February 21, 2018 / 6:10 AM / a month ago

Confident AccorHotels books record annual profit

PARIS (Reuters) - AccorHotels (ACCP.PA), Europe’s largest hotel company, reported record earnings for 2017 and said on Wednesday plans to sell a stake in its property business were in their final stages.

Sebastien Bazin, Chairman and Chief Executive Officer of French hotel operator AccorHotels, attends the company's 2017 annual results presentation in Issy-les-Moulineaux near Paris, France, February 21, 2018. REUTERS/Gonzalo Fuentes

AccorHotels, which has more than 4,000 hotels ranging from the budget Ibis to the luxury Sofitel brand, expressed confidence over its prospects for this year.

However, there was some disappointment over the lack of concrete news on plans for outside investment in its property unit AccorInvest — known as “Booster” by the company — and no increase in the annual dividend.

“The dividend has been maintained at the same level as last year and we suspect this reflects the delay of the Booster project,” wrote analysts at brokerage Berenberg, which kept a “sell” rating on Accor shares.

“We remain a seller on the basis that we believe the Booster completion will trigger smaller cash returns to shareholders than consensus expects,” added Berenberg.

Accor shares slipped 1 percent at the start of trading, although the stock then gradually recovered ground to trade flat by 0855 GMT. The stock is up around 6 percent so far in 2018.

“We had excellent and record 2017 results. In 2018, the trends seen in Asia, Europe will continue. Brazil will probably be better. We are approaching 2018 with confidence,” CEO Sebastien Bazin told a conference call with journalists.

He was speaking after AccorHotels reported a forecast-beating 10 percent rise in like-for-like operating profit to 492 million euros ($606 million) in 2017, helped by cost controls and robust demand in all key regions except Brazil.

This was above a revised company’s guidance for a 2017 EBIT at the upper end of a 460-480 million euros range, while analysts polled by Inquiry Financial for Reuters had forecast 481 million euros.

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AccorHotels competes with InterContinental (IHG.L), Marriott (MAR.O) and Starwood.

It has struck deals in areas such as concierge services to fight the rising challenges from companies such as Airbnb and online travel agents such as Expedia EPE.O.

InterContinental, which focuses on business customers, reported a 7 percent rise in annual operating profit on Tuesday along with plans to go further upmarket.


    The only region where Accor did not have strong growth last year was South America and in particular Brazil, which is slowly emerging from a recession, although Accor said trends had improved in Brazil in the fourth quarter.

    Bazin, who took over in August 2013, 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.

    In October, AccorHotels also clinched a deal to buy Mantra Group Ltd (MTR.AX) for A$1.18 billion to create the biggest hotel group in Australia. Bazin said he expected to finalize the deal during the second quarter of 2018.

    Kingdom Holding 4280.SE, Saudi billionaire Prince Alwaleed bin Talal’s investment company, has a 5.71 percent stake in AccorHotels and is its third-largest investor.

    Prince Alwaleed bin Talal was released last month from detention in an anti-corruption crackdown.

    Asked if there had been any signs of a possible change in the prince’s holding in AccorHotels, Bazin said: “We have been comforted on the fact that there was no change in governance, shareholding. Prince Alwaleeed is and remains the third-largest shareholder of this group.”

    Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta/Keith Weir

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