Accor Sa

Welcome to the Accor Q3 2025 Revenue Presentation. Today's conference will be hosted by Martin Gero, Group CFO. For the first part of the conference, the participants will be on listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to the speakers. Please go ahead.

Thank you and good evening, everyone. And thank you for joining ACOR's third quarter trading update call. And without further ado, I will start with the key highlights on slide three of the presentation. In an environment which continues to evolve, we have made solid strides since our last call towards, one, accelerating the network growth, and two, mitigating the impact of FX, which leads us to upgrade our EBITDA guidance by two points. Starting with REF PAR, despite a challenging calm base in the ENA region in the month of July and August, Q3 REF PAR like-for-like remained positive at plus 0.8%, equally driven by price and occupancy. Softness in France due to the Olympic baseline and Germany was more than offset by solid growth in other geographies. And we were pleased to see the rebound in September with a 3% REFBA growth, which was driven by ENA, which returned to positive growth. Other geographies remained very solid. As we anticipated, NUG accelerated to 2.5% on an LTM basis, and our pipeline remains very healthy with a growth rate of 8.2% over the same period, benefiting from a very robust flow of signings. At constant currency, our management and franchise revenue increased by 3.1%, outpacing ref bar growth in the quarter. Group revenue overall was flat versus prior year at constant currency due to some asset disposals in the quarter and the Olympics value in kind service revenue in prior year. Those two together impacted revenue by about three points in the quarter. As highlighted during our July call, the euro appreciated both rapidly and significantly against most currencies and in particular against the US dollar. And as a reminder, our FX exposure is predominantly in currencies which move with the US dollar. What we noted in the third quarter is that the euro was actually broadly stable versus other currency. And as a result, we still expect to have a negative full year impact of 60 million on EBITDA due to FX. Now, against this backdrop, we secured profit protection measures of more than 20 million in the second half, which combined with a confident outlook for the fourth quarter leads us to upgrade our full-year EBITDA guidance. Therefore, recurring EBITDA guidance at constant currency is increased by two points, from 9% to 10% growth to 11% to 12% growth, for the fiscal year 2025. And again, at reported rates, recurring EBITDA is expected to be impacted by a negative FX impact of 60 million. As a point of update, we have completed the second tranche of the 2025 440 million share buyback program, driving the total shareholder return since the beginning of the year to 743 million, which is roughly 6.5% of the market cap at the beginning of the year. And I am pleased to announce that we have decided to launch a new tranche of share buyback of 100 million during the fourth quarter of 2025 to take advantage of the current market conditions. Let's now turn to the ref bar for the third quarter on slide four. Starting with PM&E, which posted a third quarter ref bar decrease of 1.1% versus 24. Occupancy was actually slightly up to 71% in the quarter. with sustained demand. Prices were down, and that's really what drove the REF PAR decline in PM&E, and that is really reflective of the high Olympic comp base in ENA. In ENA, REF PAR was down 4.6%, driven by France, primarily. Demand was sustained with occupancy reaching 74% in the third quarter, which is a one-point gain versus prior, but obviously less constrained stays in France than during the Olympics period resulted in the rate decrease, which you see here. In France, again, REFBAR was basically mechanically down, high single digit from last year, driven by Paris. Provence REFBAR was slightly negative over the same period. But again, September saw a rebound from July and August, although the activity remained soft in a context of political uncertainty, which has an impact on business confidence. In the UK, REVPAR rebounded from the second quarter and was up mid single digit both in London and the regions, thanks to what was a supportive leisure and corporate event calendar. In Germany, which is a market primarily driven by business demand, REVPAR was down high single digit in the third quarter as the country is facing persistent economic challenges. Sequentially, September did improve from July and August, but still negative, and October is expected to be slightly improved due to a more supportive fair activity calendar. Turning to