.41 billion euros.

Higher prices in Accor’s hotel rooms in Europe and North America contributed to improved operating margins in the upscale and midscale division, made up of the Sofitel and Novotel chains, and in budget hotels outside the United States, such as the Ibis chain.

The profitable services division, which sells restaurant and human resources vouchers, posted a 16 percent operating profit increase.

Accor booked a 109 million euros ($136 million) capital gain in the first half from the sale of some hotel properties that it is leasing back. The company expects the program to continue with the sale of six Sofitel hotels and 80 midscale hotels by the end of June, 2006.

The travel recovery continued in July and August, despite terrorist attacks in London and Egypt. Accor said revenue rose across its hotels businesses, most notably at budget hotels in the United States.

For the full year, Accor said it is targeting 300 million euros ($374 million) in net profit and 590 million euros to 610 million euros ($737 million to $761 million) in pretax profit.