Hotel giant Accor will allocate 25 per cent of a withdrawn dividend towards a new COVID-19 fund for its employees.
A special-purpose fund of €70 million ($125.5 million), drawn from Accor’s €280 million ($502) dividend withdrawal, has been allocated to provide relief to eligible employees.
The ‘All Heartist Fund’ will assist Accor’s 300,000 employees with the pledge to pay for their COVID-19-related hospital expenses, if they do not have social security or medical insurance.
In addition, the fund would assist furloughed employees under financial stress on a case-by-case basis and individual partners facing financial difficulty, Accor said.
The company will further deploy support to front-line healthcare professionals and non-profit organisations.
To support the fund, Accor’s board members collectively decided to reduce their attendance fees by 20 per cent.
Additionally, Accor chief executive and chairman Sebastien Bazin will forego 25 per cent of his compensation during the crisis.
The cash equivalent will also be contributed to the fund.
Accor to furlough 75 per cent of global head office
It comes as more than 2,500 of Accor’s properties worldwide remain closed, with more than 3,000 “likely” to shut in the coming weeks, the company said.
Accor, which holds a portfolio of 5,000 properties in 110 countries, revealed several ways it has been cutting costs since February to weather the impacts of COVID-19.
This includes furloughing 75 per cent of global head office teams in the second quarter of 2020, which Accor said would see a minimum €60 million ($107.6 million) reduction in general and administrative expenses.
Additionally, the company has implemented a travel ban, hiring freeze and reduced schedules, along with a review of its recurring investment plan for 2020, resulting in a €60 million ($107.6 million) reduction in capital expenditures.
Accor is further streamlining all other costs in sales, marketing and IT in line with lower system-wide revenues.
Thanks to its recent asset-light transformation and cash preservation strategy, Accor said it can today rely on a strong balance sheet, with more than €2.5 billion ($4.5 billion) in cash on hand and an undrawn revolving credit facility of €1.2 billion ($2.1 billion).
“While much uncertainty remains on the duration of this crisis, the group expects a severe impact on its 2020 performance, but remains bullish on the long-term perspective of the hospitality industry, for Accor, its employees, its owners and shareholders,” it said.
Furthermore, the company acknowledged the initial recovery of the Chinese hotel market, with mild improvements in occupancy and food and beverage activity, also noted by Marriott International and InterContinental Hotels Group.
Featured image: Twitter/@Accor
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