Accor Sa

Good morning, ladies and gentlemen, and welcome to the ACOR H125 results conference call. For your information, today's conference call is being recorded. If you would like to ask a question during the conference call, please press star 1 on your phone's keypad. I will now hand over to Sebastian Bazin, Chairman and CEO of ACOR. Please go ahead, sir.

Thank you. Welcome, everyone, on this H125. I'm here with Martine, Pierre-Lou, and I'm going to leave the floor very quickly now to Martine, and then I'll get back to you for the conclusions and for Q&A, of course. Martine, up to you.

Thank you, Sébastien, and good morning, everyone. So I'll start with the financial highlights on slide three, and I'm pleased to report that we've delivered Another quarter and a semester of solid growth despite multiple headwinds, both from geopolitics but also foreign exchange. Second quarter, REF PAR, like for like, remained solid at plus 4.1%, and it's driven both by price and occupancy and benefiting from our geographical and segment diversification. In the first half, REF PAR was up 4.6%. NARG on the last 12-month basis reached what was an expected low point for the year at 1.9%, and this is mainly reflecting a base effect related to the conversion of the Daiwa portfolio in Japan, which took place in the second quarter of 24. Our pipeline, on the other hand, grew at a very healthy rate of 10.7% over the same period, which supports the acceleration of opening and net unique growth, which we expect in the second half. Now, the euro has appreciated both rapidly and significantly since the first quarter against pretty much every currency, and in particular against the USD, and therefore all of the USD-pegged currency now. Our FX exposure is predominantly in currency which move with the US dollar, and as a result of that, the erosion of the dollar has had a negative impact on our reported result as of the second quarter. Now, at constant currency, group revenue increased by 5.1% in the first half, and at reported rates, revenue grew by 2.5%, reaching $2,745,000. Now, we translated this solid activity into solid financial results, which demonstrates the same discipline. Recurring EBITDA is up 13.5% at constant currency, which is above our midterm guidance, and at reported rates, Recurring EBITDA is up 9.4% to $552 million in the first half. And as you can see, foreign exchange rates had a negative four points impact on EBITDA growth in the first half. Recurrence rate actually improved to $136 million. That is a growth of 13.3% versus prior year. And finally, we keep to our shareholder return policy with $530 and $3 million of cash returned to shareholders in the first half through dividends, as well as the first launch of our 25-share buyback program. Now, let's turn to the second quarter red bar on slide five. I'll start with PME. PME posted a second quarter red bar growth of 2.9%, still largely driven by pricing for about three quarters last and occupancy for a quarter. Occupancy reached 69% in the quarter, which is still below 2019. In Europe, North Africa, or ENAF, REFBA growth accelerated from 0.6% in the first quarter to 3.3% in the second quarter, primarily driven by France. Occupancy was the main driver, reaching 73% in the second quarter for the ENAF region, which is a two-point gain versus prior. In France, RAFAR was up in the mid-single digit, driven by Paris, which was up in the low double digit. Paris benefited from very strong tourism inflow as well as favorable costs. In June, you might remember, we had a slowdown in 2024 ahead of the Olympics game. The RAFAR in the Provence grew in the low single digit in the second quarter. In the UK, the low single digit negative momentum for RAFAR remained both in London and the regions. still reflecting a depressed economic environment. In Germany, RESPAR was done in the mid-single digit with unfavorable comps in June, which, as you may recall, hosted the UEFA football championship in June of 2024. In Mayapak, Q2 RESPAR softened to 1.2%, and this is primarily driven by Saudi Arabia, which was negatively impacted by the timing of Ramadan as well as some stricter entry rules for the June hash pilgrimage. Now, China, negative high single-digit RefBar growth continues to weigh on the region. If you exclude China, Neapak region RefBar is up 3.6% in the second quarter, primarily driven by price. In the Middle East, performance was flat of all, but highly contrasted. UAE was up in the low double digits, despite some cancellation due to the tensions in Iran. But Saudi Arabia As I was just commenting, recorded negative growth for the reasons highlighted previously, timing of Ramadan, and strict entry rules for the Juhaj pilgrimage. Turning to Southeast Asia, Southeast Asia was solid, despite Thailand being negatively impacted by what was a lower inbound flow from China due to security concerns in Thailand and Indonesia facing economic headwinds due to government budget restrictions. But the other countries in Southeast Asia, mainly Japan, Korea, Vietnam continued to perform very well. Pacific rest bar rebounded in the second quarter with mid-single-digit growth following what was a soft Q1 which had been impacted by the Alfred cyclone in Queensland in March. And China, as indicated, saw no improvement in Q2 with still negative high single-digit rest bar growth concentrated in the eco-portfolio, which, as you might recall, is the vast majority of our portfolio in China. Turning to Americas, Americas continues to post solid, very solid growth, with Q2 Ref Bar up 9.1% versus prior year, driven by Brazil, which had solid pricing as well as solid corporate demand. Turning to Luxon Lifestyle, RASPAR growth was 7% in the quarter, equally driven by pricing and occupancy. Occupancy was up two points in the period for Lux