Accor Sa

Hello and welcome to the Accor QM 2025 revenue conference call. Please note this conference is being recorded and for the duration of the call, your lines will be on listen only. However, you'll have the opportunity to ask questions after the presentation and this can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero and you'll be connected to an operator. I will now hand you over to your host, Martine Giraud, Group CFO, to begin today's conference. Thank you.

Thank you. Good evening, ladies and gentlemen. Thank you for joining Accor's first quarter trading update call. And I will start with the key highlights on slide three. So I'm pleased to report that we started the year with sustained momentum. So the strategy of ACOA, which is to focus our investments in higher growth regions and segments, is yet again delivering another quarter of very solid growth. First quarter, RESPAR reflects a solid trading at plus 5%, like for like, driven by strong performance in the Middle East, in Southeast Asia, and the Americas. March was softer than January and February due to calendar shifts, notably with Easter that is shifting in April, which for us created a headwind in March. April and May are trending much better, and thus far we are not seeing significant changes in demand trends in our key markets. Pricing continues to be the main driver. contributing about 80% of the group ref bar growth in the first quarter. Occupancy was up by one point in the first quarter at 61%. Net unique growth reached 2.7% on the NELTN basis, reflecting a lower pace of openings in the first quarter, and a churn which this year will be more front-loaded. We expect NUG to accelerate in the second half, and we are very pleased with the pipeline, which is improving 4.9%, on an LTN basis. Turning to revenue, group revenue increased by 9.2%, with management and franchise revenue up by 9.3%, a combination of REFAR and Natchini Growth. And as announced in February, we did reach 100 million oil members in March. Now, during this quarter, the group has remained active and continued to strengthen both its portfolio and its balance sheet, and you may have noticed that we recently announced a significant breakthrough in two high-growth markets in India, where we announced a strengthened partnership with Interglobe and Tribo to jumpstart our development in India, and in Mexico, where we announced the acquisition of 17 hotel management agreements and a brand rating platform for the acceleration of the development of Accor Brands, both in lifestyle and PME in Central America. We took advantage of what were supported markets, financial markets in February to successfully issue a senior bond for 600 million euro with an eight year maturity and a three and a half cent coupon. And finally, we launched, as we announced in February, a first tranche for 200 million out of the 400, 40 million share buyback program and as of today there's a bit more than 60% of this tranche that has been executed. Now if we turn to slide 4 on the Q1 Ref Bar starting with PME which posted a Q1 Ref Bar growth of 3.4% versus 2024 driven primarily as you can see here by solid pricing resilience. In the quarter, average room rate was at 3% year-over-year, and occupancy rate was up slightly, a bit less than a point, to 61%. In INAH, Europe-North Africa, Q1 RESPA was up 0.6%, solely driven by occupancy, which was up 0.4 to 58%, with a somewhat contrasting picture across the various countries that comprise this region. In France, Both Provence and Paris reported slattish to slightly negative growth in Q1. Both were positive in January and February, but March came in negative again due to a weaker event calendar and Easter shifting to April. However, when we look at April, on which we have good visibility, April bookings have responded quite strongly in France and are back to positive territory. In the UK, low single-digit negative RefBar growth in the first quarter mainly reflects a continuation of lower consumer confidence, which are prioritizing savings over spending. In Germany, RefBar overall for the first quarter was slightly negative, but sequentially improved, turning positive in March, thanks to a more favorable event calendar. And in Southern Europe, And Eastern Europe, those regions continue to be positive, solid positive contributors to the ENA Ref Bar. Turning to MEAPAC, the first quarter Ref Bar was up 4.6%, solely driven by rates. As you can see, excluding China, which is part of this region, the MEAPAC was up 7.2%, so very, very solid Ref Bar growth. Middle East Red Power was up in the mid-teens, so quite strong, notably benefiting from the Ramadan in Saudi Arabia, which was fully in the first quarter this year. Southeast Asia also posted very solid growth in the mid-single digits, despite what was actually a challenging calm base for Singapore, where we had a number of tele-shoot concerts in March of last year. Pacific REST bar growth was sladdish. Pacific was impacted quite strongly by the alpha cyclone in early March, which affected the coast of Queensland, which is a big region for Australia for ECHO. In China, REST bar continues to be negative, high single digit growth. Recovery of Chinese tourism is really benefiting more the outbound market and Southeast Asia in particular. So we benefit from this indirectly. And we do not foresee, given the current events, we don't foresee China turning positive in the short term. Turning to America, Refbar continues to be very robust with up 13.1% in the first quarter. Brazil continues to post mid-teens RASPAR growth, driven by both price and occupancy, with a quite strong events calendar again in the first quarter. Moving to luxury and lifestyle on the right, RASPAR growth was 8.3% year-over-year with rate and occupancy gains. Rate was up 5% in the quarter. Occupancy was up 2 points to 60%. Luxury respire was at 9% with rates driving most of the gains. All brands reported high single-digit to low-teens respire growth as international tourism continued to be supportive of this segment. As for lifestyle, respire growth was a solid 6% mainly driven by occupancy. Resorts continued to perform well in Turkey, in Egypt, and the UAE. and benefiting from strong demand and boosted occupancy. I will now turn to slide five, which breaks down the hotel portfolio and pipeline by division, starting on the left with PME, where net unit worth was 2.4% on an LTM basis. As is usual for the first quarter, the pace of openings was moderate. but did include some notable openings such as Foreman in Chennai and a new hotel in Valencia. In addition, while we expect Churn to be in line with 2024 on a four-year basis, it will be more front-loaded in 2025, and that is what is impacting Q1 net unit growth. Pipeline is up 4.5% on a last-term basis, 178,000 rooms, thanks to a solid level of signings in Q1 in both volume and in value. And if you look at the