Activities

Accor of France claims to be the leading hotel operator in Europe and the third-largest hotel group in the world. It has two major international activities:

• Hotels, casinos, travel agencies, restaurants and on-board train services
• Services to corporate and public institutes in 34 countries, including food vouchers, uniform cleaning, events and incentive loyalty programmes.

UK activities include hotels, services and travel agencies.

Brand names

Accor operates under six brands in the UK - the upscale Sofitel, the mid-scale Novotel and Mercure, and the budget Ibis, Etap and Formule 1 brands.

In the USA it operates two budget brands (Motel 6 and Red Roof Inns) and one extended-stay brand (Studio 6).

Other brands include the mid-scale Suitehotel brand in Europe, a host of Mercure-family brands (Libertel in France, Orbis in Poland, All Season in Australia, and the Parthenon flat hotels in Brazil).

Atria convention and conference centres are sited in Novotel and Mercure hotels, and Accor Thalassia health spas in around 50 properties.

Timeline

• 1967: Paul Dubrule and Gérard Pélisson create Société d’Investissement et d’Exploitation (SIEH) and open the first Novotel in Lille, France.
• 1970s: SIEH opens its first UK hotel, the Coventry Novotel, in 1973 and unveils the first Ibis hotel in Bordeaux in 1974. In 1975 it snaps up the Mercure hotel chain.
• 1980: SIEH buys Sofitel, which has 43 hotels and two seawater therapy spas.
• 1983: Accor is born following the merger the year before of Novotel SIEH Group with Jacques Borel International, a leading European foodservice company.
• 1985: Accor creates the Formule 1 concept and buys a 46% stake in Lenôtre, whose interests include gourmet restaurants.
• 1990: Accor buys Motel 6, a 550-strong budget chain in the USA.
• 1991: Accor acquires Compagnie International des Wagons-Lits et du Tourism. The booty includes the Etap hotel chain, on-board train services, highway restaurants and contract caterer Eurest (later bought by Compass in 1995).
• 1999: Accor buys Red Roof Inns in the USA and adds the Libertel and Demeure hotel brands to its stable when it buys CGIS in France.
• 2001: Suitehotel is launched in Europe, while the service business snaps up Employee Advisory Source in the UK.
• 2002: Accor buys a 30% stake in German hotel company Dorint AG and opens its first upscale Sofitel in the UK.
• 2004: Accor buys a 28.9% stake in Club Méditerannée, the French holiday village and tour operator, and enters the UK gift vouchers market with the acquisition of Capital Incentives. It also takes a 34% stake in Groupe Lucien Barriere, a European casino group.
• 2005:  Capital Colony, the real estate investment fund that has partnered Accor since 1998, invests €1b to fuel Accor’s expansion.
  

Financial snapshot

Full Year

Turnover: €7.6b (2004: €7.1b)
Forecast pre-tax profit: €590m-€610m (2004: €592m)

Half Year

Turnover: €3.4b (2003: €3.3b)
Pre-tax profit: €225m (2003: €180m)

Financial year end: 31 December 2005
Half year end: 30 June 2004

Operating data

Hotel turnover by sector for the year to 31 December 2005:
Upscale and midscale: €2.9b (2004: €2.8b)
Economy: €1.4b (2004: €1.2b)
Economy USA: €964m (2004: €922m)

Number of hotels: more than 4,000 in 92 countries. The group opened 182 new properties in 2005.

Number of employees: more than 168,000 (4,500 in the UK and nearly 121,000 worldwide in hotels)

Payroll as a percentage of turnover: 38%

Broken down by market sector, 8% of Accor’s bedrooms are upscale, 37% are mid-scale and 55% are economy.

Worldwide, 39.2% of Accor hotels are leased, 24.9% are franchised, 23.7% are owned and 12.2% are managed.

Europe accounts for 51% of Accor’s hotels and North America for 30%. The Asia-Pacific area holds 9% of the total, while Latin America and the Africa/Middle East region have 5% each.

Number of UK hotels: 90 – 46 Ibis, 30 Novotel, 10 Formule 1, two Etap, one Mercure and one Sofitel.

Most of the UK hotels (73%) are leased, while 23% are company-owned and 2% are run under management contracts. One-quarter are sited in Greater London.

Strategy

“The group’s overall good performance was led by the services business, the US economy hotels segment, and economy Hotels (outside the US). The upscale and midscale hotels segment in Europe remains sluggish.

With revenue in line with forecasts, Accor confirms its full-year objectives of €590-610 million in profit before tax and approximately €300 million in net profit, as it announced when the 2005 interim results were released.

Source: preliminary results statement, 25 January 2006

Chief executive

Gilles Pélisson

Key directors

Founding co-chairman: Paul Dubrule,  Gérard Pélisson
Executive vice-president, strategy and hotel development: Philippe Adam
Chief operating officer, Hotels Northern Europe: Michael Flaxman
Marketing director, UK and Ireland: Roger Smith
Chief operating officer, Hotels Southern Europe, Middle East and Africa: Yann Caillère
Chief operating officer, Accor Italy: Roberto Cusin
Chief operating officer, Accor North America: Georges Le Mener
Chief operating officer, Accor Latin America: Firmin Antonio
Chief operating officer, Accor Asia Pacific: David Baffsky
Chief operating officer, Accor Services: Serge Rogozin

Contact

225 Hammersmith Road
Hammersmith
London
Greater London
W6 8SJ

Tel: 020 8237 7474
Fax: 020 8237 7410

E-mail:
Website: http://www.accor.com

Commentary

Accor’s big-spender approach has made it the arch-collector of brands, and some observers wonder whether the group can continue being all things to all people without diluting its focus.

Nevertheless, it’s an approach that has established the French company as the world’s third-largest hotel operator, and its coverage of multiple market sectors allows it to spread the risks of a downturn in any one part of its business.

The drop in Accor’s 2003 results failed to curb its acquisitive nature. It was so keen to snap up Queens Moat Houses in 2004 that it teamed up with not one but two potential buyers, only to be pipped to the post by the Goldman Sachs-backed Whitehall 2001.

The group has been selling its properties since 1994 to release capital and, in late 2004, it announced a move to raise more than £698m through the sale and leaseback of a number of its European hotels. This move includes several UK properties, including the Novotel Edinburgh Centre, the Ibis Leeds Centre and the Ibis and Novotel London ExCels in Docklands, although 73% of the UK estate is already leased.

Accor has earmarked Europe as a prime area for growth, as it receives 60% of the world’s international tourist arrivals yet has 79% of hotels under independent ownership. Spain, Romania, Bulgaria, Romania and former USSR countries are all seen as hotspots for investment.

On the UK front, Accor’s bid to expand to 200 hotels by opening between five and 10 new properties a year will focus significantly on its budget brands. This expansion, either in ownership or via franchises, will build up the current Novotel and Ibis networks and establish Etap in cities of more than 300,000 inhabitants.

It currently has 10 openings planned for the next two years. They include two Novotels (London Greenwich in 2005, and Reading in 2006), five Ibises (at Milton Keynes and Aberdeen in 2005, and in London City, Bristol and Reading in 2006) and three Etaps (Birmingham in 2005, and Manchester and Leeds in 2006).