Accor Sa

Hello and welcome to the Accor 2022 Q3 results. Please note this conference has been recorded. After the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the presentation. This can be done by pressing star one on your telephone keypad. I will now hand over to your host, Jean-Jacques Morin, Deputy CEO and CFO, to begin today's conference.

Good evening. Good morning, ladies and gentlemen. Very happy to be with you today for this presentation of our Q3 2022 revenue. Before we start the presentation, and as usual, for the sake of clarity, we will continue to provide the left-half variation by region versus 2019, and we will do that up to the end of this year. As for revenue figures, we provide both the variation versus Q3 2021 and Q3 2019 in the document. Without further ado, let's move to slide 3, where you've got the Q3 2022 highlight. On the left, just to start with the activity dimension of it, you can see here that we've got the Q2 2022 activity, which is now well above 2019. You may recall that in Q2, we reached a level by which we were at about the level of 2019 in terms of fresh power, And we are now 14% above the level of 2019 in Q3. And you see that throughout all geography, as we will detail later on. The second point of highlight on the activities, there was a net unit growth acceleration. We reached 2.4% over the last 12 months. And that confirms that we are on track to reach our net unit growth guidance at around 3.5% for the year 2022. These performances illustrate continued hospitality recovery. We knew summer would be good. We were expecting summer to be good. I think two points I'd like to highlight here is that in September and in October, we did confirm the return of corporate and mice. And the other element to take into account here is that there is still upside potential in Asia, notably in China, in Southeast Asia, because they are still in the dynamic of the overall regions trailing. And we expect to see those benefits popping up in 2023. So on the high side, how does that activity translate in numbers? The group revenue reaches 1,149,000,000, which is an increase like for light of 83% versus Q3 of last year and 9% above Q3 of 2019. As for EBITDA, the combination of robust summer activity as well as the benefit of the sales, marketing, distribution, investment that we discussed with you when we published H1 2022. And all of that combined with some discipline makes us confident that we will be on the high end of the 610, 640 ABDA range that we communicated back to you at the end of September. And STO. Service to Honor, which was subject of many discussions at the end of July, will be breakeven in H2. So as we're entering in 2023, the group can leverage supportive operational lever on top of the business recovery that just went through, a strong pricing power, and also cost inflation mitigation plan in the hotel, as inflation is a subject of many, many industries today. If you move to the second page, we detail here the RESPAR over the values geography. And what you see is that the RESPAR performance is clearly driven by prices, the orange part of the graph that you've got face to you. And when you look at the RESPAR sequentially, I mean sequentially, every region goes up by around 10 points. We also see some occupancy recovery. And so you see that again on the table face to you. If you go by region, in South Europe, the RESPAR of Q3 is 11% above 2019. That is a nine-point sequential improvement quarter on quarter. France had a strong summer period, as we were expecting. And what is very visible now is the performance of Paris. which translate the fact that international guests have now returned. And that performance in Paris is lined up with the performance in Provence. There is no more a dichotomy between the dynamic of the two. In September, corporate recovery drove an occupancy level, which is now close to the pre-crisis level, 2019 level. Northern Europe, you find about the same type of trends, 9% above 2019, 16% sequential improvement, significant improvement from Germany, which had been trailing the rest of Europe as they went out of COVID a bit later than the other countries in Europe. And UK behaves like France, i.e. there is now no more differential between the province and London. If you move to Asia, again, here a sequential improvement to the tune of 9%. Pacific further strengthened, so