Accor plans to open more than 1,200 hotels in the next five years, increasing the number of its resorts by more than one-fifth, it said on Tuesday, the latest sign the industry is betting on strong travel demand long-term following the pandemic.
Europe’s biggest hotel group also said it plans to return around 3 billion euros (USD 3.3 billion) to shareholders in the 2023-2027 period via dividends and share buybacks and raised its 2023 core earnings outlook.
The hospitality industry has benefited from higher prices and a rebound in travel demand in the wake of the pandemic, with consumers rushing to travel even as rising interest rates stoke fears of a recession and inflation erodes household purchasing power.
Accor forecast 2023 revenue per room (RevPAR) to grow by 15 per cent to 20 per cent amid reorganisation plans implemented in January, and expects core earnings before interests, taxes, depreciation and amortisation (EBITDA) of 920-960 million euros.
In the first quarter of 2019, Accor estimated the average price of a room at 89 euros per night. After the reorganisation, the average price was 106 euros, marking an increase of around 19 per cent. However, the company warns about comparing these two numbers, noting it “didn’t communicate the elements in the same way, since we didn’t have the 2 divisions (Premium Midscale & Economy vs. Luxury & Lifestyle)”, it told Reuters.
Chief Executive Officer Sebastien Bazin attributed growth to the confirmation of very broad international demand across different countries, and said he expected swelling demand in almost all of the group’s segments and geographies.
This demand reflected “the desire to travel, the growth of the middle classes, especially in Asia, and the appetite of younger generations for experiences”, the company told Reuters. The French-listed company’s shares were, however, up 0.5 per cent at 1042 GMT with analysts and traders underwhelmed by its 2023 outlook upgrade.
US embassies and consulates in India have issued 44% more non-immigrant visas in 2023 than in the same period in 2019 and are on course to process over one million visas this year, a State Department spokesperson said. Flight bookings from India to the United States for the last quarter of 2023 are 26% higher than pre-pandemic levels, according to ForwardKeys, a travel data firm.
“We like the commitment to return 3 bn to shareholders by 2027, which we expect the market to focus on today, and 2027 EBITDA targets imply c.12 per cent upside to consensus if the company executes on its strategy,” Jefferies analysts said in a note. “However, FY23 guidance is in-line of consensus at the midpoint and shy of buyside expectations, in our opinion.” Accor also said it aims to grow EBITDA by 9-12 per cent annually from 2023 through 2027, and its revPAR by 3-4 per cent per year over the same period.
The firm plans to expand worldwide, but particularly in the Asia Pacific and Middle East. In May it said it planned to double its presence in Saudi Arabia by 2027, opening hotels in, among other cities, the capital Riyadh, as well as Jeddah.
Peers such as Spanish Melia Hotels, Stockholm-listed Scandic, and Pandox have also planned an increase in the number of hotels, as the sector outlook brightens. This is despite inflation hitting customers throughout the leisure industry on purchases such as concert tickets or cruises.
