The group, which has 45 brands and one of the most diversified portfolios in the world, continues to move upmarket. Its Luxury and Lifestyle division is outperforming its other segments. They account for only 15% of rooms, although generate 34% of commissions.
Yes, commissions, because Accor operates on an asset-light model, like most of its competitors. At a time when international expansion has been the priority, many players took this turn to generate cash. Accor earns revenue in the form of management fees, franchises, and services.
The high-end segment, which includes the Luxury and Lifestyle divisions, now accounts for 47.5% of revenue and is still performing well, with a 7% increase in revenue per room in Q2. Meanwhile, the three most basic divisions, Premium, Mid-range and Economy, are up 2.9%. This brings the group's growth to 4.1% in the second quarter, which is short of estimates of 4.7%.
A stronger-than-expected currency effect
Despite a cloudy macroeconomic environment, Accor is maintaining its annual targets: revenue per room growth of 3%-4% and EBITDA growth at constant exchange rates of between 9% and 10%.
However, it is precisely the currency effect that is weighing on results. This will cost €60m in annual EBITDA, representing an impact of 5%, well above the 2% anticipated by JPMorgan analysts. Annual EBITDA is expected to be 4% below consensus.
Revenue per room in the Lifestyle segment climbed 12% over H1, far ahead of the Premium, Mid-range and Economy segments. With an average price of $245 per night, the Luxury and Lifestyle segment posted strong profitability, with EBITDA up 14.3% to $224m.
Clouding the skies even more, net income fell 7.9% to €233m, compared with €253m a year earlier. This decline was due to an unfavorable base effect, as the group benefited last year from capital gains related to the sale of assets of Essendi (formerly AccorInvest), its real estate subsidiary, from which it is gradually divesting.
All in all, excluding the currency effect and the impact on net income, the results would have been better than expected. Although Accor is penalized by the currency effect, it benefits from its geographical positioning. Less Americanized than its competitors, it is benefiting from the rise in room rates in Europe, which rose by 2.7% this quarter, compared with a 0.2% decline in the United States, according to data published by Bank of America.
In this regard, Bloomberg notes the recent discount of the stock relative to its peers, and particularly Intercontinental.
Forward P/E ratio of the main players in the hotel industry (Source: Bloomberg) (Click to enlarge)