Pacific is largely Australia, and it ends at 15 points above 2019 level in Q3. Prices is very much driven by prices, and you see some bubbling around cities that start to recover too. Greater China showed some improvement, but you see when you look at it period after period that there are still volatility, as the zero COVID strategy remains strictly applied. So on the one side, you do have some restriction easing that have been occurring, whether in Macao, in China, or in Hong Kong. On the other hand, strict application of the zero COVID creates today volatility, as it has been doing for the last two years. Southeast Asia reported a recovery versus Q2 of about 10 points, so 10 points of improvement sequentially to end up at a negative RESPAR versus 2019 of minus 21%. Hence the point I made that there is potential both in China but also in Southeast Asia of further recovery, everything being equal. In IMEA, which include India, Middle East, Turkey, the Q3 RESPAR is 68% above 2019, a significant job, which is boosted by a very strong summer in Turkey, you know, boosted on top of that by the inflation that you've got in Turkey. UAE was 17% up in Q3 and you will see a continued good performance from UAE in Q4 as the FIFA will now take place in Qatar over the second part of Q4, the second part of the year. Saudi Arabia is still negative at minus 14% below 2019 And then you've got some seasonality because, as usual, of the religious calendar of Saudi. When you move to America, the Q3 REF PAR is 12% above 2019, and that is a 7% sequential improvement, again, versus Q2. So same dynamic here. Brazil's performance is brilliant. They are the only region which has an occupancy rate today which is above the level of 2019. So they have recovered. the occupancy of the pre-crisis level. North America reported a stable RESPAR above 2019 level with good pricing power. So that's about the region view of the RESPAR. If we now move to the second lever, which is the net unit growth, the last 12 months net unit growth is now at 2.4%. That means that the Q3 that we just closed is the best ever in terms of opening in the group. The acceleration is driven by three factors. I mean, first off, Asia. Asia is a key driver in the net unique growth for the group, has been, continues to be. And so the activity rebound during summer was largely due to China. The second reason is still very strong and will continue to be very strong number of conversion. We are now year-to-date at the conversion rate on properties of 50% of the opening. So much, much bigger number than anybody in the industry. Reason three is that we had some one-offs in terms of churn in H1. You may recall the COVID portfolio we had discussed. And we're now back to a normalized level of churn at around 2%, 2% plus. And that also explains the number that you see for the end of September. So all of that together, we confirmed the guidance at around 3.5% net unique growth for 2022. What is also a point we would like to make today is that the people on the ground, the developer on the ground, see asset owner showing appetite for the positive long-term prospect of hospitality industry. And this notably when you compare them with other real estate investment classes. And so despite some tough times, interest rate environment, we see the prospect in terms of development very solid. All of that drives the pipeline to remain stable at around 212,000 rooms, with an Asia-Pacific which, as customary, is about half of the pipeline, and EBSCAN and Luxury, which is getting an always larger share of the pipeline. It's now accounting for a little bit more than 40% of the pipeline, just as a reference, it was about one-fourth of the pipeline four years ago, 25%. If we now move to the revenue, and I am on page six, you can see here the breakdown by segments, the segment reporting. So in global, ACCO revenue is at 9% to the tune of 1,149,000. The like-for-like increase versus Q3 2021 is 83%. If you were to look at the same figure in reported figure, it would be even bigger because of the strength of the USD versus most of the currency in the world. You would be to the tune of 95%. If you look at the segment of hotel services, revenue is at 9% again, and you are 84% above Q3 2021. That reflects the REFPA rebound. And I'll detail the M&S fees in the next slide. As for service to owner, we reached a level of €556 