Accor Sa

Welcome to the ACOR half-year 2026 results presentation. Today's conference will be hosted by Mr. Bazin and Martine Gerow, 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 Mr. Bazin. Please go ahead.

Well, good morning, everyone. Very happy to have you all for the first semester results. I'll do the conclusion at the end. I'm going to let the floor to the best of us to Martine as Chief Financial Officer. She's going to guide you through the results and comments, and then we'll go straight to conclusion and Q&A. But at least thank you so much, each of you, to actually being on the phone with us. Martine.

Thank you Sebastien. Good morning ladies and gentlemen and again thank you for attending our earnings poll for the first half. So I will kick off on the financial highlights on page four. So following a very strong start of the year, the situation in the Middle East has impacted our trading in the second quarter. But to note that the performance in other regions remained very solid. We activated in March a profit protection plan, which has enabled us to largely offset the impact of the conflict and deliver a very steady set of results for the first half of 26. The operating performance is contrasted across regions, but did improve throughout the quarter, adjusting for the hash calendar. Q2 Ref Bar came in at minus 0.2%. Now, that is a headline that masks two very different situations outside the Middle East. Q2 REF PAR was up 3.3% driven by both pricing and occupancy, which demonstrates the continuous strength of demand and the attractiveness of our brands. In the Middle East, REF PAR was down 29%, driven by the UAE, which was down 67% in the quarter. As other countries, which is Egypt and Saudi Arabia, namely, posted positive REF PAR growth in the mid single digit. We exited the quarter with a marked improvement in the UAE and an acceleration in other regions, notably in Europe. This drove our H126 ref bar growth to 2.2% and 4.6% excluding the Middle East. Room revenue growth was driven by both business and leisure, with individual leisure travelers and business groups growing in the mid-single digit. Net unique growth was 3.2% on our last 12-month basis, with limited openings in H1 and some churn in our Germany Revo portfolio as well as in China. Pipeline growth remained very healthy at 11.4% growth over the last 12 months, supporting an acceleration of NUG going forward. Signings also grew at a strong pace. Moving to financials, we adapted very quickly to the geopolitical events, producing a solid set of results. MNF revenue was up 4.8% at constant currency, reaching 685 million. That's a solid performance. And MNF EBITDA was up by 9.1% at constant currency. which is a 280 basis points margin improvement. Total revenue was up 3% at constant currency and 4.8% on a like-for-like basis when we adjust for some disposals in Paris society. And total EBITDA was up by 6.5% at constant currency and 7.4% on a like-for-like basis adjusting for scope. FX had a negative two points impact on group revenue and four points on EBITDA and was concentrated in the first quarter. Based on current rate, we expect EBITDA to turn positive in the second half. Scope impacted revenue by two points in the first half and EBITDA by one point. Recurring free cash flow reached 194 million, that's up 42% versus prior year. and we delivered strong shareholder return year to date at 541 million, which equates to a 4.8% return, bringing total return to shareholders over the last three and a half years to 2.6 billion. Actually, by the end of 2026, when we factor in our second transfer share buyback, we will have returned 2.8 billion two shareholders with dividends and share buyback in the first four years, which puts us in line of sight of the 3 billion return which had earmarked in our capital market base almost a year ahead of schedule. Let's now move on to the second quarter REF part for each division on slide five. PM&E posted a flattish REVPAR growth of 0.1% driven by pricing. In the quarter, average rate was up 1% and occupancy rate was down 1.68% driven by the Middle East. Excluding the Middle East, REVPAR was actually up 1.1%. In Enna, Refbar was also flattish at 0.2%, driven by pricing, stable occupancy year over year. Our three largest countries report actually very different trends. France and the UK posted low single-digit Refbar growth, while Germany was negative. Now, we did note that trading improved in June in all three markets, with Refbar in the low single-digit to mid-single-digit. In France, in the second quarter, Refbar was in line with the first quarter, although more driven by the province, with strong and steady leisure demand. In the UK, demand was also sustained, notably in London, confirming a solid low single-digit Refbar growth. In Germany, demand softened in April and May, but improved in June, with a positive Refbar in June, driven by a more supportive event calendar. In Mayapak, Q2 REF PAR was down 1.1%, impacted by the conflict, with significant decline in occupancy and rates in the