Vanuatu Takeover
Vanuatu Takeover

Accor Sees 2020 First-Half Losses: Looks To A Brighter Future

In its first-half financial results for 2020, The Accor Group has reported a 59.3% RevPAR drop due to the impact of COVID-19 on the group's portfolio of 5,000 hotels and residences across 110 destinations worldwide.

In its first-half financial results for 2020, The Accor Group has reported a 59.3% RevPAR drop due to the impact of COVID-19 on the group’s portfolio of 5,000 hotels and residences across 110 destinations worldwide.

Paris based Accor says the 59.3% RevPar decline for the first six months of 2020 and 88.2% drop for the second quarter of it 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.’

For hotel services worldwide, the group saw a 64.3% drop in North America and Central America, with a 62.1% decline in Europe. In comparison, Africa & Middle East reported a 55.6% drop and South America 52.4%.

While the Asia-Pacific region was down 54.7% overall, revenue in Australia fell the least of all regions at 49.3% in the first half of the year.

Accor says the decline in Australia was less significant than in other countries owing to the more limited COVID-19 impact over the first quarter (-18.2%). Government-imposed quarantine measures were the main source of business for hotels.

Looking ahead

Raffles Bali
Raffles Bali

Despite the gloomy first-half results, which are generally reflective of the entire global hospitality industry, Accor says they are observing signs of recovery in all regions.

During the first half of 2020, Accor opened 86 hotels (12,000 rooms) including the stunning new Raffles Bali, which the Group says illustrates the appeal of the portfolio and business to hotel owners.

By the end-June 2020, the Group had a portfolio of 747,805 rooms (5,099 hotels) and a pipeline of 206,000 rooms (1,197 hotels), of which 75% are in emerging markets.

As of August 3, 2020, 81% of Group hotels were open, i.e., more than 4,000 properties worldwide.

As the crisis arose, Accor took immediate drastic measures to mitigate the impact on its earnings group, embarking on an AU$331 million recurring cost-saving plan.

Accor says 60% of the plan was achieved by end-June 2020, with a sharp reduction in other operating costs including cutting 1,000 jobs to come.

The plan includes the ‘simplification and realignment of operating structures in different regions and the automation of tasks for repetitive processes.’

Sébastien Bazin, Chairman and Chief Executive Officer of Accor, said:

“The shock that our industry is experiencing is both violent and unprecedented. Against this backdrop, we have managed to limit the impact of the crisis: on our performance by taking immediate steps to protect our resources and, thanks to the Group recent years transformation and our sound financial structure; on our employees by implementing concrete and immediate support measures. The peak of the crisis is undoubtedly behind us, but the recovery will be gradual.”

“Having taken these emergency steps, we must now finish the job from an asset-light model to a full asset-light company. Beyond Covid-19, this is essential. Accor must become simpler, leaner, more agile and even closer to the field. These initiatives will enable us to extend our leadership, make our decision process more efficient and boost our recovery. They will be implemented with transparency and candour and, in a spirit true to our values of solidarity and commitment.”

Sébastien Bazin, Chairman and Chief Executive Officer of Accor

The Accor group is a 50-year-old world-leading hospitality group offering unique experiences in 5,000 hotels and residences including the Fairmont, Raffles, Sofitel, Art Series, Pullman, Swissotel, Mercure and Novotel brands.

RevPAR is a measurement of both a hotel’s average daily rate and its ability to actually fill those rooms. There are two possible ways to calculate the KPI revenue per available room: RevPAR = Rooms Revenue / Rooms Available or RevPAR = Average Daily Rate x Occupancy Rate.