and Lifestyle. Luxury RASPAR in the second quarter was up 5.3%, driven by both price and occupancy, with very solid momentum across all the brands. And as we noticed in the first quarter, luxury tend to overperform other segments in all geographies. Lifestyle posted an impressive 12% RASPAR growth driven by both price and occupancy with a very strong performance, again, in resorts in Turkey and Egypt and UAE. Moving on to slide six on Acclar network and pipeline by division, and I'll start on the left with PME. Net unique growth was 1.5% on the last four-month basis, an expected low point due to the Q2-24 base effect against from the opening of the DAGWA portfolio in Japan. In addition, this year, openings will be more skewed towards the second half, while, on the other hand, churn is more front-leaded, as we shared in our Q1 call. Overall, we do expect churn and openings for the PME division to be in line with prior on a four-year basis, but again, with a significant acceleration of the NUG in H2, which is supported by the pipeline. And actually, PME pipeline reached 184,000 rooms at the end of June, which is up 12% over the last 12 months. And it is worth noting that we just signed Arco's largest hotel worldwide in the U.S. with the signing of the 2,800 key treasure island hotel in Las Vegas, which will be under the handwritten bread. M&F revenue at €1,200 was stable. Moving to the right Luxury and lifestyle network grew by 4.3% over the last 12 months, still driven by any more. As we shared with you in our first quarter call, LTM9 for luxury and lifestyle is impacted by the phasing of the churn, which is predominantly in H1, actually Q1, notably in lifestyle. And the postponement of some openings to the second half, including two large Rixos property in Egypt. Now, it is worth noting the opening of four Fairmonts in the second quarter of 2025, as well as some Ennismores opening Montreal on the Gulf Coast and the Hoxton in Edinburgh. Luxem lifestyle pipeline continues to grow at a sustained pace, plus 6.3% on an LTM basis, and it is driven by Ennismore. Overall, the pipeline for luxury and lifestyle is 45% of the existing network. M&F revenue per room, 3,900 euros, also stable. Amongst the notable openings claimed in the second half, we have a finance area opening in New York City, Delano, Miami, South Beach, Mama Shelton, Zurich, and Hoxton in Dublin. So at group level, NUG again reached 1.9% over the last 12 months, which we hold as a low point, and we anticipate a strong acceleration in the second half based on what is a very robust pipeline. And conversions in the first half were 56% of our opening. Now, let's move to slide seven and the revenue breakdown by segment. As I stated in my introduction, group revenue reached $2,745,000,000 in the first half. That is up 2.5% on a reported basis versus prior year. And again, the reported growth is significantly impacted by FX, very limited scope effect over the period. On a constant currency basis, revenue was up 5.1%. For premium scale and economy, revenue was essentially flat at 1 billion 475 million with a similar FX impact as the one for the group. Management and franchise revenue was down 0.8%. There's a two point negative impact which we had called out in our earnings goal in the first quarter, which is related to the conversion of some of our management contracts to franchise contracts, and that is weighing on that line. And in addition, of course, FX is also negative for M&F revenue. Services to owner grew at a higher pace than M&F fees, reflecting improvements in both distribution and loyalty. We continue to gain share in our preferred distribution channels, where our revenue intake is higher, thanks to stronger loyalty contribution. All, which is our loyalty program, is sustaining high single-digit growth in its membership base in the first half. Turning to hotel assets and other, performance is driven by Australia and Brazil, and is therefore significantly impacted by the weakening of both the real and the Australian dollar versus the euro, with a negative impact in the mid-single digit from FX in hotel assets and others. For luxury and lifestyle, revenue was up 5.6% versus prior to reach $1,312,000,000, also impacted by FX. Management and franchise revenue was up 0.6%, with difficult comps stemming from the front-loading of the branded resident fees in H-124, which we had called out in our H-124 earnings call. Now, on a four-year basis, this has no impact, as we expect four-year residence fees to actually be slightly up versus prior years. So if you adjust for that phasing, then luxury and lifestyle M&F revenue growth would have been 7.5% at the point rate. Services to owners revenue primarily reimbursed costs for luxury and lifestyle, which are slightly down in the first half and largely due to effects. Hotel Assets and Others reflects the very strong performance of Paris Society Venues as well as the acquisition of RICAS, which took place in March of 2024. Turning to slide 8, Management and Franchise Revenue, M&F revenue is essentially flat in H1, reflecting both headwinds but also the two-point impact on the conversion from management to franchise in PME and the HICOM base last year of residential fees in lifestyle. Starting with P&E, M&F revenue was down 0.8% in the first half. ANR reflects low REF bar growth, as well as, again, the contract conversion, which is where the impact is concentrated is really in this region. Mayapak and Americas were both significantly impacted by FX. Constant currency growth remained solid in the mid to high single digits in both regions. Luxury and lifestyle M&F revenue growth with 0.6%, again, 7.5% if we adjust for the phasing of residence fees. Turning to EBITDA on slide 9, the group's overall EBITDA reached $552 million, again, up 9.4% on a reported