UAE. Excluding Middle East, REF PAR would be up 1.9%, driven by UAE, as Egypt and Saudi Arabia were up in the mid-single digit. Southeast Asia remains a growth engine for the region, with REF PAR in the mid-single digit territory, with notably Good performance in Japan, in Vietnam, and in Indonesia. Pacific slowed down somewhat versus the fourth quarter, reporting a flattish REF PAR growth due to lower international traffic and lower consumer and business confidence. In Mayotte, obviously, impact of the conflict. Mayotte was down in the low teens in the quarter. The negative performance, again, attributable to the UAE. The UAE REF PAR decreased significantly. in April in the mid 80s, but improved since the declining in June in the UAE was only in the 40s. Saudi, Egypt and Turkey continued to perform well. China stayed in low single-digit negative territory. Supply growth is leveling off, so the industry should be at or near the bottom of the cycle, but RevPAR recovery is actually highly uneven, and there is clear underperformance of the mid and eco segment, which is where most of our portfolio sits. In China, to note that recovery is already well in place in luxury since the fourth quarter and continuing through the second quarter with positive ref bar growth. America's posted mid single digit growth with Q2 ref bar up 4.8%. Region remains driven by Brazil. Turning to luxury and lifestyle, Q2 ref bar decreased by 1.4%. led by occupancy and red decline in the Middle East. Excluding the Middle East, luxury and lifestyle ref bar would actually be up by 9.4%, which is in line with the first quarter and confirms the healthy demand for this segment bar the conflict. Luxury reported positive ref bar growth of 2.5%. Excluding Middle East, it would be up 9.1%. All brands, all regions, again, reporting growing REFBAR outside of the Middle East. Europe and Noram demand were particularly robust with excellent performance in Noram, in Fairmont and Raffles. Lifestyle is a segment which is the most impacted given its larger exposure to the UAE. which weighed down on REF PAR, which is down 11.3%. In the quarter, excluding Middle East, REF PAR would be up 10.3% for lifestyle. And within lifestyle, resorts were the most effective. Lifestyle collecting was actually only slightly down due to its larger presence in the Europe and U.S. Let's now turn to slide 6, which breaks down our portfolio and pipeline by division. PME grew its network by 2.6%, the pace of openings remained steady, and pipeline grew a stellar 12.7%, reaching 28% of the PME network, which is up 3 points from prior, and confirming again the attractiveness of our brands. PME signings grew by 10%. The sequential slowdown of the NAG results from, as I mentioned in my introduction, some churn in the rebel portfolio in Germany, as well as the equity segment in China, where we see some hotels actually closing down due to the lower activity level, particularly in the second and third tier cities. On the right, luxury and lifestyle portfolio grew by 6.8%. That's driven by any small pipeline growth picking up from the first quarter at 7.4%. Now, we did transfer the Joe Angel portfolio in H1, which impacted the nug of luxury and lifestyle by about one point. So if you look at the underlying luxury and lifestyle growth, it's closer to 8% on the LTM basis when we adjust for that transfer. It was marginal, obviously, on PE, which is a There were fewer openings in the first quarter, sorry, in the first half. There were more concentrates in the second half. Some openings in the Middle East were actually pushed to the second half. As we expected, churn was lower compared to prior. Some notable openings of the second quarter include Raffles, Jetta, and Orange Express in Venice. Pipelines, still very healthy, stands at 46% of the networks. That's also up one point from prior year. And signings grew by 39% in volume. At group level, net tuning growth reached 3.2% over the year with an accurate mix. Newly opened hotels will generate fee per room, which is approximately twice as high, so 2x, as fees generated by churn hotels over the last 12 months, as you can see on the box at the bottom of the slide. Versus last year, pipeline is up 11.4% at group level in volume, and group signings in volume are up 13%. And conversions still represent more than 55% of our openings. That's quite in line with last year. Now let's turn to slide 7 with revenue by segment. The revenue by segment and by division is actually provided as we always do in the appendix and in the press release. The group revenue reached 2 billion 760 million in the first half, that's up 3% at constant currency and it's up 4.8% adjusting for the scope effect from the disposal of Ferris Society. Festive. Again, FX and scope impacted revenue by a negative two points each, lowering the reporting growth to 0.6%. FX impact concentrated in Q1, and again, expect FX impact to be positive from Q2 onwards. M&F revenue growth up 4.8% at constant currency. That's in line with the algorithm at group level. Hotel assets and other