Accor Sa

and welcome to Accor Group's Q3 2024 Revenue Conference Call. Please note, this conference is being recorded. During the conference, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the presentation by typing star 1 on your telephone keypad. I now give the floor to Madam Martine Giroux, Accor CFO, to begin this conference. The floor is yours.

Thank you and good evening everyone. Thank you for joining our third quarter trading update call. And without further ado, I will start with the key highlights on slide three. So I'm pleased to report yet another strong quarter with a robust top-line performance in line with our perspectives for 2024. So our activity growth, as you can see on the left side, was solid in the third quarter. Domain remained strong with a rest guard growth of 5.3% in the quarter, benefiting from the Olympic Games in France, but also the diversification of our portfolio. Pricing remained supportive with rates improving by 4% year over year in the third quarter. Occupancy was also up, gaining one point to 70% in the quarter. Turning to net unit growth, net unit growth reached 3.2%. on an LTM basis at the end of September, which is in line with all our quarterly guidance. As we anticipated, turn was higher this quarter as compared to the third quarter of last year, primarily driven by the portfolio upgrade program we have in the PME division, and we do expect this to normalize in the fourth quarter. We regained positive momentum in the pipeline, which increased 6% versus last quarter. Pipeline totals 231,000 rooms. and this was driven by the PME division. On a year-to-date basis, pipeline is up 3%. Our signings are also progressing well, and they're up 9% in value as we continue to drive up the average fee per room. Turning to revenue, revenue increased by a very solid 12% to slightly over €1.4 billion, and it's 9% when we adjust for fairing exchange and scope. M&F revenue was up a solid 7% in the quarters. We therefore remain on track to deliver our four-year guidance on all metrics. We are comfortably within our four-year Rothbard growth of 4% to 5%. And we have narrowed upwards our guidance, which is now expected, between $1,100 million and $1,125 million. And on the balance sheet side, We successfully completed the refinancing of our second hybrid bond insurance for $500 million at a lower cost than last year's refinancing. I'll now turn to slide four on rest parts. Starting with PME, PME posted a third quarter rest bond growth of 5%. Driven by continued strong pricing for about 80% and occupancy gain for 20%. In the quarter, average room rate was up 4% year-over-year, and occupancy rate was up 1.71%. In ENNA, Q3 left par was up 6% versus prior year, driven by a 7% growth in average room rate with France, obviously, and Germany equally being both strong drivers. In France, the thrift car was clearly boosted by the Summer Olympics. Gamescure delivered a peak performance, which was in line with our expectation, with ADR that was more than double in the period, and we also had 15 points of incremental occupancy. over the game period. The province had a fairly resilient summer. September was a bit softer. September had challenging comps because of the World Cup, which ran from September to October last year, as you may recall. In the UK, Ref Bar was broadly annoying with previous quarters overall, London being softer than the province. And in Germany, Ref Bar continues to perform well with a growth rate in the high single digits, and occupancy rate was up in the quarter, which is an improvement from previous quarters, where it was mostly pricing that was driving RESPAR growth. Turning to MEAPAC, RESPAR was up 1% in the quarter, with sharply contrasted performances. Southeast Asia was the best-performing region and continues to deliver double-digit RESPAR growth, benefiting notably from the outbound demand from China. Middle East Africa, Turkey's performance was softer this quarter. It was negatively impacted by the timing of some religious holidays, notably the hash, and the latest start of UNRWA, particularly in Saudi Arabia. We also had the reopening ramp-up of five hotels, which had been impacted by the April flooding in Dubai. However, we saw sequential improvement in RESPAR over the quarter, and we closed the quarter with high single-digit growth in Middle East Africa and Turkey. And if we combine those two regions, which are growth markets for REFGAR, we register the world, a solid 6% growth as you can see on the page. Pacific continues to be challenged with flat-ish REFGAR in the quarter. Macros continue to be weak and consumer confidence remains low. remains a challenging market. Ref par declined within the high single digits in the quarter, although that is less pronounced than what we have observed in luxury goods. Now, while China's outbound traffic continues to recover, and we see the benefit of that in Southeast Asia, domestic demand remains under pressure. Trading's improved somewhat over the golden week, which had a stable ref par year-over-year during that period. Thus far, the stimulus program has mostly benefited the financial sector. Turning to America, which, as you may recall, is mostly Brazil, we continue to post double-digit growth, with third-quarter FPR up 13%. Demand was very solid in Brazil. Occupancy was up 2 points and is now sticking 3 points above 2019. notably driven by corporate and events in Sao Paulo. High inflation also benefited the rates in Brazil. Moving to luxury and lifestyle on the right side, rest of the work was sustained at plus 7% with both rates and occupancy gain. Rate was up 3% in the quarter and occupancy was up 3 points in the