“In 2020, the hotel industry navigated an unprecedented crisis. In response to the pandemic, Accor, its employees and its owners made an extraordinary effort across the globe to support those most affected, continuing to uphold their values of generosity, hospitality and sharing. At the same time, the Group’s rollout of measures to protect its financials was quick and disciplined. The measures delivered benefits over the second half of the year, and helped to limit the impact of the health crisis. The Group also continued with the rollout of large-scale initiatives to plan ahead for the economic recovery and consolidate its leadership position in lifestyle: implementation of a new streamlined and agile organization, a merger with Ennismore through the creation of a dedicated entity comprising 12 unique hotel brands, and the signing of a strategic partnership with the Faena brand.
In 2021, while the vaccine is ensuring a gradual rebound in tourism—largely driven by leisure guests—Accor is ideally positioned to benefit from the recovery and press ahead with its roadmap.”
Against the unprecedented backdrop of the global health crisis, RevPAR was down 62.0% in 2020. This marked decline reflects the dramatic deterioration in the industry linked to the spread of the Covid-19 virus worldwide, as well as lockdown measures and border closures implemented by governments throughout the world.
Nevertheless, we saw signs of significant recovery in all regions in the third quarter, with a strong summer season in Europe, after the low point seen in the second quarter (RevPAR down 88.2% in Q2). The new restrictions implemented by European governments in response to the resurgence of the epidemic in the last quarter halted the summer recovery. Consolidated RevPAR was down 66.2% in Q4 and RevPAR in Europe was down 73.1%, while the gradual recovery continued in other regions.
During full-year 2020, Accor opened 205 hotels, i.e., 28,942 rooms, confirming the appeal of the Group’s brands to hotel owners. At year-end 2020, the Group had a hotel portfolio of 753,344 rooms (5,139 hotels) and a pipeline of 212,000 rooms (1,209 hotels), of which 73% in emerging markets.
As of December 31, 2020, 82% of Group hotels were open, i.e., more than 4,000 units.
Consolidated full-2020 revenue totaled €1,621 million, down 54.8% like-for-like and down 60.0% as reported compared with full-year 2019.
- Changes in the scope of consolidation (acquisitions and disposals) had a negative impact of €155 million, largely due to the disposal of Mövenpick leased hotels.
- Currency effects had a negative impact of €53 million, mainly due to the Australian dollar (-2.7%) and the Brazilian real (-24.7%).
HotelServices, which includes fees from Management & Franchise (M&F) and Services to Owners, reported revenue of €1,142 million, down 59.8% like-for-like reflecting the decline in RevPAR as a result of the health crisis and government lockdown measures implemented worldwide.
Management & Franchise (M&F) revenue amounted to €292 million, down 71.4% like-for-like. The sharper decline in this item compared with RevPAR reflects the collapse in incentive fees based on the hotel operating margin generated from management contracts.
M&F revenue was down by a sharp 74.3% like-for-like in Europe, reflecting a 63.3% decline in RevPAR that was generally consistent across all segments.
- In France, RevPAR was down 57.6% like-for-like over the full-year 2020. After a promising third quarter driven by the regional cities (RevPAR down 49.1% in 2020) compared with Paris and the Paris region (RevPAR down 68.9% in 2020), the RevPAR recovery stalled in the fourth quarter with the second lockdown. The lack of foreign visitors continues to have a significant impact on the capital city;
- In the United Kingdom, RevPAR fell by 73.3%. RevPAR in London was down 78.5%, slightly harder hit than the rest of the country (-67.3%) where domestic activity was stronger. The United Kingdom was affected by longer lockdowns than the rest of Europe as the resurgence of the pandemic was more virulent there;
- In Germany, where lockdown measures were reinstated in the fourth quarter, RevPAR was down 64.7% in 2020;
- In Spain, RevPAR fell by 74.9% in 2020.
M&F revenue in Asia-Pacific was down 63.8% like-for-like as a result of a 54.9% decline in RevPAR.
- In China, the recovery observed from the second quarter onwards gathered pace quarter after quarter, resulting in a 44.2% decline in RevPAR over the year (-18.1% in the fourth quarter). The Luxury & Premium segment outperformed the Economy and Midscale segments, reflecting the deep desire among the Chinese population to travel again. The new travel restrictions in place since the beginning of 2021, notably for the Chinese New Year, nonetheless highlight the fragility of the health situation and its impact on the recovery;
- In Australia, where the health crisis has by and large been well managed, RevPAR fell by 53.3% in full-year 2020. The recovery that began in December, the start of the summer season, continued. The country has kept its borders closed but benefits from strong domestic activity, like that seen in Europe in the third quarter, which has boosted leisure destinations. This was particularly positive for Mantra hotels.