million, which is up 8% versus Q3 2019, so very much what you would expect. Moving to hotel assets and other, the revenue is up 6% versus Q3 2019, or 76% versus Q3 2021. same rationale that the one that we had described back in H1, and Australia, which is about 50% of that segment, which is doing very well, and notably because of a strong leisure demand in coastal areas, and as I was mentioning before, recovers period after period in Australian cities, in the large Australian cities, which have been trailing in terms of performance as they depend on corporate demand. And on the other side, Brazil, which is having, as I mentioned before, a buoyant activity this year, and so is also helping the growth on the teleset. If you move to the deep dive on M&S revenue, you can see here that versus Q3 2019, M&S revenue is above 2019 level. The incentives continue to kick back. You had many questions over time on how the incentive would come back, and I am very happy to confirm what we had said before, i.e. that we will be for the full year somewhere between 30% to 35%. You may recall 35% was kind of the number for 2019, kind of the reference number for history. So as business is coming back, because we've got good pricing in the hotels, you've got a good bottom line at the hotel level, which kicks back to us in terms of incentives. Versus Q3 2021, again, a strong rebound, as you would expect. The revenue growth is 93%. So very, very steep recovery since Q2 of this year. If you go to the last slide, which is some takeaways here, I mean, the rest part is above 2019. You know the levers, which is corporate event, Asian market pricing power. I went through that. Net unique growth, we don't see that changing. There is demand on the ground, and so we'll continue to fill up the pipeline with demand. EBDA at the high end of the guidance. And the last point I would like to make is on the business profile of Accor. Business profile of Accor is today more resilient than ever. We continue on the asset red light, the couple of milestones that were still missing. So we just, as you probably saw, announced the sale, the disposal of the Sequana headquarter in Paris. And we think we will close that transaction between now and Iran. The variability of our cost base has been worked upon during the COVID crisis. It was one of the themes that we worked on during the reset project and so forth. That's definitely helping going forward. And there is a lot of talk around inflation here, and we just would like to say a couple of words for what concerns Accor. First off, inflation is not the same depending on where you are in the world. The inflation that you face in Europe is not the inflation that you're facing in places like Brazil or places like Middle East and Africa. Middle East and Africa is, in fact, you know, getting a lot of benefits coming from the their capability to sell petrol and gas instead of Russia. And Brazil is, in fact, not depending on the rest of the world, neither for commodities nor for gas, neither for food. And so two examples of large regions in our portfolio where the situation that you see is not the situation that you've got in Europe. So I think this natural aging of us being in many, many places in the world is paying off. It didn't really pay off when there was a pandemic, but this is not a pandemic that we face here. And the other element that I would like to say is, by the way, Europe is 50% franchise. So whatever may be the effect of inflation to the bottom line of the hotel, Europe is the place in the world where you've got the largest percentage of franchise businesses versus any other regions. We are, in average, at 30%. Europe is at 50%. So there is also here some kind of an edging coming from the nature of the business that we do in Europe. And then there is the work that we've been doing with our procurement teams in order to edge the cost of energy by buying in advance, so basically getting some term contracts on energy purchases, which is most definitely going to help us in 2023. And last but not least, we are obviously putting all kinds of measures in the hotel in order to reduce consumption, everything being equal. So a lot of things that make us confident on how we will weather inflation going forward if it was to continue. I think that's the positive note we wanted to give for this year. Q3 result, and the floor is now yours.