M&F revenue on the last 12 months basis, it stood at 1,300 euros in the first quarter, which is up slightly from where it was for 2024. Moving to the right, luxury and lifestyle portfolio grew by 4.3% over the last 12 months. The network growth was really impacted by a more moderate pace of opening, but also the churn of two large hotels in lifestyles. Now, the impact of that churn will actually be quite minimal on lifestyle revenue as those properties, those two properties had very low fees per room, less than €1,000. And you contrast that to the average fee per room in lux and lifestyle, which is over €4,300. And as in PME churn, this year will be more front-loaded in luxury and lifestyle. Now, we do plan an acceleration in monitoring lifestyle of the natural growth as early as the second quarter, with the openings of two large rickshaws actually in Egypt and Hoxton and in Dubois, and also having a more normalized churn in Armenia as we go forward. And for the four-year, we do expect lifestyle to continue to grow its networks. in the Me Too High team fueled by pipeline, which grew 15% on a last 12 month basis, and which represents 80% of the lifestyle network. For the Division, the pipeline is also up a healthy 6% on an healthy last 12 month basis driven by lifestyle. And for the Division, pipeline accounts for 46% of the existing portfolio, which is up slightly from where it was last year. In terms of noticeable signings in the quarter, we're happy to announce the future openings of Raffles, Como in Italy. We have emblems in Cortina d'Ampezzo and Sofistel Porto in Portugal. All were signed in the first quarter. And again, M&F FIPA room at 4,100 euros is a very solid increase versus last year. Last year, FIPA room was 3,800 euros. So we continue to have signings that are accretive to the revenue. At group level, NUG reached 2.7% over the last 12 months. Again, what we expect, 2025 net unique growth to be above 2024. As we shared with you in February, it will follow a somewhat different profile. In 2024, and you may recall, H1 openings benefited from the large portfolio conversion of Daiwa in the second quarter. As a result, you will see an acceleration in NUG starting in the second half. Very good conversions in the first quarter. 61% of the openings were conversions. And again, total pipeline is at 4.9% on an LTN basis and standing at 28% of the network. I will now turn to slide six with a revenue breakdown by segment. So very good revenue growth in the first quarter, plus 9.2%. Premium mid-scale and eco, so PME revenue is up 1.8% versus the first quarter of 2024. Management and franchise revenue is up 3.9%, so slightly above REF PAR. Incentives are actually represented 32% of M&F fees in the first quarter, so quite stable. Services to owner continues to perform well, up 5.4%, outpassing REF PAR growth as we continue to drive improvement in our channel mix in the first quarter web direct channel was up 1.4 p.m hotel assets and other revenues down 3.5 percent uh this is where uh our mantra portfolio sits in australia and that was impacted by the tropical storm alfred as I shared in my introduction, and we also have the effect of the depreciation of the real in Brazil, which is impacting also this line. So luxury and lifestyle revenue is up 17.9%, so quite healthy growth, with management and franchise up 19.6%, so that's 11 points above REFAR growth, and that's the reflection of both Network work, but also good growth in incentives. Incentives were 35% of M&F fees in luxury and lifestyle in the first quarter, with good development of the hotel margin. Services to honor revenue growth driven by both activity, but also improved loyalty contribution at 14.6% in the quarter. And hotel assets and other, which, you know, with a growth of 25.9%. Now, that reflects the... consolidation of ReCAS, which was acquired in March of last year, as well as the openings of some new F&B venues. I will now focus on M&F revenue growth on the next slide, which again grew a very healthy 9.3% in the quarter, starting with PME. PME M&F revenue was at 3.9%, so again reflecting the global rough part growth of 3.4%. with a somewhat contrasted performance across regions. In ENA, the slight decline in M&F revenue reflects a lower FBAR, 0.6% in the quarter, but also the move to franchise. We have a limited number of management contracts that are moving into franchise contracts. We did anticipate this in our mid-term projections that we shared with you in June of 2023. And most of the impact is now expected in 2025. Now, we have taken the required adjustments to our cost base. They have been identified and they are being actioned to offset the MNF revenue impact on the PME division, which we estimate to be about 2% on a four-year basis. In MEAPAC, the revenue growth is well above REFAR, boosted by network growth and strong incentive fees, with a 13% growth in MEAPAC. And in the Americas, we're not seeing here the good performance, and it's really a reflection of what's happening to the real, which, as I said, is weaker in the first quarter. Turning to luxury and lifestyle, M&F revenue, double-digit growth, very strong at 19.6%, so well above our FPR. It's driven both by a solid activity performance, very good translation into incentives and more for lifestyle, obviously a very strong net unique growth. Turning to slide eight and to conclude this presentation with the key takeaways before we open the floor to Q&A. A core strategy of focusing investments in high growth geographies and segments is fueling yet another quarter of solid growth. And as shared in my introduction, we are not seeing material shifts in overall demand in the month of April and May or trending in line with our expectations and above where March was. Visibility is more limited beyond May given the short booking windows as always, but we feel good about where April and May are trending. We recently announced two significant breakthroughs in fast-growing markets in India and Mexico, which will accelerate our development in both regions and therefore further diversify our portfolios. We expect our net unique growth to accelerate in the second half as we lap over the direct portfolio conversion, which had boosted NAG in the second quarter of last year, combined with what we see as strong planned openings in the third and fourth quarter. Now, clearly the visibility is limited, given the volatility on tariffs in particular. Now, as a service business, the direct impact of tariffs on ACO is clearly minimal. Nevertheless, we are closely monitoring the situation, and we have tightened our cost control measures in this respect. And as always, we remain focused on delivering our midterm targets as we disclose during the June 2023 Capital Markets Day. And I will now thank you for listening, and I will now open the floor to your questions.

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