Accor suffers double-digit drop in Q1 revenue

Hospitality giant Accor has revealed its first-quarter results for 2020, with the impact of COVID-19 telling by the significant decline in overall revenue and RevPAR.

Accor’s consolidated revenue for the first three months of this year totalled €768 million ($1.3 billion) – down 17 per cent on a reported basis from the previous corresponding period, and down 15.8 per cent on a like-for-like basis.

Revenue for Accor’s management and franchise business, which sits under its HotelServices arm, was down 34.9 per cent on a like-for-like basis, with its performance hit by the gradual spread of the coronavirus in various regions.

RevPAR fell by 25.4 per cent, which Accor said was reflective of the sharp deterioration in the environment due to the worldwide spread of COVID-19, first in the Asia Pacific (down 33.7 per cent) and then in other regions, including Europe (down 23.2 per cent) and the US (down 22.2 per cent).

Accor noted that compared to other countries, Australia’s decline in RevPAR was somewhat less pronounced at 18.2 per cent, due to COVID-19 having a more limited impact.

“This decline was also mitigated by the hotels being used for quarantine, which had a positive short-term impact on RevPAR,” the company noted.

Changes in the scope of consolidation (acquisitions and disposals) had a negative impact of €7 million ($11.7 million) on Accor during the first quarter, largely due to the disposal of Mövenpick-leased hotels.

Currency effects had a negative impact of €4 million ($6.7 million), mainly due to the Australian dollar, but offset by the US dollar.

During the first quarter of 2020, Accor opened 58 hotels, representing 8,000 rooms, which it said was a “very satisfying level” given the current environment.

Looking forward, Accor said that while it is unable to estimate the financial impact the COVID-19 crisis will have on its results and financial position for the 2020 fiscal year, the company predicts a €170 million ($285.1 million) earnings shortfall.

The company noted that this amount reflects the gradual closure of a majority of its portfolio in March, and only “very partially” incorporates the positive impacts of its cost-saving measures taken at the end of March.

“These are ramping up and will produce most of their results in the coming months,” Accor said.

These measures include a travel ban, hiring freeze and reduced schedules or furloughing for 75 per cent of global head office teams for Q2, a review of the recurring investment plan for 2020, and significant cost reduction measures in areas such as sales, marketing and IT to offset drastic fee decreases.

Accor expects April and May to be the most difficult months of the year, with very low occupancy rates and strong uncertainty about timing and lockdown relaxation, as well as the pace for border re-openings.

However, it noted that a few markets are showing some positive signs of recovery, primarily China.

Commenting on Accor’s Q1 results and outlook, CEO and chairman Sébastien Bazin said: “The group is in a strong position to address the current situation and we are taking aggressive measures to adapt our organisation.

“Accor’s recent transformation has left the group with a robust balance sheet which will enable it to absorb the economic consequences of this crisis in the coming quarters.

“At the same time, we are preparing for the recovery alongside the authorities and professional organisations in the countries in which we operate so that the group will be well-positioned to rebound as quickly as possible.”

Featured image supplied by Accor.

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accor coronavirus COVID-19 financial results hospitality hotels Q1 results