basis and 13.4% on a constant currency basis. EBITDA growth reflects four points of effects, headwinds, and phasing effects, namely residential fees and marketing spends. Adjusting for phasing, both in marketing and residential fees, which we expect, again, to be broadly neutral on a four-year basis, NFX, the underlying performance of EBITDA in the first half would be 8%, which is a very solid performance. As for M&F, EBITDA growth is constrained by the lack of top-line growth for the reasons shared previously. Overall margin is flat as PME M&F margin improvement is offset by the high-con base, again, of residential fees. As for STO, the significant growth in STO services to owners reflects the structural improvement in distribution and loyalty EBITDA and a phasing of marketing costs, which is cued towards H2 in 2025. Last year, we had a larger portion of our spend in H1 ahead of the Olympics. Now, again, the phasing effect is neutral on a four-year basis, as we expect four-year STO EBITDA to be in line to slightly above prior years. As for hotel assets and other, the growth from retails and parish societies is partially offset by P&E. Now, regarding premium mid-scale and economy EBITDA is up by 6.7% to $385 million at reported rates. As for M&F, slight EBITDA growth is reflecting a one-point improvement in M&F margin, which is in line with our mid-term perspective. As for STO, EBITDA was positive for the reasons mentioned previously, with favorable marketing phasing, more benefiting PME. As for hotel assets and other EBITDAs impacted by the tropical storm in the first quarter and the disposal of ACA Vacation Club in March of last year. Regarding luxury and lifestyle, EBITDA is up a solid 14.3% to 224 million at recorded rates. As for M&F, EBITDA is down 2.4% again, mainly due to the comps and residential fees, again, neutral on the folio basis. As for STO, EBITDA is slightly ahead of prior, and as for hotel assets and others, EBITDA mainly reflect the growth of both RICAF and Paris Society. Moving on to slide 10, we achieved a net profit of $233 million in the first half, which compares to $253 million in the first half of last year. If we adjust for S&D, S&D is the new name of AccorInvest, adjusting for S&D contribution, which had benefited, and you may recall, from gains on asset sale in the first half of 24, net profit would be up by 19% in the first half. Now, I'd like to call out the main highlights. Other in common expenses as well as DNA are essentially flat to prior. Share of net profit loss of equity investment was negative 19 million. This line is mainly driven by S&D, our stake in S&D. And as I was commenting earlier, our stack, this line saw a profit in the first half from capital gains resulting from the asset disposals of S&D. Net financial expense, two-thirds of the increase that you see here is actually non-cash and is driven by the variation in non-cash FX gains and losses. This year, we recorded a small loss versus a gain last year. Cost of debt is actually stable. in the first half of 2025 versus prior same period. Income tax expense is down from prior, mainly from a baseline effect. We recognize in the first half of 24, a tax expense related to the reorganization of the group. Turning to cash flow on slide 11, The recurring free cash flow improved to $136 million, which is a 13% growth versus prior, with a slight improvement in cash conversion ratio from 24% to 25%. Really, four main highlights that I will call out. Cash interest slightly decreased. It's really mostly from favorable timing. Cash tax increased from $105 million to $121 million this year, and that is due to higher taxable profits in 4 and foreign jurisdictions where we have net operating losses, which essentially have been extinguished. Recurring investment increased from $90 million to $120 million, and that is completely aligned with the strategy and the guidance we communicated during our CMD, which is to bring over time or annual recurring investments up to $300 million, and that is to support the network growth in luxury lifestyles, which tends to call for higher key money than PME. The working capital improvement from prior reflects the continued improvement and control of our cash collection, and I do remind you that our working capital change is seasonal in nature, and therefore negative in the first half and positive in the second half. Finally, net debt reaches $3.94 billion at the end of June 2024. As a reminder, net debt was $2.5 billion at the end of December last year, And the main movements in the first half are really the recurring free cash flows, the return to shareholders, and the reimbursement of the outstanding hybrid, which was refinanced in the second half of last year. Finally, let me now introduce our guidance for 2025 on page 12. RASPAR like-for-like growth is expected in line with our midterm guidance, between 3% and 4%. It reflects the solid start of the year, but also in the second half, the negative comp base of the Olympics, which will impact the third quarter, which, as you may recall, we expect to be our weakest quarter. Net unique growth is expected at around 3.5%. That is a robust acceleration versus the first half, given the high volatility of SX. we have decided to provide a recurring EBITDA growth guidance at constant currency, which is expected between 9% and 10%, in line with CMD perspective. Assuming the forecast by Bloomberg for the second half, which has a US dollar at 1.17 against the euros, a reported four-year 2025 EBITDA growth would be negatively impacted by about 5 points or 6 million, which implies a stronger FX headwind in the second half, given, again, where the dollar closed in the second quarter. And this concludes my opening remarks, and I will now turn the floor over to Sébastien for closing remarks.