May-Apac, where the REFBAR in the third quarter was up 2.7%, primarily driven by Middle East and Pacific regions. China, still negative, high single-digit REF PAR growth, which continues to weigh on the region if we exclude China. MEAPAC REF PAR is up 5.3% in the third quarter, driven by price. Starting with the Middle East, the region rebounded strongly, posting a low double-digit REF PAR, driven by solid UAE, as well as Saudi Arabia, which had a very strong pilgrimage season. Southeast Asia flattish due to security concerns in Thailand, as well as the worsening of travel conditions in Indonesia. Pacific ref bar strengthened again in the third quarter with mid-single-digit growth. And China, which was still negative high single-digit growth in the quarter, actually improved sequentially during the quarter with a better September ref bar. Still negative, but at a much lower rate than July and August. Americas continues to post solid growth with Q3 Ref Bar up 7% versus prior year, primarily driven by Brazil, with very solid pricing and corporate demand. If we turn now to luxury and lifestyle, on the right side, Ref Bar growth was a solid 5% versus prior year, driven by pricing for two-thirds and occupancy for one-third. Occupancy was up one point in the period. Luxury REFBAR was 4.3%, driven by both price and occupancy, with solid momentum across all brands, particularly Fairmont and Raffles. Lifestyle posted a very solid 6.9% REFBAR growth, driven by price primarily, with some occupancy gain. And despite geopolitical tensions, resorts in Turkey and the Middle East had again a very strong quarter, with REFBAR up in the low teens. Moving on to slide five, which breaks down our hotel portfolio and pipeline by division. So at group level, net unit growth on an LTM basis reached 2.5%, which is an acceleration from June and in line with our expectation. And again, pipeline growth LTM is 8.2% versus prior, which supports further acceleration. Starting with PME on the left, NUG on the last 12-month basis was up 2%, again, accelerating from H1, as we expected, as we have lapped over the opening of the Daiwa portfolio in the second quarter of 2024. And we expect PM&E to continue to accelerate NUG in the fourth quarter. Notably, we have two large hotel openings planned in the fourth quarter, the handwritten in Las Vegas and the EBIT budget high to our tower. PM&E pipeline also very healthy, 194,000 room, up 9.5% over the last 12 months and representing 26% of the portfolio. Moving to the right, L&L network growth also accelerated, reaching 5.3% on an LTM basis. with a more favorable phasing of opening and churn than was the case in the first half. The pipeline was up 4%, with the pipeline representing 44% of the existing network, which obviously provides solid visibility for the future growth of NUD. And among the most notable openings planned in the fourth quarter, we have Delano in New York City, Fairmont in Hanoi, and Hoxton in Dublin. Now I'll turn to page six. We have decided to provide greater visibility into services to owner revenue and EBITDA by breaking what is known as STO down in two components, which you see here on page six. These two components are reimbursed costs on one hand, on the right side, and SMDL, which stands for sale, marketing, distribution, and loyalty on the left side. And I'll start with SMDL on the left. SMDL regroups activity, which are expected to grow at a faster pace and generate at least a 6% margin over the midterm. And they can be further divided in two blocks, sales and marketing, where activities are funded by fees received from hotel owners and fundamentally should be EBITDA neutral. and distribution and loyalty, which regroups EBITDA-generating activities, including distribution, loyalty, partnership, and subscription, both expecting to contribute meaningfully to EBITDA growth. Over the midterm, we expect revenue growth for SMDL to outpace the growth of net unique growth plus REFPAR, and this is driven by gaining distribution in feeble channels, increasing loyalty penetration, and expanding non-REFPAR revenue from partnership and subscription. Reimbursed costs, on the other hand, are a pure pass through. For Accor, they're mostly staff costs incurred on behalf of owners primarily in North America with Fairmont. And as a result, that revenue line should fundamentally grow in line with the growth of the payroll costs in North America. So net wage inflation plus network variation. And again, you know, pure price through no EBITDA impact. And in order to provide better visibility into EBITDA generating revenue streams, we've chosen to present reimbursed costs separately from division revenues. as you will notice in the next slide. So turning now to slide