February 21, 2019 / 6:44 AM / 5 months ago

AccorHotels' 2018 profit rises, beefs up lifestyle loyalty initiatives

PARIS (Reuters) - AccorHotels, Europe’s largest hotel company, posted record operating profits for 2018, helped by cost controls and robust demand in most key regions including France and Brazil.

The logo of French hotel operator AccorHotels is seen on top of the building company's headquarters in Issy-les-Moulineaux near Paris, France, April 22, 2016. REUTERS/Gonzalo Fuentes/File Photo

The French company said it would invest 225 million euros ($255 million) over coming years to support new initiatives to boost its presence in hospitality and entertainment services.

These initiatives, which form a lifestyle loyalty program codenamed “ALL-Accor Live Limitless”, include the signing of partnerships with entertainment group AEG and a multi-year deal to become principal partner and official jersey sponsor of the Paris Saint-Germain (PSG) soccer team from the 2019/20 season.

These investments will cost AccorHotels 55 million euros in 2019 and 45 million euros in 2020.

The program is expected to reach breakeven in 2021 and the group expects it will help it exceed its 2022 core earnings or EBITDA target of 1.2 billion euros that was presented last November.

Shares in the group were down 2.3 percent in early trade having on Tuesday reached their highest in more than two months.

AccorHotels, which runs high-end chains such as Raffles and Sofitel as well as budget brands such as Ibis, said annual EBITDA reached a record 712 million euros, up 8 percent on a like-for-like basis and in line with revised company guidance for core earnings between 700 million and 720 million.

Revenue reached 3.61 billion euros, up 16.9 percent on a reported basis and driven by acquisitions. On a like-for-like basis revenue grew 8.8 percent.

Revenue per available room (RevPAR), a key gauge of activity, grew 6.6 percent in France, with strong gains of 12.2 percent in Paris. In South America, Brazil confirmed its recovery in 2018 for the AccorHotels company.

AccorHotels said it benefited last year from a general pickup in the broader French tourism sector, despite anti-government violence across France and riots on the Champs Elysees in Paris during the fourth quarter.

Basin has been cutting costs and expanding in China and the luxury hotels market, with AccorHotels having bought FRHI Holdings, the owner of London’s Savoy and New York’s Plaza hotels as well as Australian hotel group Mantra.

AccorHotels has also struck deals in areas such as concierge services and luxury rentals to try to combat competition from the likes of Airbnb.

In February 2018, AccorHotels agreed to sell 55 percent of its AccorInvest property business to sovereign and institutional investors for 4.4 billion euros.

It has used 2 billion euros of that cash to fund acquisitions and bought back shares for 850 million euros. It also recently raised its stake in Polish company Orbis to 85.8 percent, deputy CEO Jean-Jacques Morin said.

(This refiled story fixes typo in paragraph three.)

Reporting by Dominique Vidalon; Editing by Bate Felix and David Holmes

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