Accor's consolidated revenue totaled EUR3,765 million for the first six months of 2008. This represented a 5.2% increase at comparable scope of consolidation and exchange rates (like-for-like) and a 6.2% decline as reported.
Revenue First-half First-half Change Change
2007 2008 as reported like-for-like(1)
(in EUR millions)
Hotels 2,850 2,810 -1.4% +5.1%
Upscale and 1,596 1,681 +5.3% +6.2%
midscale
Economy 793 842 +6.3% +6.1%
Economy US 461 287 -37.8% -0.4%
Services 418 459 +9.9% +11.8%
Other businesses 747 496 -33.5% +2.0%
Total 4,015 3,765 -6.2% +5.2%
First-half 2008 revenue performance was shaped by the following factors:
• The solid 5.2% increase in revenue at constant scope of consolidation and exchange rates, reflecting growth of 4.8% in the first quarter and 5.6% in the second.
• The impact of the Group's expansion strategy, which added 3.4% to revenue growth.
• The negative 12.6% impact of asset disposals, including Go Voyages, the Italian and Brazilian food services businesses, Red Roof Inn In the United States, and property as part of the "asset-right" strategy.
• A negative 2.2% currency effect resulting from the appreciation of the euro against the dollar, the pound and most South American currencies.
Services revenue up 11.8% like-for-like
Revenue from the Services business increased by 9.9% as reported. Like-for-like growth for the period amounted to 11.8%, of which 10.4% in the first quarter and 13.3% in the second. Restated from the impact of the loss of the Titres-Services contract in Belgium (ONEM) and the gradual elimination of tax breaks in Argentina, Services revenue would have been up 14.6% for the first six months of the year.
Acquisitions added 4.0% to growth. However, the currency effect was a negative 2.8%, mainly due to the weakness of Latin American currencies.
In Europe, revenue was up 10.4% like-for-like for the period, of which 9.5% in the first quarter and 11.4% in the second. The second quarter saw:
• Strong 16.2% like-for-like growth in France, led by the implementation of a sales force action plan to increase meal voucher sales.
• 12.8% like-for-like growth in the United Kingdom.
• 13.6% growth in Belgium, restated from the loss of the ONEM contract, compared to a reported decline of 16.4%.
In Latin America, revenue grew 13.4% like-for-like, reflecting increases of 10.6% in the first quarter and 16.2% in the second. In the second quarter:
• Revenue in Brazil continued to climb, gaining 12.0% compared to 5.1% in the first three months of the year.
• The other Latin American countries saw revenue rise an aggregate 21.0% like-for-like, even after taking into account the negative 10.2% decline in Argentina revenue following changes in tax legislation.
Hotels revenue up 5.1% like-for-like
Hotels revenue amounted to EUR2,810 million in the first half, a decline of 1.4% compared to the prior-year period on a reported basis. This figure takes into account the impact of:
• Like-for-like growth of 5.1%, of which 3.7% in the first quarter and 6.3% in the second. Restated from the shift in Easter vacation to March (2008) from April (2007) in most European countries (mainly Germany, the United Kingdom, Benelux and Spain), growth in both the first and second quarters would have been 5.1%.
• The expansion strategy, which led to the opening of 11,000 rooms during the first six months of the year and added 3.3% to growth.
• The sale of Red Roof Inn and other hotel units as part of changes in ownership structures ("asset-right" strategy), which reduced first-half revenue growth by 7.0%.
• The currency effect, mainly due to the weakness of the dollar and the pound, which was a negative 2.8%.
Upscale and Midscale Hotels (Sofitel, Pullman, Novotel, Mercure and Suitehotel): up 6.2% like-for-like
In the upscale and midscale segment, revenue rose by 6.2% like-for-like in the first half, including 3.9% in the first quarter and 8.2% in the second. The second quarter was shaped by:
• Sustained 7.0% like-for-like revenue growth in France, led by the very robust performance of the Novotel and Mercure brands, whose RevPAR rose 9.0% and 9.2% respectively. Performances were more contrasted In the upscale segment due to re-brandings and renovations at certain
Sofitel and Pullman hotels.
• 12.6% like-for-like growth in Germany.
• 7.2% revenue growth in the United Kingdom.
Economy Hotels outside the US (Ibis, all seasons, Etap Hotel and Formule 1): up 6.1% like-for-like
In economy hotels, revenue rose by 6.1% like-for-like in first-half 2008, of which 5.3% in the first quarter and 6.8% in the second. During the second quarter, revenue rose by:
• A strong 5.9% like-for-like in France, lifted by the good performance of the Ibis brand, which reported RevPAR up 11.0%.
• 8.1% like-for-like in Germany.
• 9.8% like-for-like in the United Kingdom.
Economy Hotels in the US (Motel 6 and Studio 6): down 0.4% like-for-like
In a market impacted by a slowing economy and rising gas prices, like-for-like revenue in the US economy hotels segment slightly declined by 0.4% in the first half of the year, reflecting a stable performance at +0.1% in the first quarter and a 0.8% modest decline in the second.
The 37.8% reported drop in the division's revenue for the period was mainly attributable to the disposal of Red Roof Inn in August 2007 as well as to the weaker US dollar. The sale of Red Roof Inn has considerably reduced the Group's exposure to the United States, a market that tends to be more cyclical than Europe. In 2007, the US accounted for only 8% of consolidated EBIT*.
Outlook
After reporting a solid set of figures in first-half 2008, Accor will leverage its operating performance in its Services and European Economy Hotels businesses. These two businesses represented nearly 70% of consolidated EBIT* in 2007:
• In Services, Accor holds a global leadership position with major market shares in 40 countries. The Group will continue to pursue sustained organic growth in this business, which has demonstrated strong resilience to economic cycles.
• In the European Economy Hotels business, Accor will benefit from its large market shares in countries where, furthermore, hotels supply growth has been limited over recent years. This will enable the Group to drive sustained growth and effectively resist cyclical downturns.
* Pro forma 2007 EBIT, after the disposal of Go Voyages, Red Roof Inn and the Italian and Brazilian food services businesses.
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