As a reminder, if you would like to ask a question or make a contribution, please press star one. The first question comes from Vicky Stern from Barclays. Please go ahead.

Oh, yeah. Hi there. Thanks for the colour there on sort of different profiles, different geographies and so on in terms of how to think about inflation. As you sort of weave that in and are looking into next year, if you could just help us a little bit on how to think about the cost outlook in aggregate for your owners and how that should sort of weave its way into incentive fees, perhaps any sort of sensitivity you could give us, obviously, with some of those numbers, at least in Europe, being rather high. Secondly, just on marketing costs, into next year again how should we be thinking about the sort of higher marketing spend in the first half is that something that should recur at least into H1 next year or sort of all of that 40 million or so should come out and then finally on cash returns just again now how you're thinking about the right leverage for the group obviously in a world where interest rates are rising I guess you might have thought February would be the time to think about renewing some share buybacks is that still the right way of thinking about it thanks

Yeah, I'll take Arjun. I mean, the first one I'll take is sales, marketing, distribution and loyalty. I had said back in H1 2022 when we explained to you that we had overspent. And hence, there was a deficit on the line in our segment reporting, which is called STO, service to honor, which includes sales, marketing, distribution and loyalty. Most of it is sales, marketing, strength and loyalty. And I had told you that we would be back to what is, between quotes, the normal situation, i.e. a breakeven by 2023. Where we are today is we are at breakeven in H2 of 2022, so faster than what I had said. And for next year, the way to think about it is that you're going to be positive on that line. So I think that's the answer on the same deal. In terms of inflation, there is two ways by which inflation impacts the account of Accord. There is one which is the inflation at the headquarter level, you know, the people that work here, and we kind of discussed it a bit at the end of H2. There are some IT costs, for example. There are some people costs. And there is the portion of my revenue and hence my profit that is incentives and that I earn through fees from the hotel. Because of what I explained on the fact that not everybody is you know, impacted the same way by what's happening in the world. If you do a complicated model, what you find out aggregating the various geographies and their own peculiarity is that if we are able to increase versus 2022 our pricing by 5%, there is no effect whatsoever with the current elements that we have on inflation on the account of the group, neither on the headquarters cost-based inflation, or the incentive which pops into the MNF revenue. So that's kind of giving you the sensitivity, and frankly, I was very happy by that result, which means that we've been working well on a series of dimensions. So that's a super macro level. Obviously, it's not a call about income here, and we'll detail the result and the income later, by the end of the year, but wanted to give you that kind of sensitivity to help for you model going forward. In terms of cash return, Vicky, I think mechanically because the ABDA is a positive number, you know that the recurring free cash flow will be a positive number, and so there will be a mechanical dividend, mechanical dividend, In the policy, we said that there is a mechanical computation by which 50% of the recurring free cash flow is an ordinary dividend. And so as we will generate recurring free cash flow this year, there will be a proposal by the management team to do a dividend for the result of 2022 in 2023. On top of that, you raise another question, which is a potential share buyback. And so we will talk about that when it is time. But for sure, what you can remember here is that there will be a dividend in 2023 coming from the performance of 2022. Thank you.

Can I just follow up on the inflation point? That's really helpful with the 5%. Just on your own direct cost to sort of break up the parts, would you still be factoring in something like about the same sort of increase as we've seen this year, maybe 50 million into next year, or has that changed?

No, I mean, if you recall what I said in H1, I kind of said that we want for an average inflation, everything being compounded for 2022 of 5%. I think something around 5%, 5% plus, is a good number for the cost base with what we know the world is heading towards, probably a little bit more, I would say closer to 7%. I think that's what I would use at this stage in the discussion. And remember what I said and how I was explaining why there was a deficit too, is what matters here is how much of that inflation on the cost base you are able to find back through an increase of prices in the top line and what is super comforting here is when you look at the performance of q3 our average pricing has been 23 above 2019 so there is pricing power because everybody's facing the same thing so that's why i wanted to you know reassess and reaffirm that it's not only a question of the cost base but it's also a question of the fees and your capability to earn more fees through the inflation in the pricing that needs to be accounted for, and the sensitivity I give you on the 5%. Does that make sense?

Very helpful, yeah. Thanks a lot.

Sure.

The next question comes from the line of Jared Castle of UBS. Please go ahead.

Great afternoon, everyone.

Hello.

Hi. I'm interested just to get your views. You know, you've done 2.4% net unit growth recently, You know, we've had both Hilton and IHG come out with theirs. How do you see the industry growth at the moment in some of your core markets, firstly? Secondly, just looking at, you know, 3Q, you know, obviously incredible room rates you're getting at the moment. Are cryptocurrencies still growing? a little bit further to go. But is this intentional, I mean, in terms of revenue management? So I guess what is holding occupancy back? Is there something besides revenue management holding it back, i.e., could it be business trouble or lack of staff? And then just lastly, you've upped the guidance to the top end of the range. Is this very much on the revenue side or also somewhat on the cost side in terms of towards the 640 of EBITDA? Thanks very much.

