Accor says no ‘cracks in demand’ for Q1 earnings

PARIS — Accor posted strong numbers driven by continued demand as part of its first-quarter earnings.

Paris-based Accor said its revenue was up 9.2% year-over-year to €1.35 billion, RevPAR was up 5% YOY, and the company’s pipeline has increased 4.9% over the last 12 months.

Accor isn’t seeing “cracks in demand” so far, group CFO Martine Gerow said during the company’s earnings call. He said U.S. exposure is quite minimal in the company’s overall portfolio.

“If I include both the Americans traveling in the U.S. as well as international foreigners traveling in the U.S., it’s about 5% of our room revenue,” he said. “If we now look at Americans traveling outside the U.S., it’s less than 3% of our room revenue.”

Gerod said Accor isn’t seeing much change in its American bookings.

“The only market where we’ve seen an inflection, and it’s actually benefiting us, is Canada,” he said. “We see Canadians who are planning to travel in the U.S. actually staying in Canada, and some events that were planned in the U.S. are now repositioned in Canada.”

Accor opened 45 hotels and 5,900 rooms in Q1, representing a net unit growth of 2.7% over the last 12 months, which the company said should accelerate in the second half of the year. Through the first quarter, Accor had a network of 5,695 hotels and 847,290 rooms and a pipeline of more than 1,388 hotels and 235,000 rooms.

“Our diversified geographic positioning and leadership in the most promising markets, combined with the strength of our attractive and distinctive brands, enable us to continue to grow in a more volatile geopolitical and economic environment,” said Sébastien Bazin, chairman and CEO of Accor. “In this context, while maintaining strong operational discipline, we are pursuing our strategy of development and value creation and are confident in our ability to continue improving our performance.”

Gerow said Accor would issue its future guidance in Q2 July release. In February, the company reiterated the mid-term goal of 3-5% annual net unit growth, with an expected acceleration in 2025.

Portfolio breakdown

Accor’s premium, midscale and economy (PM&E) division posted a 3.4% increase in RevPAR YOY, driven 90% by prices and 10% by the occupancy rate. Regionally, Accor’s Europe North Africa region posted a 0.6% increase in RevPAR but saw RevPAR declines in France (which accounts for 44% of the company’s portfolio) and the U.K. (13% of the portfolio) and moderate growth in Germany (12% of the portfolio). Strong ADR gains drove 4.6% RevPAR growth in the Middle East, Africa and Asia Pacific region.

Accor’s luxury and lifestyle (L&L) division posted RevPAR gains of 8.3% YOY, driven by strong ADR and occupancy gains. All brands in the L&L division outperformed the PM&E division in comparable areas.

Gerow said Accor hasn’t seen demand weakening so far.

“March was softer than January and February due to calendar shifts, notably with Easter that is shifting in April, which for us created a headwind in March. April and May are trending much better,” he said. “Thus far, we are not seeing significant changes in demand trends in our key markets. Pricing continues to be the main driver contributing about 80% of the group RevPAR growth in the first quarter.”

Gerow said that despite France showing negative growth in Q1, April bookings “have gone quite strongly” and are back in positive territory. He said U.K.’s negative growth was tied to lower consumer confidence. Despite market volatility, he said Accor expects net unit growth to accelerate because of the company’s portfolio conversion of 23 Daiwa hotels in Japan to Grand Mecure and Mecure hotels.