UPDATE 3-Accor ousts CEO to speed up strategy

Tue Apr 23, 2013 4:17pm EDT

* Board terminates mandate of Accor Chairman/CEO Hennequin

* Board names transition executive team, with Caillere CEO

* Citerne named non-executive Chairman, Bazin Vice-Chairman

* Activist shareholders have been pushing for change

* Accor shares close down 2.1 pct before board meeting ends

By Dominique Vidalon and Cyril Altmeyer

PARIS, April 23 (Reuters) - Accor SA ousted Chairman and Chief Executive Denis Hennequin on Tuesday and put a transition team in charge of Europe's largest hotel group amid a disagreement over the pace of change.

The French company named Chief Operating Officer Yann Caillere CEO, while board member Sebastien Bazin, the head of Colony Europe, was named vice-chairman to replace Philippe Citerne, who becomes non-executive chairman.

Hennequin is the third chief executive to be ousted from Accor, the world's fourth-largest hotelier, since U.S. investor Colony Capital invested in the group in 2005.

Private equity firm Eurazeo SA joined Colony at Accor in 2008 and together they own a combined 21.4 percent of the capital and command four board seats.

Sources have said the stakeholders were losing patience with the weak performance of Accor shares, down nearly 5 percent this year, and wanted to speed up asset sales and franchising to boost returns for investors.

Hennequin was hired in 2010 to accelerate an "asset-light" strategy of reducing Accor's exposure to capital intensive owned hotels in favour of franchises and management contracts.

During his tenure, he sold loss-making U.S. budget hotel Motel 6 for $1.9 billion and turned Accor, whose brands range from the luxury Sofitel chain to budget-oriented Ibis, into a pure hotel player, selling gourmet caterer Lenotre and a stake in casino group Lucien Barriere.

In February, Hennequin launched a three-year plan to reduce Accor's exposure to a weak Europe, stepping up expansion in emerging markets and cutting costs, while accelerating its move toward franchising or managing hotels for others to boost profit margins.

Accor, which makes more than 70 percent of its sales in Europe, said the plan would boost its operating margin to above 15 percent by 2016 against 9.3 percent last year.

Nevertheless, Accor, which competes with global rivals InterContinental Hotels Group Plc, Marriott International Inc or Starwood Hotles and Resorts Worldwide, said on Tuesday the change must be accelerated in the face of tough economic conditions, notably in Europe.

UNANIMOUS DECISION

"The directors came to the joint conclusion regarding the group's situation: that the strategy adopted is the right one and that it will remain unchanged," Accor said in a statement.

"However, given current economic conditions and the rapid transformation of its competitive environment, Accor must accelerate the implementation of this strategy in order to reinforce its positions."

Accor said Hennequin had reservations about giving top priority to transforming Accor's business model and so the board unanimously voted to terminate his mandate with immediate effect. Hennequin also resisted pressure to split property holdings from the hotel business.

Colony and Eurazeo declined to comment following the announcement on Tuesday.

Hennequin's exit is likely to draw attention again to the role played by the activist shareholders.

The former CEO of McDonald's Europe took the top job at Accor after his predecessor, Gilles Pelisson, was ousted in 2010 over "strategic differences" with the board.

Accor's market capitalisation of 5.9 billion euros ($7.7 billion) is little more than that of its former subsidiary Edenred SA, which was spun off in 2010. The meal vouchers company is valued at 5.6 billion euros.

Accor is scheduled to hold its annual shareholders meeting, which will be chaired by Citerne, on Thursday.

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