The Africa & Middle East region reported Management & Franchise revenue down 74.6%, with RevPAR declining 59.9%. Business recovered slowly and gradually, particularly with a strong December for the United Arab Emirates thanks to the resumption of air travel.
North America, Central America & the Caribbean reported a 72.0% decrease in M&F revenue, in line with the drop in RevPAR of 73.9% in 2020. This sharp decline reflects the nature of Accor’s portfolio, with its many business hotels targeting group guests and MICE (Meeting, Incentives, Conferences & Events).
Lastly, activity in South America also enjoyed a gradual recovery with RevPAR down 61.9% in 2020. Management & Franchise revenue was down 65.3%.
Services to Owners revenue, which includes the Sales, Marketing, Distribution and Loyalty divisions, as well as shared services and the reimbursement of hotel staff costs, came to €850 million, versus €1,867 million in full-year 2019.
Hotel Assets & Other revenue
Hotel Assets & Other revenue was down by 45.8% like-for-like to €398 million. This segment saw a more moderate decline in business thanks to a more limited Covid-19 impact in Australia in the first quarter, and the delayed spread of the pandemic to Brazil. The Strata businesses in Australia (room distribution and management of common areas) also proved more resilient and benefited from leisure demand along the eastern coast of the country. The 63.0% decline in revenue as reported was exacerbated by the disposal of the Mövenpick leased hotel portfolio in early March 2020.
The division’s hotel base included 161 hotels and 29,102 rooms at December 31, 2020.
New Businesses revenue
New Businesses (luxury home rentals, private sales for luxury hotel stays, and digital services for hotels) generated revenue of €91 million at year-end 2020, down 42.9% on a like-for-like basis. This change masks disparities between the hard-hit businesses directly related to the Travel segment, such as onefinestay private home rentals, and the digital businesses, such as D-Edge services.
Lowered operating leverage
Consolidated EBITDA was €(391) million at December 31, 2020. Sensitivity of EBITDA to RevPAR changes amounted to €(18) million for each percentage point decline in RevPAR in H2 versus €(19) million in H1, due mainly to better cost control.
HotelServices EBITDA by business
HotelServices EBITDA was negative at €(257) million for full-year 2020. This performance breaks down as positive EBITDA of €25 million for Management & Franchise (M&F) and a €(282) million negative contribution from Services to Owners. The latter stems from high fixed costs coupled with a sharp decline in RevPAR for the Sales, Marketing, Distribution and Loyalty businesses.
Management & Franchise EBITDA by region
The Management & Franchise HotelServices division saw EBITDA down 97.0% like-for-like, with each region close to breakeven. The one noteworthy exception was Asia-Pacific, where EBITDA was positive for full-year 2020 thanks to a more rapid recovery in business.
Overall, the sharper decline in EBITDA versus revenue can be attributed to the allocation of provisions for doubtful receivables as well as fixed costs.
Hotel Assets & Other EBITDA
Hotel Assets & Other EBITDA was €3 million at year-end 2020 versus €216 million at year-end 2019. The transformation towards an asset-light model has changed the geographical exposure and nature of this segment. It is currently driven mainly by Asia-Pacific, which includes the Strata businesses (room distribution and management of common areas), Accor Vacation Club (timeshare business) and AccorPlus (discount card program).
The 77.5% decline like-for-like reflects measures implemented to adjust the cost structure, limiting losses. These measures included headcount reductions and/or use of partial unemployment in Europe and in Australia.
The 98.5% decline in revenue as reported was resulting from the disposal of the Mövenpick leased hotel portfolio in early March 2020.
New Businesses EBITDA
New Businesses EBITDA was €(25) million in 2020 vs. €(2) million in 2019. As it is true for revenue, EBITDA varies widely as each business is different in nature.
Apart from the decline in EBITDA, Accor reported a net loss, Group share of €1,988 million, penalized by:
- The contribution from affiliates: came to a negative €(578) million stemming from the combination of operating losses and asset impairments, linked in particular to AccorInvest, sbe and Huazhu.
- Non-recurring income and expenses: the €(958) million figure consists primarily of asset writedowns already recorded in H1. These writedowns were the result of prospects of a return to pre-crisis business levels (not before 2024), and an increase in discounting rates reflecting market volatility. This figure also includes a €254 million positive impact related to the withholding tax credit dispute and provisions for the RESET cost-cutting program.
- Profit from discontinued operations relates mainly to the capital gain on the Orbis disposal.
Further reduction in monthly cash burn
Group recurring free cash flow was negative at €(727) million for full-year 2020 as a result of negative EBITDA and changes in working capital requirement (WCR). The latter includes extensions to payment deadlines granted to hotel owners tackling the health crisis, with many of them forced to temporarily close their establishments.
