“In 2020, the hotel industry navigated an unprecedented crisis,” said Sébastien Bazin, chairman/CEO, Accor. “In response to the pandemic, Accor, its employees and its owners made an extraordinary effort across the globe to support those most affected, continuing to uphold their values of generosity, hospitality and sharing. At the same time, the group’s rollout of measures to protect its financials was quick and disciplined. The measures delivered benefits over the second half of the year, and helped to limit the impact of the health crisis. The group also continued with the rollout of large-scale initiatives to plan ahead for the economic recovery and consolidate its leadership position in lifestyle: implementation of a new streamlined and agile organization, a merger with Ennismore through the creation of a dedicated entity comprising 12 unique hotel brands, and the signing of a strategic partnership with the Faena brand.”
He continued, “In 2021, while the vaccine is ensuring a gradual rebound in tourism—largely driven by leisure guests—Accor is ideally positioned to benefit from the recovery and press ahead with its roadmap.”
Against the unprecedented backdrop of the global health crisis, RevPAR was down 62% in 2020. This marked decline reflects the dramatic deterioration in the industry linked to the spread of the COVID-19 virus worldwide, as well as lockdown measures and border closures implemented by governments throughout the world.
Nevertheless, Accor saw signs of significant recovery in all regions in the third quarter, with a strong summer season in Europe, after the low point seen in the second quarter (RevPAR down 88.2% in Q2). The new restrictions implemented by European governments in response to the resurgence of the epidemic in the last quarter halted the summer recovery. Consolidated RevPAR was down 66.2% in Q4 and RevPAR in Europe was down 73.1%, while the gradual recovery continued in other regions.
During full-year 2020, Accor opened 205 hotels (28,942 rooms). At year-end 2020, the group had a hotel portfolio of 753,344 rooms (5,139 hotels) and a pipeline of 212,000 rooms (1,209 hotels), of which 73% in emerging markets.
As of Dec. 31, 2020, 82% of group hotels were open (more than 4,000 units).
Consolidated revenue
Consolidated full-2020 revenue totaled $1.982 billion (1.621 billion euros), down 54.8% like-for-like and down 60% as reported compared with full-year 2019.
HotelServices revenue
HotelServices, which includes fees from management & franchise (M&F) and services to owners, reported revenue of $1.396 billion (1.142 billion euros), down 59.8% like-for-like reflecting the decline in RevPAR as a result of the health crisis and government lockdown measures implemented worldwide.
M&F revenue amounted to $357 million (292 million euros), down 71.4% like-for-like. The sharper decline in this item compared with RevPAR reflects the collapse in incentive fees based on the hotel operating margin generated from management contracts.
Consolidated RevPAR was down 62% overall for the full-year, and down 64.5% for the second semester.
M&F revenue was down by 74.3% like-for-like in Europe, reflecting a 63.3% decline in RevPAR that was generally consistent across all segments.
- In France, RevPAR was down 57.6% like-for-like over the full-year 2020. After a promising third quarter driven by the regional cities (RevPAR down 49.1% in 2020) compared with Paris and the Paris region (RevPAR down 68.9% in 2020), the RevPAR recovery stalled in the fourth quarter with the second lockdown. The lack of foreign visitors continues to have a significant impact on the capital city.
- In the U.K., RevPAR fell by 73.3%. RevPAR in London was down 78.5%, slightly harder hit than the rest of the country (-67.3%) where domestic activity was stronger. The U.K. was affected by longer lockdowns than the rest of Europe as the resurgence of the pandemic was more virulent there.
- In Germany, where lockdown measures were reinstated in the fourth quarter, RevPAR was down 64.7% in 2020.
- In Spain, RevPAR fell by 74.9% in 2020.
M&F revenue in Asia-Pacific was down 63.8% like-for-like as a result of a 54.9% decline in RevPAR.
- In China, the recovery observed from the second quarter onwards gathered pace quarter after quarter, resulting in a 44.2% decline in RevPAR over the year (-18.1% in the fourth quarter). The luxury & premium segment outperformed the economy and midscale segments, reflecting the deep desire among the Chinese population to travel again. The new travel restrictions in place since the beginning of 2021, notably for the Chinese New Year, nonetheless highlight the fragility of the health situation and its impact on the recovery;
- In Australia, where the health crisis has by and large been well managed, RevPAR fell by 53.3% in full-year 2020. The recovery that began in December, the start of the summer season, continued. The country has kept its borders closed but benefits from strong domestic activity, like that seen in Europe in the third quarter, which has boosted leisure destinations. This was particularly positive for Mantra hotels.
The Africa & Middle East region reported M&F revenue down 74.6%, with RevPAR declining 59.9%. Business recovered slowly and gradually, particularly with a strong December for the United Arab Emirates thanks to the resumption of air travel.
North America, Central America & the Caribbean reported a 72% decrease in M&F revenue, in line with the drop in RevPAR of 73.9% in 2020. This sharp decline reflects the nature of Accor’s portfolio, with its many business hotels targeting group guests and MICE (meeting, incentives, conferences & events).
Lastly, activity in South America also enjoyed a gradual recovery with RevPAR down 61.9% in 2020. M&F revenue was down 65.3%.
Services to owners revenue, which includes the sales, marketing, distribution and loyalty divisions, as well as shared services and the reimbursement of hotel staff costs, came to $1.039 billion (850 million euros), vs. $2.283 billion (1.867 billion euros) in full-year 2019.
Hotel assets & other revenue
Hotel assets & other revenue was down by 45.8% like-for-like to $486 million (398 million euros). This segment saw a more moderate decline in business thanks to a more limited COVID-19 impact in Australia in the first quarter, and the delayed spread of the pandemic to Brazil. The Strata businesses in Australia (room distribution and management of common areas) also proved more resilient and benefited from leisure demand along the eastern coast of the country. The 63.0% decline in revenue as reported was exacerbated by the disposal of the Mövenpick leased hotel portfolio in early March 2020.
The division’s hotel base included 161 hotels and 29,102 rooms at Dec. 31, 2020.
HotelServices EBITDA by business
HotelServices EBITDA was negative at -$314 million (-257 million euros) for full-year 2020. This performance breaks down as positive EBITDA of $30.6 million (25 million euros) for M&F and a $344.9 million (-282 million euro) negative contribution from services to owners. The latter stems from high fixed costs coupled with a sharp decline in RevPAR for the sales, marketing, distribution and loyalty businesses.
M&F EBITDA by region
The M&F HotelServices division saw EBITDA down 97.0% like-for-like, with each region close to breakeven. The one noteworthy exception was Asia-Pacific, where EBITDA was positive for full-year 2020 thanks to a more rapid recovery in business.
Overall, the sharper decline in EBITDA vs. revenue can be attributed to the allocation of provisions for doubtful receivables as well as fixed costs.
Hotel assets & other EBITDA
Hotel assets & other EBITDA was $3.7 million (3 million euros) at year-end 2020 versus $264.2 million (216 million euros) at year-end 2019. The transformation towards an asset-light model has changed the geographical exposure and nature of this segment. It is currently driven mainly by Asia-Pacific, which includes the Strata businesses (room distribution and management of common areas), Accor Vacation Club (timeshare business) and AccorPlus (discount card program).
The 77.5% decline like-for-like reflects measures implemented to adjust the cost structure, limiting losses. These measures included headcount reductions and/or use of partial unemployment in Europe and in Australia.
The 98.5% decline in revenue as reported was resulting from the disposal of the Mövenpick leased hotel portfolio in early March 2020.
Tags: Accor, full-year results, Sébastien Bazin