seven, revenue by segment. The revenue by segment and by division is provided in the appendix, so this is an overall group revenue summary. Group revenue, as I was saying in my introduction, reached 1,369,000,000 in the third quarter flat to prior at constant currency and down 4.6% at current rates. We continue to be impacted by the weakening of the US dollar and related currency, with FX negatively impacting our revenue by almost five points in the third quarter. Scope effect was also slightly negative in the period, and I'll come back to that. As expected, management and franchise revenue growth picked up in the third quarter, growing at 3.1% at constant currency, which is basically in line with the growth of the REF bar and the NUG. Hotel assets and other revenue was down 3.1% at constant currency, reflecting the high Olympics comps for our catering business, Potel et Chabot, as well as some disposal, mainly the festive business of Paris Society, where the focus going forward is on the development of the restaurant platform. On a positive note, the PM&E hotel assets and other was up 4.4% at constant currency, mostly driven by Australia. You see here, SMDL, which is, again, sales, marketing, distribution, and loyalty revenue, down 1.6% at constant currency. Now, in the third quarter of 24, we recognized 26 million of value in kind revenue related to services provided to the Olympic Games organizing committee, which had no EBITDA impact. If we adjust for this accounting revenue recognition, SMDL revenue would actually be up 6% at constant currency, in the quarter reflecting Ref Bar Nug and better distribution mix. Turning to slide eight, management and franchise revenue by segment, which grew again at 3.1% at constant currency, which is more than two points above Ref Bar growth in the quarter down 0.9% at current rate, and this is the impact of FX. Starting with PME, MNF revenue is down 1.2% at constant currency. That's in line with REF PAR. The decline in ENA, which is really what drove the decline for the PME division, mainly reflects the negative REF PAR growth, as we've seen, and to a lesser extent, the conversion of some contracts to franchise, as we have called out since our first quarter call. Mayapak is quite impacted by FX. At constant currency, MNF revenue is up 2.9%, slightly above REFBAR. Turning to luxury and lifestyle, MNF revenue grew at the healthy rate of 11.7% at constant currency, almost 7 points above REFBAR. At current rate, growth was 6%. Both segments, luxury and lifestyle, reflect solid revenue conversion from NUG and REFBAR. And in addition, and as expected, lifestyle revenue grew at a higher pace, benefiting from a more favorable phasing of residence fees. I will now turn to our guidance on page 9. We confirm our guidance for like-for-like REF PAR growth at between 3% and 4%. As we anticipated, Q3 was our weakest quarter, and we expect a rebound in Q4, which is confident by the Q3 exit rate with the September REF PAR at plus 3%. Net unique growth is still expected at circa 3.5% as we continue to pick up pace in the fourth quarter with a high volume of openings planned, but as well a lower churn than prior in the fourth quarter. Now, based on current production projections, as I stated in my introduction, we still expect FX to have a negative four-year impact of 60 million, so consistent with what we shared with you in July. And against this backdrop, we have secured additional profit protection measures of more than 20 million, which combined with a confident outlook for the fourth quarter enables us to upgrade our full year 25 recurring EBITDA growth guidance by two points to a growth which is now expecting between 11% and 12% at constant currency. And I will conclude this presentation with an update on Anis Mor on slide 10. As you may recall, Anismore was created in 2021 with Accor joining its lifestyle brands with Hoxton. Today, Anismore is a leading player in the fast-growing lifestyle hospitality segments with 192 hotels and over 500 restaurants and bars. Today, the Accor board approved the evaluation of a potential listing of Anismore. Such a listing would enhance liquidity for minority shareholders, and provide additional flexibility to support Anismore growth platform. Now, in the event a listing would take place, Accor would remain the controlling shareholder of Anismore. And as this juncture, there's no certainty that a transaction will be completed. And obviously, we will inform the market of future development as appropriate. And thank you for your listening. And I will now open the floor to questions.

Ladies and gentlemen, if you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Jamie Rollo from Morgan Stanley. Please go ahead.