Accor: Increasing Responsiveness at Every Level
May 13 2009 - 1:44AM
PR Newswire (US)
PARIS, May 13 /PRNewswire-FirstCall/ -- Faced with an unprecedented
recession, which caused business to decline more quickly in the
first quarter and offers few prospects for an improvement in the
second, Accor is focused more than ever on the battle for revenue
in the Hotels business and on stepping up its marketing initiatives
in Prepaid Services and has decided to take a certain number of
additional measures to reduce costs and scale back capital
expenditure. Enhancing responsiveness also requires lean, agile
governance structures. Accor shareholders are therefore asked at
today's Annual Meeting to approve a reduction in the number of
Board members from 17 to 12. In the same commitment to speeding up
the decision-making process in a time of crisis, the Group has also
streamlined its management structures by reducing the number of
Executive Committee members to 9 (see the May 11, 2009 press
release) and the number of operating regions in the Hospitality
business to 3. Marketing responsiveness - Focusing more than ever
on the battle for revenue in Hotels With its efficient distribution
platforms, particularly in online channels, Accor is able to launch
major super sale promotions that can have an immediate impact on
revenue. Through the end of May, for example, the "Happy Nights"
campaign will offer online bookers more than 700,000 rooms at
cut-rate discounts in three succeeding waves, starting in Germany
and Austria (100,000 rooms), followed by France, Italy and Belgium
(500,000) and ending in the United Kingdom (100,000 rooms). -
Stepping up marketing initiatives in Prepaid Services The Prepaid
Services business is continuing to launch new products and win new
markets, with, for example, Holiday Vouchers in Romania and the
CESU Social human services vouchers in France (a market worth
EUR300 million). The business is deploying an ever-greater number
of programs to win new customers and retain existing ones.
Marketing initiatives launched since the beginning of the year are
designed to attract 800,000 additional users in 2009. In addition,
sales forces have been increased in fast growing regions, such as
Italy, Romania, Asia and Chile. Reducing operating costs in owned
or leased hotels by EUR120 million In the current business
environment, Accor has targeted a fixed operating cost response
ratio[1] of 35% in the owned and leased hotels in 2009. This ratio,
which would limit the negative impact on EBITDAR of a decline in
revenue, corresponds to a 5% reduction in fixed costs in owned and
leased hotels, for total savings of EUR120 million. Operating costs
will be reduced by optimizing operating structures, reviewing
purchasing policies and aligning service offerings with hotel
occupancy. When these measures deliver their benefits, a one-point
change in RevPAR would feed through to a EUR32 million increase or
decrease in profit before tax in the Hotels' business. Reducing
support costs by 15%, or EUR125 million Accor has decided to
increase the reduction in support costs from EUR100 million to
EUR125 million, corresponding to a 15% reduction of costs. Of the
total savings, EUR80 million will be realized in 2009 and EUR45
million in 2010. The first step in implementing this plan has been
to adjust the Group's organization, resizing teams to bring them in
line with the smaller number of projects and freezing hiring. A
detailed review of all the projects undertaken in recent years has
led to some of them being cancelled or postponed. This was
particularly the case for hotel renovation projects, back-office,
IT and distribution projects and image campaigns. At the same time,
the corporate sponsoring programs and the partnership agreements
were also reviewed. Lastly, the Group has reduced all of its
corporate overheads. Reducing renovation capital expenditure by
EUR170 million Annual renovation capital expenditure has been
scaled back to EUR315 million in 2009 and 2010, corresponding to a
EUR170 million reduction in 2009. Almost all of these cutbacks
concerned the Hotels business, whose renovation budget has been
reduced to EUR270 million, of which EUR120 million for security and
maintenance work, EUR30 million for major refurbishments and EUR120
million for product renovations and IT infrastructure upgrades.
Accor is staying on course In a challenging business environment,
the Group is leveraging its two strategically related core
businesses to improve its ability to weather cyclical downturns. It
enjoys a solid financial position. With a more streamlined
organization, Accor is staying on course and keeps on investing for
the future. The Group has indeed targeted to invest EUR400 million
in hotel expansion capital expenditure in 2010 (instead of 2011 as
previously announced). It corresponds to EUR100 million less than
in 2009. Of the total EUR400 million, EUR300 million will be
committed to driving organic growth and EUR100 million has been set
aside for possible acquisitions. In the Prepaid Services, the Group
confirms to dedicate EUR100 million for acquisitions. Accor, a
major global group and the European leader in hotels, as well as
the global leader in services to corporate clients and public
institutions, operates in nearly 100 countries with 150,000
employees. It offers to its clients over 40 years of expertise in
two core businesses: - Hotels, with the Sofitel, Pullman, MGallery,
Novotel, Mercure, Suitehotel, Ibis, all seasons, Etap Hotel,
Formule 1 and Motel 6 brands, representing 4,000 hotels and nearly
500,000 rooms in 90 countries, as well as strategically related
activities, such as Lenotre. - Services, with 32 million people in
40 countries benefiting from Accor Services products in employee
and constituent benefits, rewards and incentives, and expense
management. --------------------------------- [1] Response ratio =
1 - [flow-through] = 1 - [change in like-for-like EBITDAR / change
in like-for-like revenue] DATASOURCE: Accor CONTACT: CONTACTS
PRESSE: Alain Delrieu, Tel. : +33-1-45-38-84-85. Aurelie Langevin,
Tel.: +33-1-45-38-84-76. CONTACTS INVESTISSEURS: Eliane
Rouyer-Chevalier, Directeur Relations Investisseurs et
Communication Financiere, Tel. : +33-1-45-38-86-26. Olivia Testas,
Relations Investisseurs, Tel. : +33-1-45-38-86-33.
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