Recurring expenditure - which includes “key money” paid by HotelServices for its development and its digital and IT investments - was reduced to €102 million in 2020, versus €161 million in the prior-year period. This reduction resulted from a review of expenditures planned for 2020, as announced on April 2, 2020 in connection with the measures rolled out in response to the Covid-19 crisis.
Average monthly cash burn was €61 million for full-year 2020, down from €80 million in H1 2020.
Group’s consolidated net debt as of December 31, 2020 came to €1,346 million, versus €1,353 million at December 31, 2019. This stability hides the following changes:
- An increase related primarily to the loss of recurring free cash flow in full-year 2020, the investment related to the acquisition of all of sbe’s brands, and the implementation of a share buyback program in Q1 2020.
- A decrease related primarily to the disposal of Orbis for €1.06 billion in early March 2020 and the €307 million refund related to the withholding tax credit dispute.
Pursuant to a decision handed down on July 7, 2020 by the French Administrative Court of Appeal, on July 23, 2020 Accor benefited from a refund of €307 million linked to the withholding tax credit dispute. In October 2018, the European Court of Justice ruled that the withholding tax credit system for dividend payments was contrary to certain EU regulations. In September 2020, the tax authorities appealed to France’s highest administrative court, the Conseil d’État. Accor’s legal analysis concluded that it had a very good chance of prevailing in these proceeds and that there was high likelihood for Accor to be definitely entitled to up to €254 million.
At December 31, 2020, the average cost of Accor’s debt came to 1.61% with an average maturity of 3.2 years, with no major repayment dates before 2023.
Accor has two undrawn renewable credit facilities (RCF), for a total of €1.76 billion, which, after the renegotiations, are not subject to any restrictive covenants before June 2022. Combined with its existing cash, Accor benefits from a robust liquidity position, topping more than €4.0 billion at year-end 2020.
In February 2021, the €550 million redemption of the maturing bond reduced this liquidity position. This redemption was financed with the issue of a €500 million convertible bond on November 30, 2020. At the same time, the disposal of 1.5% of Huazhu’s capital generated a cash inflow of €239 million. Adjusted with these factors, the cash position at December 31, 2020 therefore stood at €3.9 billion.
Swift rollout of €200 million recurring cost savings plan
The €200 million RESET recurring cost savings plan announced in August 2020 at the H1 earnings presentation is being rolled out on schedule. Implementation carries a non-recurring cost of €300 million of which €168 million was booked in non-recurring items in 2020.
RESET-related cost savings are divided equally among wage and non-wage costs. 40% of these savings will be generated in the Management & Franchise and Holding segments.
The positive impact expected on EBITDA in 2021 is more than €70 million, as announced.
In light of the cash burn in 2020 and the uncertainty surrounding the recovery in business, the Board of Directors decided to propose not to pay a dividend at the next Annual Shareholders’ Meeting on April 29, 2021.
Subsequent events after December 31, 2020
Exclusive negotiations with Ennismore
On November 24, 2020, Accor announced that it has entered into exclusive negotiations with Ennismore, a London-based hotel operator, with a view to complete a merger through asset contributions and form the world’s leading lifestyle operator in the hospitality sector. Focusing on one of the fastest growing segments in the industry, the combined entity would operate a portfolio of 73 existing hotels under 12 brands and over 150 destination restaurant and bars. Completion of the transaction, which will be subject to the employee consultation process and customary regulatory authorizations, is expected to occur in the first half of 2021.
Besides, on January 15, 2021, Accor acquired the remaining 50% stake in 25 hours, investment currently accounted for under the equity method in Group’s consolidated financial statements, for €61 million. This transaction is subject to conditions precedent, that would lead to a takeover of 25 hours upon closing of the transaction with Ennismore.
Capital increase of AccorInvest
On January 14, 2021, the Extraordinary General Meeting of AccorInvest’s shareholders approved the completion of a €150 million euros capital increase subscribed by all shareholders in proportion to their ownership, representing €45 million for Accor. Besides, a second tranche amounting to €327 million euros (including €109 million euros for Accor) is expected to be proposed for approval to the Extraordinary General Meeting that will be held on March 1, 2021, subject to a subscription by all shareholders.
Redemption of bond
On February 5, 2021, Accor redeemed the maturing €550 million outstanding amount of a €900 million bond issued in February 2014. In 2019, this bond had been partially repurchased in the amount of €350 million. This redemption has been funded through the issuance of bonds convertible and/or exchangeable into new and/or existing shares (OCEANEs) on December 7, 2020.