Yeah, I mean, on the EBDA guidelines, I'll start with the last one because I still remember it. On the EBDA, the summer, we had said the summer would be strong. I mean, the summer was just gorgeous. I mean, the level of activity that we had on summer and the pricing level that we had on summer was just astounding. And I call it summer because it was summer in the northern hemisphere, but it was not summer in every part of the world. Latin America was not summer. Nevertheless, I was just mentioning that we never had such a high occupancy rate in Brazil than we had since 2019. We are above 2019 level. So I think here the demand has been extremely strong, and that's also why we are confident that that's going to help making us on the upper part of the fork. On the other hand also, Gerard, As I was explaining in H2 and H1, and I know it didn't necessarily was well perceived, but we did let, in fact, a lot of costs go in H1 because H1 was made of two very different quarters. On the one side, you've got a quarter where your SPAR is minus 25%, and on the other side, Q2, your SPAR is 0%. So when you add up the thing, it's 10%, except that it is very, very different. The one thing we did not want to miss was the rebound. So I did let go everybody to do whatever it takes to not miss that rebound. We don't need to go that far today because we've again reached a much more normalized level. And the short answer to your question is top line is better, and we've put back some, I would say, framework discipline on how much you can plan on distribution, sales, and marketing. And so that's also helping us. you know, STO to be back to breakeven, because STO was minus 90 million in H1, if you recall. So a very significant improvement on STO. And it has also been, sorry, helping drive the top line that you saw in the number, because the rest part of Q3 is just a very, very, very good number. You had a question also on what we see in terms of development. I think today... Europe has been, over the crisis, behaving quite well, really. I think, you know, if you look at the spread by geography, Europe has never been a very strong element of the absolute development, but it has been a steady element of the development. And so in Europe, because of the conversion and all of that, we see a continued demand, strong demand, and that is not going to change. The element which is fluctuating is two ways. One is Middle East and the other one is Asia. Middle East has already recovered. And in fact, the demand in Middle East, this is very, very true for luxury and any small, is very strong. And I was mentioning to you the mix that you have on luxury and lifestyle versus the rest of our portfolio. You know, a large part of that is driven by the demand that exists in those markets and is pushing us on... pushing us forward and increasing that level of activity. The joker, the element which is tougher, has been tougher, is Asia. The reason for why, in fact, the numbers were weaker for the last two years was Asia, because Asia was basically closed. And so if it is closed, why open a room, right? And it is, by the way, still trailing the rest of the world in terms of activity. And in my view, this is a situation which is going to correct itself next year and the coming months, and hence the potential of those regions, which, if you recall, was the largest driver of net unit growth and pipeline in history, hence the fact that I mentioned the pipeline in Asia being 50% of the total. That portion is the one that we still have to model and understand it has been moving very well over the second part of the year. You can see Southeast Asia also coming back and we need now to see how China and Southeast Asia will behave next year and that's going to make the difference.

Great. Any comments on industry unit growth?

Industry unit growth, that's just net unit growth. Yes, exactly. Which is the net unit growth. Sorry, the one from Europe is steady. The one from Asia will recover and is recovering. And China is a question mark. And the one from Middle East has already recovered and is very much slanted towards, in fact, luxury and lifestyle.

Okay, thanks.

Sure.

The next question comes from the line of Leo Carrington from Citi. Please go ahead.

Thanks. Good evening. Might I just ask three questions? One, a quick follow-up. In terms of the pipeline evolution the activity in lifestyle and luxury, do you see the same trends that you're seeing in Middle East begin to spill over into other regions, or do you think, or is there a very pronounced regional mix right now? Secondly, in terms of the, and perhaps I'll just collapse my last two questions together, I mean, in terms of the pricing power, Do you see similar trends for your business customers and midweek demands as you do the weekends? How do you see the pricing power in that amongst your business room nights? And then how do you see this evolving into November and December? What do you think the longevity of this pricing power can prove to be through the rest of Q4?

