* Accor splits into hotel operator and hotel owner/investor
* No further sale of owned hotels unless underperforming
* CEO keeps 2013 EBIT goal, sets no targets for new strategy
* Shares down 5 pct to lowest in a month
(Rewrites first paragraph, adds CEO quotes, analyst comment)
By Dominique Vidalon
PARIS, Nov 27 Accor's new chief has
stymied expectations that his strategic rethink at the hotels
group would result in more cash-generating disposals and cost
cuts, offering instead a reorganisation he said would boost
Shares in the company, which had spiked to a 2-1/2 year high
ahead of Wednesday's statement, dropped more than 5 percent to
their lowest in over a month.
Three months after joining Accor from the private equity
group which is one of its biggest shareholders, Sebastien Bazin
set out a strategy which he conceded meant no further disposals
of owned hotels unless they were underperforming.
"Sorry to disappoint you, that's behind us... If we had sold
our assets, this would have hampered our growth," Bazin told
"Success is our only option ... This is a transformative
development that cannot be done in six months. I am impatient
but I have to control my own impatience," he said.
Under former CEO Denis Hennequin, Europe's largest hotels
group by revenue had been selling real estate and using the
proceeds to grow in emerging markets to offset European
weakness. Bazin had been expected to speed up that strategy, as
well as cutting costs.
The CEO did not provide any targets under his plan, but said
those set under a three-year revamp initiated a year ago by
Hennequin were no longer valid. "We are banking on returns well
above the previous plan," he said.
Societe Generale analyst Sabrina Blanc said investors may be
disappointed because they expected a new cost-cutting plan and
an acceleration of the group's transformation.
Bazin confirmed Accor's target to achieve an operating
profit of between 510 million euros ($691.6 million) and 530
million in 2013, compared with 526 million last year.
"I want Accor to become the world's best-performing and
best-valued hotel group," he told journalists.
PACE OF CHANGE
Bazin, previously Europe head of Colony Capital, one of
Accor's biggest shareholders, had been unhappy with the pace of
change under Hennequin and as CEO he is under pressure to prove
he can improve the group's performance.
Colony and fellow private equity firm Eurazeo are
Accor's top investors with a combined 21.4 percent holding.
Bazin's strategy entails splitting Accor into a fee-oriented
hotel operator and franchisor, HotelServices, and a hotel owner
and investor, HotelInvest.
He did not give any timetable for his strategy to take
effect, nor quantify any savings it could generate, saying he
understood analysts' frustrations but did not want to
Accor, which competes with the likes of InterContinental
, Marriott and Starwood, has lagged the
profit margins of some of its peers, as a large part of its
hotels are owned or leased, generating lower profitability and
returns on invested capital than franchised hotels or those
under management contracts.
Accor achieved an operating margin of 9.3 percent last year,
whereas InterContinental - which owns less than 1 percent of its
hotel portfolio - had a margin of 33 percent.
Under the new plan, HotelServices will operate nearly 3,600
hotels and 460,000 rooms worldwide under 14 brands and will be
"a high margin and cash generative business", Accor said.
Proforma 2012 figures give HotelServices revenue of 1.12
billion euros and an EBIT of 372 million, or a margin of 33
HotelInvest will start with a portfolio of 1,400 hotels, of
which nearly 300 are in full ownership. The business had
pro-forma 2012 revenue of 5.12 billion euros and an EBIT of 239
million, or a margin of 5 percent.
Bazin's revamp also involves the creation of a new executive
committee of 10 members, including five regional heads of
By 1100 GMT Accor shares were off 3.7 percent at 32.310
euros, against a 1 percent rise in the European sector.
The stock, which before the April ouster of Hennequin had
been stuck at around 27 euros, or nearly half a 2007 peak, has
since then jumped 29 percent, surpassing the European sector's
15 percent advance amid hopes Bazin can improve the
($1 = 0.7374 euros)
(Editing by James Regan and David Holmes)