On February 8, 2021, Accor obtained a one-year extension of the covenant holiday for the €1,200 million revolving credit facility, concluded on June 2018 a bank consortium. The covenant will not be tested on the next two test dates on June 30 and December 31, 2021.
Disposal of Huazhu Group Ltd shares
On February 18, 2021, Accor sold a part of its share in Huazhu Group Ltd which represent 1,5% of share capital of the company for 239 million euros. After completion of this transaction, the Group retains a 3.3% residual interest in the share capital.
Events during full-year 2020On January 20, Accor entered into an agreement with an investment services provider to carry out a €300 million share buyback.
On February 18, Accor and Visa, world leader in digital payment solutions, announced an international partnership to offer new payment solutions to ALL-Accor Live Limitless members.
On March 11, Accor announced finalization of the sale of its 85.8% stake in Orbis with AccorInvest for €1.06 billion. During the same week, the Group finalized the disposal of the Mövenpick leased hotels portfolio, making a positive €430 million contribution to Group net debt.
Also, on March 11, Accor announced as of February-end, a decline of 4.5% in RevPAR compared with the same period of 2019 on a like-for-like basis, with February down 10.2% owing to the marked deterioration in the tourism industry as the pandemic spread. Over this two-month period, the decline reflected sharp underperformance in business with a Covid-19 impact of €20 million at the EBITDA level. From the last week of February, the Group observed a sharp decline in business in Europe, particularly in Italy, France and Germany, and took far-reaching measures to cut costs to partially offset the decline.
On March 24, Accor announced the finalization of its €300 million share buyback program launched on January 20, 2020. Upon completion of the program, the Group acquired 10,175,309 shares at an average unit price of €29.48. In order to protect its cash position, Accor announced the suspension of share buyback programs until further notice. On the same day, the liquidity contract was reactivated.
On March 24, against a backdrop of persistent uncertainty and as the pandemic spread throughout the world, the Accor Board of Directors decided to postpone the Annual General Meeting of shareholders initially planned for April 30, 2020 to June 30, 2020.
On April 2, following a sharp deterioration in the business environment in the wake of the health crisis, Accor decided to take drastic protective measures. On the same day, the Accor Board of Directors decided to complement the initiatives taken by management by withdrawing its proposal to pay a dividend in respect of 2019, representing €280 million. After consulting with the Group’s main shareholders, Accor decided to allocate 25% of the planned dividend (i.e. €70 million) to the launch of the “ALL Heartist Fund,” a COVID-19 special-purpose vehicle designed to assist employees and — on a case-by-case basis — individual partners experiencing great financial difficulty, as well as stakeholders providing support to local communities during the crisis. This initiative received the unanimous support of the members of the Board, who agreed to cut their attendance fees by 20% in favor of the ALL Heartist Fund. Similarly, Sébastien Bazin, Accor Chairman and CEO, allocated 25% of his remuneration during the crisis, to the Fund also.
On April 17, Accor and Bureau Veritas, the world leader in testing, inspections and certification, launched the ALLSAFE Cleanliness & Prevention label certifying that safety and cleanliness measures in hotels and restaurants are appropriate for the restart of business.
On May 15, Accor also signed an innovative strategic partnership with Axa, the world leading insurance group to provide medical assistance to the guests of its 5,000 hotels throughout the world.
On May 18, Accor announced it had signed an agreement with a consortium of five banks for a €560 million revolving credit facility (RCF). This line complements the existing €1.2 billion credit line agreed in July 2018 to shore up the Group’s cash position, which currently amounts to more than €4.0 billion, i.e. covering more than 40 months of cash needs under current conditions. As of this date, 42% of Group hotels had reopened.
On August 4, with the release of the H1 20 results, Accor announced the launch of a €200 million of recurring cost saving plan in order to shift from its new asset-light business model to an asset-light company.
On October 22, Accor, and BNP Paribas, the leading bank in the eurozone, announced that they had concluded a pan-European partnership to launch a unique co-branded payment card.
On November 24, as part of its simplification and asset-light strategy, and with the ambition of accelerating its momentum in the Lifestyle hospitality sector, Accor acquired all of sbe’s asset-light activities. On the same day, Accor and Ennismore announced they had entered exclusive negotiations to form the world’s leading lifestyle operator in the hospitality sector.
On November 30, Accor issued bonds convertible into new shares and/or exchangeable for existing shares (OCEANEs) for €500 million. The issue was 6.5x oversubscribed, demonstrating a strong level of interest which enabled rapid execution and a favorable coupon.
The Board of Directors met on February 23, 2021 and approved the financial statements ending on December 31, 2020. The consolidated financial statements have been audited and the Auditors' report is being issued. The consolidated financial statements and notes related to this press release are available from the www.accor.com website.