Yeah, just on the longevity, if I just look at the result of October, because we already are very much advanced in the month of October, and I have also a very good view on November because it's tomorrow, we see the same kind of trends, i.e. a very strong pricing power in our hands. As you know, the difficulty of the industry is to project it much further because of the way people booked. So beyond... You know, the two months' time, I don't have a lot of backlog, which is coming in in advance, and hence the judgment is much tougher. But we don't see today any slowing down. So it's something to be monitored, that we monitor daily. But you would have very good REFPA in the months of October, in the months of November, in the months of December. And this is going to be supported still by very nice pricing power. In terms of, by the way, your other question, which is a very good one, we see a rebalancing between the weekend and the week. And all of that comes from what has been happening with the COVID, with people now working differently. And so people staying in reality longer and coming, for example, over the weekend to do their week into a given place for work and not coming anymore for just one day during the work week. And so there is this so-called mixing between business and leisure, which has been kind of smoothing, in fact, effects that were existing before, the differences between weekend and the rest of the week. And so this is continuing, and I don't see why it would fundamentally change. You see more and more people coming back to the office, but you will never see something which is going to be back to the level people used to work in 2019. Some industries are still very, very much working offline, and notably anything related to technology. In terms of lifestyle, actually, I insist on Middle East because that's the portion which has been buoyant. And again, remember, Middle East and Africa in our world has been the region that came back up from COVID the fastest. And so that's also probably part of the reason. But we do see a lot of leads in Asia. We have, for example, some lifestyle hotel now in Australia, Mondrian, We have also some openings in Paris, again, Mondrian, as an example, Oxton. And so you see some of those brands kicking in, not only in Middle East and Africa, but it is true that it is very much today in Middle East and Africa. I mean, you've got a series of, like, for example, in December, we will open a Mondrian brand. In Singapore, we have Maison Delano in Paris, which is probably going to open now in October. And you've got Faina that we are signing in Buenos Aires. So there is a couple of things here that are going in that direction. I think the one point I didn't make to go to the previous question that I should highlight is, remember, the number of rooms that you open is one element of the equation. But what really matters is the fee that you generate. And so when you look at what we call lifestyle and premium, it's probably today, you know, 70% of the pipeline, right? And that 70%, that's lifestyle pre-human life. And that 70% is the valuation in fees. So I just told you that it was 40% in volume, but it is 70% plus in fees. And I think that's the portion that you need to take into account in how you may judge how we develop the business going forward, because there is a mix change. I mean, we went through creating that lifestyle platform. We went through the acquisition of more blacks and premium kind of brands over the last three, four years. I mean, it started with Fairmont, but it has continued with Mervin Peak. It has continued elsewhere. with other brands like 25R and so on and so forth. And so that is going to help in the future because it means that your pipeline is getting richer. So just the 3.5% or whatever does not necessarily translate. If I do all my openings in China, it is not going to do the same thing to my bottom line that if I do all my openings in a nice SLS in Dubai. And so I want to insist on that because you may not see the same trends in every... of the people in this industry. Is that making sense?

Yes, that's very clear.

Thanks a lot, Julien.

Good evening. Congratulations for this strong publication. Two questions, if I may. First one was on ADRs. Do you have any visibility on 2023, any negotiations with corporates or tour operators or OTAs, which could give us some flavor about what is going on? I know that's difficult, but any information would be welcome. And the second part, the second question, sorry. would be on the 200 million saving plan. Could you give us an update on that side and which part you could confirm? Because, correct me if I'm wrong, but during the H1 results, you were saying that part of the saving would be impacted by inflation. So any information would be welcome. Thanks.