quarter. Luxury rest part was 5% in the third quarter, with rates up 2% and occupancy up 2 points. Luxury momentum, when we look at it by market, by geography, is actually quite comparable to that of PMU with a slight positive premium. Lifestyle sustained double-digit growth at plus 14% in the third quarter, equally driven by occupancy and price. Results had, again, particularly strong quarters in Turkey, Egypt, and Dubai. Moving to portfolio and pipeline on slide 6, slide 5. As shared in my introduction, our net unit growth reached 3.2% on an LTM basis, starting with PME. Last year, our net unit growth was 2.6% in the PME division. That's in line with our mid-term guidance. It is down from 3.7% at the end of June, primarily driven by churn. Third quarter openings were back in line with prior years, following the uptick in Q2, which had the opening of the downward portfolio. However, churn, as indicated in my introduction, was above prior in the quarter. And this is mainly a consequence of the portfolio upgrade program that we have launched in 2023, which is therefore more of an active, proactive churn. We do expect churn to normalize in the first quarter and fall back in line with prior. Now, with regard to pipeline, we're pleased to report an 8% growth over the quarter in the P&E division. And the last 12-month M&F revenue per year is holding up at €1,200. Moving to the right, we had a slight acceleration in the growth of the luxury lifestyle net unit growth at 7.1%. on an LTM basis continues to be driven by any smaller, which was up more than 20% on an LTM basis. We see an improvement quarter after quarter in the net tuning growth of luxury and lifestyle, and this is fueled by a high opening and a significant pipeline. In the quarter over versus previous quarter, pipeline is actually stable. Signings, however, in the luxury and lifestyle divisions are up 22% in value on a year-to-date basis as we continue to focus on higher-value deals. Some notable openings in the quarter were the Raffles in Jaipur, the Ricks of Golden Horn, and Sofitel in Cotonou. And in this division, we also see, you know, steady M&F revenue per room at €4,000. So at group level, net unit growth reached 3.2% on a near-term basis. It is at the low end of our midterm guidance, as expected. We had a bit more conversions. Conversions represented 62% of opening, which is above our historical level, which is near 50%. Moving to slide six, which is the revenue breakdown by segment. Group revenue slightly over $1.4 billion, up 12% versus prior year. Reported growth is positively impacted by the consolidation of Coupe de Chabot, which is impacting luxury and lifestyle. Partially upset by foreign exchange, which impacted us by a negative 2% in the quarter. And on a life-or-life basis, our revenue is up 9%. For premium mid-scale and economy, revenue was up 7% in the quarter at $821 million. Management and franchise was up 6%. That's one point above red bar. We also had a bit of a negative FX impact. On the positive side, we had some termination fees in the ENA region. In services to owners, The 14% year-over-year valuation that you see here is fairly impacted by services that were provided to the Olympics organization. Hotel assets and other performance remains driven by Australia and Brazil, so the revenue growth in this region, which is pretty flattish, reflects your softness in Australia as well as negative foreign exchange from the Brazil deal. Turning to luxury and lifestyle. Revenue was up 18% in the quarter, 635 million euros. Management and franchise was up 10% in the quarter. That's three points above growth, which reflects the strong growth of the lifestyle portfolio, and again, partially upset by negative effects in this division. Services to owner growth was pretty much in line with REF PARC. And hotel assets and other growth, again, reflects mainly the acquisition of Portel and Chabot. which we did in the October of last year, and RICAS, which was at the end of the first quarter of this year. Turning now to specifically management and franchise revenue on slide 7, L&S revenue was up 7% in the third quarter. PME was up 6%, and as you can see here, this was primarily driven by the INA region, as previously mentioned. This region benefited from some termination fee, as well as obviously the very good growth in VETFAR. In the APAC, the M&F revenue growth at 2% is the main line with VETFAR growth, and in America, as you can see here, minus 2%, and this is the result of the depreciation of the Brazilian rail, primarily, as VETFAR was very positive in this region. Regarding luxury and lifestyle, MNF revenue grew by 10%. Luxury revenue, MNF revenue, is up 5%. That's in line with VEFAR. And for lifestyle, you're seeing 23% growth in MNF revenue, a combination of obviously very solid VEFAR growth, but also the very strong growth in the network in this segment. Turning now to page 8 with the key takeaways. As we expected, and as we shared with you, the group foresees a normalization of the RASPAR momentum towards our mid-term perspective of 3% to 4%. As for full-year 2024, we are confirming our RASPAR guidance, only between 4% and 5%. We're also confirming our net unique growth between 3% and 4%, confirming our positive services to owner EBITDA, And we slightly narrowed upwards our EBITDA guidance, which is now expected between $1,100 million and $1,125 million. And that concludes my introductory remarks, and I will now open the floor for questions.

Thank you very much. Ladies and gentlemen, as a reminder, if you wish to ask a question, please press star 1 on your telephone keypad. Our first question is from Vicky Stern with Barclays. Please go ahead.