“Accor First-Half Net Loss Narrows as Revenue From Upscale Hotels Increases”

Accor First-Half Net Loss Narrows as Revenue From Upscale Hotels Increases

Posted: 26 Aug 2010 12:29 AM PDT

Accor SA rose the most in 3 1/2 months in Paris trading as Europe's largest hotelier forecast 65 percent growth in full-year operating profit, helped by sales gains at its higher-priced lodgings.

Accor gained as much as 6.9 percent to 25.13 euros, the biggest intraday jump since May 10, and was up 5 percent as of 9:47 a.m. in Paris trading. The stock has fallen 1 percent this year, valuing the Evry, France-based company at 5.61 billion euros ($7.14 billion). That compares with a 14 percent gain at InterContinental Hotels Group Plc stock in London.

Earnings before interest and taxes this year will total 370 million euros to 390 million euros, increasing from 236 million euros in 2009, Accor said today in a statement. The first-half net loss narrowed and revenue per available room increased, said Accor, whose brands include Motel 6, Ibis and Sofitel.

The lodging industry has raised occupancy rates and prices this year as it recovers from the recession that deterred vacationers and led companies to cut travel budgets, according to researcher STR Global. Accor said profit will be helped by spending cuts and a rebound in sales, led by growth in Europe.

"Consensus forecasts should rise considerably on the back of results and guidance," Vicki Lee, an analyst at Barclays Capital in London, said in a report today, adding that Accor's forecast is 27 percent higher than analysts' estimates.

The net loss on a pro-forma basis narrowed to 64 million euros from 236 million euros a year earlier, Accor said. Excluding costs and taxes from spinning off the former Edenred voucher-service unit, net income was 12 million euros, it said.

Barriere's Sale

The operating-profit forecast excludes casino operator Groupe Lucien Barriere and Cie. des Wagons-Lits train sleeping- car unit, which the company plans to sell. Accor, which owns 49 percent of Barriere, is waiting to receive valuations regarding an initial public offering of the business, Chief Executive Officer Gilles Pelisson said today on a conference call. The company is under no pressure to sell after disposing of real estate, he said.

Revenue per available room at Accor's upscale and midscale hotel divisions in Europe rose 14 percent in July, accelerating from a first-half increase of 7.1 percent. The economy brands' revenue per room rose by 5.6 percent in July in Europe, compared with 3 percent growth in the first half, and by 5.2 percent in the U.S., versus a 4.2 percent drop in the first six months.

Accor aims to sell some hotels to reduce debt while obtaining 80 percent of its new rooms through management contracts and franchises, following a strategy adopted by InterContinental. About 40 percent of Accor's hotels are owned and leased.

Debt-Reduction Plan

The French hotelier said it can't specify a forecast for the second half amid an "uncertain" economic environment. Accor also said it plans to speed up asset disposals and reduce net debt by as much as 650 million euros this year.

Divisions of Credit Agricole SA, France's biggest bank by branches, and real-estate manager Fonciere des Regions SA will buy 48 hotels in Europe from Accor for 367 million euros under the property-sale program, the company said on Aug. 23. Accor will continue to run the hotels.

First-half revenue rose 6.1 percent to 2.85 billion euros, Accor said on July 20.

To contact the reporter on this story: Armorel Kenna in Milan at akenna@bloomberg.net.

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