Yeah. On the corporate discussion, I think the one thing which is, in my view, extremely positive, is that all the discussion that we have, people do take the argument of inflation in the discussion. So there is no rejection from anybody that inflation cannot be part of the discussion. And by the way, it kind of makes sense economically, but they are taking it. So to me, that's a very positive thing. And that's also why, with what I have in my hands, I feel comfortable about the ADR going into 2023. After that, André, on the commitment of volumes, there is never really any firm commitment on volumes. I mean, it's mostly envelopes. And so, you know, it's not as if any of those things are like casting concrete, if you will. But on the pricing, on the other hand, you know, it's a good thing that we're able to keep the same kind of rates and adjust them for inflation. For your other points about reset, as I've been saying earlier, like a broken machine, we have done all the actions, and we have done all the severance of many people, unfortunately, and it has cost us a lot of money, and it was a painful path of any manager's life, and it is not only people, but it is, in our business, a lot of people. And so the 200 million versus 2019, are basically done. There is a little bit still that we've got to do between now and Iran, and you know there is a little reminder that we're only kicking in the PNL in 2023, something to the tune of 20 million, but 180 million of it will be the exit run rate of 2022. What I was saying when we went through the H1 discussion is that because of the 5% of inflation that I mentioned, and if you do Very simple math on the basis of 1.3 billion of cost base, which was our cost base back in 2019. So you just do something where you put a bit of inflation in 2021, 5% in 2022. You find out that half of the 200 million would be eaten by the inflation on the cost base. And so going forward, the big question is, am I able to get the 5% I was mentioning on average room rate? I'm offsetting in the fees that I collect the increase that I see on the cost base in the future. So that's really where we are on reset in macro terms. So the saving and the plans have been done, and they have been very much helping us weathering all the bad news that happened during this year in terms of the inflation and turbulences in the world, and I don't think we're going to need as much of it going forward because I think we're going to be able to continue to increase the pricing.

Okay, so if I understand well, the fact that prices are strongly up, partly thanks to inflation, means that we should have a positive effect of more or less $200 million on the cost base.

Yes, you will have a portion of the 200 million in the cost base, absolutely. I'm guessing, just to make it clear, let's keep something that everybody will be able to remember, use for now 100 million, because I'm considering that, you know, there is a portion of what I have which is going to be lost through inflation because of what happened this year, but there is a net benefit to be modeled coming from reset going forward. Okay, thank you.

The next question comes from Alex Brenkno of Redburn. Please go ahead.

Hi, thanks very much for taking the questions. First one is on the profitability of the STO business. You previously talked about a potential mid- to long-term EBITDA contribution. You're obviously running ahead in terms of timing, but I wonder whether the cost savings you've taken out has changed the long-term hopes or expectations on the contribution process. And then just a second quick one that there might not be a good answer to, but just on disposals, obviously the trading conditions are much improved. Is there anything further to say on the assets that you have intentions on disposing? Thank you very much.

Sorry, just on the asset to make sure I catch your question properly. What assets are you discussing in terms of disposals, sir?

So any of the remaining leases and then, of course, hotel assets.

I got you. I mean, the Sequana will obviously help the net debt position of the company because it's a great transaction in terms of internal rate of return. I mean, it was a good transaction and hence it will help in fact the liquidity and the net debt position of the we have been mentioning 465 million of selling price in the press release and so you've got against that alone of about 300 million so you can see here that there is a net effect which is a positive one and the internal rate of return that you may have if you do classical computation is a double-digit, way double-digit kind of return. So again, here we may not do everything perfectly right all the time, but this one was a very good transaction in retrospect. So that's on Sequana. After that, you know, what is left? What is left is two big things. One is AccorInvest. And AccorInvest, you know, performance is improving, as you may have seen in the press and as you would expect, taking into account what are I just explained on what's happening in the European market in the hotellerie. And so that one is a complicated transaction. We have anyway a lock-up up to 2023. Complicated because it's a big number. And so this one, when it comes, will be a significant effect again in terms of cash in the company. And then the other one that we've got to continue working on is Mantra. On Mantra, we do a little bit of work as we... as we progress, sorry, we have been work as we've been progressing. And what I mean by that is leases are living animals. And so they come to hand. And when they came to hands, you can either renew them, transfer them, or basically not do anything with them. And so the liability that we started with four years ago on Mantra, which was to the tune of about 300 million of debt on the balance sheet, has been reduced by 100 million. So we've been working on it, but there are still some leases that we need to continue to find ways of getting out. The amount that you can expect from the sale of a lease is not a lot of money. As much as AccorInvest and Sequana are providing large pockets of money, a lease, as you surely know, doesn't provide a lot of cash outlay when you sell it. But the benefit that you get is the reduction in net debt on your balance sheet and, more importantly, the lisibility and the capability of reducing the variability of your result. Today, the results of Australia are good. Also, because the leases in Australia are turning around. So we were hit, you know, in 2020, 2021, significantly by the leverage of the leases in Australia. Today, it's the opposite situation. And it's the fact that I've been mentioning several times that total asset profitability was, in fact, very good since 2021. So I think that's kind of the answer to your question. After that, there is not a lot that you need to add. There is a couple of hotels that we still own, but not a lot. There is maybe less than five, six that we still have owning, like one in Egypt, one in Mauritius, but not a lot. So this is not a significant announcement. That's a long answer, but it is an important subject. Great. Thanks so much.

