Marked improvement from previous quarter and organic growth in rooms signify business recovery.
Leading hospitality group, Accor, has released its revenue report for the third quarter of 2020, which shows an average decrease of 63.7 per cent like-for-like due to the effects of Covid-19. While the group’s RevPAR fell by 62.8 per cent during the same quarter, it represents a significant sequential improvement in the wake of a difficult second quarter (RevPAR down by 88.2 per cent).
This improvement reflects a recovery in business in all regions, and most especially in Europe during the summer season. However, the downturn in leisure customers, in addition to the introduction of new restrictions after the end of August, pushed the recovery down in September.
Accor opened 57 hotels during the third quarter of the year, or 7,800 rooms, which are encouraging figures, in line with those of the first quarter (58 hotels, and 8,000 rooms).
By the end of September 2020, the group was operating 750,135 rooms (5,121 hotels), with a pipeline of 208,000 rooms (1,192 hotels) running at 75 per cent in emerging markets. That means 90 per cent of the group’s hotels were open for business, or over 4,600 units.
Reflecting on the results, Sébastien Bazin, Chairman and Chief Executive Officer of Accor, said: “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 loyalty programme.
These efforts will help us benefit faster from recovery and pursue our ambitious development of the group.”
Group revenue
Group revenue in the third quarter of 2020 came in at €329 million(USD million), down by 63.7 per cent at constant scope of consolidation and exchange rates (LFL) and by 68.7 per cent as reported data for Q3 2019.
| In € million | Q3 2019 | Q3 2020 | Change (as reported) |
Change (LFL)(1) |
| HotelServices | 760 | 224 | (70.5)% | (69.0)% |
| Hotel Assets | 273 | 76 | (72.3)% | (57.1)% |
| New Businesses | 42 | 23 | (44.2)% | (43.6)% |
| Holding & Intercos | (26) | 5 | N/A | N/A |
| Total | 1,049 | 329 | (68.7)% | (63.7)% |
(1) Like-for-like: at constant scope of consolidation and exchange rates.
Reported data showed the following details:
- Changes in the scope of consolidation (acquisitions and disposals) had an adverse effect of €36 million, mostly caused by the disposal of Mövenpick hotel leases.
- Currency effects had an adverse impact of €16 million, mostly related to the US dollar (-4.5per cent) and the Brazilian real (-29.7per cent).
HotelServices revenue
HotelServices, which combines fees for Management & Franchise (M&F) and services for owners, generated €224 million revenue, down by 69 per cent like-for-like. That points to the deterioration of RevPAR due to the impact of the Covid-19 epidemic and health restrictions taken by governments worldwide.
Revenue of fees from Management & Franchise (M&F) stood at €72 million, down by 72.4 per cent like-for-like, with a considerable fall in fees based on hotels’ operating margins (incentive fees) in management contracts.
| In € millions | Q3 2019 | Q3 2020 | Change (LFL)(1) |
| Europe | 146 | 44 | (69.6)% |
| Asia-Pacific | 54 | 15 | (70.8)% |
| Middle East & Africa | 24 | 4 | (73.9)% |
| North America, Central America & the Caribbean | 35 | 6 | (80.0% |
| South America | 13 | 2 | (87.2)% |
| Total | 272 | 72 | (72.4)% |
(1) Like-for-like: at constant scope of consolidation and exchange rates.
The Group’s RevPAR dropped by an overall 62.8 per cent during the third quarter.
Asia-Pacific Management & Franchise revenue was down by 70.8 per cent like-for-like, affected by RevPAR falling by 58.8 per cent.
In China, the third quarter (RevPAR fell by 29.4 per cent) confirms the recovery of business observed in the second quarter of the year. This improvement continues month after month (September’s RevPAR was down by 16.8 per cent), and the “golden week” vacation after the national holiday season (first week in October) confirms the potential of domestic tourism.
In Australia, RevPAR fell by 62.7 per cent in the third quarter. Business is restricted to domestic customers and hotel quarantines decreed by the government since the country’s borders are still closed.
Hotel Assets & Other Revenue
Hotel Assets & Other Revenue, standing at €76 million with a decrease of 57.1 per cent like-for-like, were impacted by the RevPAR decrease in Australia and Brazil. The “Strata” business in Australia benefitted from domestic leisure tourism in the country. In terms of reported data, the 72.3 per cent fall was increased by the disposal of the Mövenpick hotel lease portfolio in early March 2020.
As of September 30, 2020, Hotel Assets accounted for 163 hotels and 29,441 rooms.
Revenue from New Businesses
By the end of September 2020, New Businesses (concierge services, luxury home rentals, private sales of hotel stays and digital services for hotel owners) had revenue dropping to €23 million, or down by 43.6 per cent like-for-like.
FY 2020 EBITDA guidance
Accor usually announces an annual EBITDA guidance when it presents the half-yearly results and revenue for the third quarter. The present ever-changing environment and developments in the Covid-19 crisis do not afford sufficient visibility for a reasonable target range to be provided.
In this context, the Group is benefiting from its solid liquidity position, over 4 billion euros at the end of September, and despite limited visibility, it is confirming 2020 operational sensitivity indicators as follows:
- An EBITDA sensitivity per point of RevPAR under €20 million
- Monthly cash burn under €80 million.
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