Accor wary as Europe's crisis hits hotels
PARIS (Reuters) - Accor, Europe's largest hotel group, warned investors that profit could be below market expectations after demand for rooms in recession-hit southern Europe deteriorated further over the summer.
The French company, with more than 4,400 hotels ranging from the luxury Sofitel to the budget Ibis chains, on Wednesday said the trend for autumn bookings was "good" for the group overall, but it was difficult to make predictions for later in the year because of the uncertain economic climate.
Accor (ACCP.PA), the world's fourth-largest hotel group, has 63 percent of its rooms in Europe which is struggling with a debt crisis. The rest of its business is in faster-growing emerging markets of Asia-Pacific and Latin America, with a tiny exposure to the United States.
"Summer bookings are in line with what we expected except in southern Europe," chief financial officer Sophie Stabile said on a conference call.
"In that region, we thought business would stabilise and we are seeing a deterioration like we did in the first half."
In July alone, RevPAR (revenue per available room) fell 7 percent in mid and upscale hotels and 14 percent in budget hotels in southern Europe where the debt crisis is hitting hardest.
Accor predicted 2012 earnings before interest and tax EBIT.L would be in a range of 510-530 million euros against 515 million in 2011, restated for the sale of U.S. budget hotel chain Motel 6.
This was below the average of market forecasts of 533 million euros, according to Thomson Reuters I/B/E/S.
By 1002 GMT, Accor shares were down 2.4 percent, underperforming the CAC-40 index of French blue chips .FCHI.
Several analysts, including Bank of America Merrill Lynch called the guidance "disappointing" while one Paris-based trader said the cautious comments were "not good".
Earlier this month, Intercontinental said half-year operating profit rose 6 percent and that it continued to see growth for the future.
Accor, which trails InterContinental (IHG.L), Marriott MAR.N and Starwood (HOT.N) chains in the global market, posted a 10 percent rise in like-for-like first-half EBIT to 212 million euros, in line with expectations.
The company, which sold Motel 6 for $1.9 billion in May, is accelerating its growth in emerging markets and stepping up its shift to an "asset light" business model - operating more hotels under contracts rather than owning them - to cut debt.
The group set a new target to operate 40 percent of its rooms under franchise contracts, 40 percent under management contracts and 20 percent in owned and leased hotels by the end of 2016.
At end-June, Accor operated 25 percent of its rooms under franchises and 31 percent under management contracts.
Accor said consolidated debt climbed 578 million euros, reflecting the acquisition of Australian hotel group Mirvac and the payment of a special dividend, with net debt reaching 804 million at June 30.
The company, which opened 20,700 rooms in the first half, mainly under management and franchise contracts, said it hoped to end 2012 with a total of 40,000 rooms.
Accor shares have gained 35 percent this year, outperforming the STOXX Europe 600 travel and leisure index .SXTP, which has added 19 percent. (Editing by Erica Billingham)
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