Accor said that it was looking to discipline and adaptability as it reported a softening into September.
The company was buoyed over the summer by the leisure market in France and improvements in China.
The group had over €4bn in liquidity at the end of September, with a monthly cash burn under €80m. At the end of the quarter 90% of its estate was open.
Group revenue in the third quarter was down by 63.7% life for like to €329m. Revpar fell by 62.8% during the period, an improvement after the second quarter, which saw a drop of 88.2%. The improvement reflected a recovery in business in all regions, particularly in Europe during the summer season. The group said that the downturn in leisure customers, in addition to the introduction of new restrictions after the end of August, had pushed the recovery down in September.
Accor opened 57 hotels during the third quarter of the year, or 7,800 rooms, against 58 hotels, and 8,000 rooms in the first quarter, taking the portfolio to 750,135 rooms or 5,121 hotels, with a pipeline of 208,000 rooms (1,192 hotels) with 75% in emerging markets.
Sébastien Bazin, chairman & CEO, Accor, said: “Our performances during the third quarter point to a marked recovery of business during the summer season. The worst of the crisis is now behind us, but our main markets are still substantially affected by the measures rolled out to combat the health crisis. Only China reports solid performances and should swiftly recover its activity level pre-crisis.
“Against this still uncertain context, discipline, adaptability and cost control are critical. We keep transforming our organisations to make the group even more efficient, more agile, and focused on the most profitable and promising markets and segments. We are also deploying additional sources of revenue, in our hotels and in our loyalty programme. These efforts will help us benefit faster from recovery and pursue our ambitious development of the group."
In France revpar was down by 44.6% like-for-like in the third quarter, a net improvement after a second quarter which lost 88.6%. This performance was the outcome of a recovery in leisure customers in provinces during the summer season, where revpar was down by 27.6%, while Greater Paris saw revpar down by 72.2% as a result of the absence of international customers.
In the UK, revpar fell by 79.8%, echoing the pattern in France, with revpar down by 91.8% in London and 67.2% in the provinces.
In China third quarter revpar fell by 29.4%, confirming the recovery of business seen in the second quarter. The group said: “This improvement continues month after month - September’s revpar was down by 16.8% - and the "golden week" vacation after the national holiday season, the first week in October, confirms the potential of domestic tourism.”
At the group’s HotelServices division, revenue was down 69% to €224m as Revpar fell. At Hotel Assets, revenue fell by 57.1% to €76m as a result of a fall in performance in Australia, where the bulk of the company’s assets were located.
The New Businesses division saw revenue dropped to €23m, down 43.6% like-for-like.
Insight: “Discipline” is very much the word which analysts would like to hear coming out of Accor’s mouth as it enters the winter, a winter which is likely to see not very much happening in the realms of customers travelling around, but, if the winds are anything to go by, may be perky for deals.
The group needs to convince investors and analysts that discipline is indeed its middle name - and that innovations such as “an autonomous urban mobility solution” can answer the question “and how does this make us money?”.
The business is on solid ground and has €4bn to keep that position shored up. It faces a tricky situation with AccorInvest and how it must have wished that it had managed to get the remaining stake away, as it had hoped, earlier this year. Now, as AccorInvest looks to refinance by Christmas, Bazin & Co may be dealing with a whole new set of investors and the suspicion is that some of them might be a little more sharky than the current incumbents. Discipline all ‘round.