The next question comes from the line of Ali Naqvi of HSBC. Please go ahead.

Hi. Good evening. Thank you for taking the question. Sure. Just in terms of the pace of signings, how would they compare versus 2019? And what's the sort of view in terms of going forward? Are any of your regions more or less exposed to developers due to macroeconomic environment or anything that could potentially slow that down? and then the conversion level obviously this year has been pretty high. How do you think about that for next year?

I think the conversion level is most definitely an argument, a positive that we have a lever that we have many other players because our conversion level is to the tune of 50%, what I said earlier, year to date. It has been in history more like 40%, so we are seeing more conversion this year than we were seeing in 2018, 2019. And by the way, it makes a lot of sense to take into account what we know on the environment of the economical environment, but also all the disruption that you got through supply chain, because building some hotels, it's quite difficult to finish a hotel if you don't have beds, for example. So, you know, it's a full thing that you need to sell. And so from time to time, supply chain can reserve for you a couple of nice surprises. I make some kind of a wick out of it, but this is the daily life of people on the field. So we've been seeing good conversion, and I think you will see continued good conversions. Because of the environment in which we're entering, getting financing is not easy, and converting property is one way to resolve potentially for an asset owner problem. some of the financial issues that they may face. And so I think you're not going to see the rate of conversion slow down in the future, and it helps us develop better. We are probably also in development in the same vein. Think more about franchise versus managed, because it is faster as a cycle time to go and develop a franchise hotel, which is a very standard contract, versus a managed hotel that requires more complexities in the negotiation because of the larger added value that you may have. And so, again, it depends what type of hotel, depends what kind of location, depends on many parameters. But that may be, for Midscan and economy, a lever that we're going to use going forward more. And on the signing, and your question on the absolute level, we are behind 2019 in terms of signing. You know, the signing level, the absolute signing level that you've got in the last 12 months is probably to the tune of 70% to 80% of what we used to do in 2019, rough numbers. And again, no surprise here, as we are seeing an acceleration of the signing in the second part of the year. So the same way the net tuning growth will continue to ramp up, the same way you will see the signing last 12-month number continue to ramp up mechanically. Does that answer your question, sir? Yep, thanks very much.

We currently have no more questions on the line. If you would like to ask a question, press star 1. The next question comes from the line of Andrea Julliard of Deutsche Bank.

André, André, André, you make it twice.

Sorry, just a follow-up one. About conversion, do you see any portfolio coming to your brands compared to initial trend which were more focused on individual assets, which would be a good sign of the attractiveness of your brands?

Yeah, there are some discussions. I think I had mentioned to you, I believe, when we did the H1 publication that the Salter portfolio in Australia was going to come because I had the question of how are you going to figure out an H2 which is so much stronger than the H1. And so part of the answer there is one big conversion. which has been the Salter Brother portfolio in Australia. So that's a good example. Now, I must say that's the only one of significance that we had in the period of year-to-date. But there is a lot of little things ongoing. There is no large portfolio conversion that we are negotiating today. But, you know, these things come up and back, and I think in all cases there is a lot of smaller ones that are happening, notably in Asia.

Okay, thank you.

Sure. Okay. Listen, I think we are done. So thank you very much for the listening, and we look forward to see you in February for the ERM results. Thank you.

Thank you for joining today's call.