revenue is down 5.4% at constant currency and up 0.8% adjusting for scope. Paris Society, Rika's restaurant activity in Dubai was highly impacted in the first months of the conflict, although trading significantly improved in the later part of the second quarter. SMDL, which is sales, marketing and distribution and loyalty revenues, were up 4.7% at constant currency, which is pretty much in line with MNF revenue. And to note that our loyalty contribution was up almost four point in the first half, year over year, and we reached 121 million members as of June. Turning to management and franchise revenue by segment, on slide 8, which grew at 4.8% in the first half, Q2 M&F revenue was at 1.6% at constant currency, impacted by lower incentive in the Middle East as well as flip to franchise, a point we have commented in the previous quarters. Residential fees were stable in the first half, as we expected. PME MNF revenue was up 0.7% at constant currency, slightly higher distortion related to the switch from management to franchise, as we've called that before, which is about a one point negative impact on growth and also lower incentives due to the conflict in the Middle East. And as a result, the distortion is more pronounced in the second quarter than in the first quarter. Luxury and lifestyle MNF revenue grew at 12% at constant currency, that's slightly above REF-R. Q2 MNF fees were up a solid 9%. That segment is also impacted by the lower incentives in the Middle East, but we also had, as we call that, some termination fee in the first quarter, which helped offset. Now let's turn to EBITDA on slide 9. The group EBITDA reached 563 million, that's up 6.5% at constant currency and up 7.4% adjusting for scope. We showed adaptability, we showed strong reactivity to navigate what is a challenging global environment. The reported EBITDA growth at 2.1% include a negative FX impact of 23 million, again concentrated in Q1, and we expect FX to turn positive in the second half. As for M&F, where more detail by division are provided in the appendix, EBITDA up 9.1%, strong margin improvement resulting from the profit protection measure implemented as of March and to a lesser extent some termination fee. We expect the full year M&F EBITDA margin improvement to be above our annual guidance of our 100 basis months. Both divisions improved their M&F margins. As for hotel assets and other, EBITDA growth is impacted by the conflict in the Middle East combined with Scope, which accounted for negative seven points in the first half. As for SMDL EBITDA was at 8.3% at constant currency benefiting also from profit protection measure with an 8% margin and we expect SMDL EBITDA to be balanced between H1 and H2 and we expect fully a margin to be above our 6% plus guidance. And finally to note cost of the holding are down slightly with again strong cost containment measure. Moving on to the P&L on slide 10. In H1, we achieved an adjusted net profit of 231 million and an adjusted EPS of 83 cents, flat versus prior year. Other income and expenses at a negative 130 million in H1 included amongst primarily a 44 million valuation adjustment on our S&D stake, which reflects the time value of the Earn Act, which we expect in this transaction, and I'm sure you've all seen the press release we just issued. And 37 million restructuring costs, this is mainly in the European region, and that is to support the move to a more franchised model. DNA was flat in the first half. Share of net profit of associates in the JV minus 37 million. Slightly more than half of the losses related to S&D, which has reported lower capital gains on disposal and high impairment losses in the first half. Net financial expense driven primarily by a high gross debt. The cost of debt remains very reasonable. Income tax expense is flat. ETR is also flat if you adjust for non-recurring item, which carry a significant lower We expect the four-year ETR to be broadly flat. Minority interests are down year over year, and this is due to the lower profits in the Middle East. Turning to cash flow on slide 11, recurring free cash flow reached 194 million. That's up 42%, reflecting a 34% cash conversion, which is about 9 points above prior year. Four main highlights. Cash interest increased, as we expected, driven by the increase in debt level, but notably an additional bond we issued in 2025 with the first coupon paid in H1 of 26, as well as lower interest income. So H1 is pretty, I would say, representative of what the second half will be. Cash tax decreased from 121 million to 85 million, mainly driven by a tighter monitoring on installments between H1 and H2, and we did accelerate refunds in France. And we expect our four-year 26 cash tax to be broadly stable versus prior. Recurring investment were below last year at 93 million. We controlled CapEx in what is a challenging geopolitical environment. The key money was also lower in the first half. For the full year, we continue to expect an increase of the CapEx in line with the guidance provided in the CMV, probably closer to 250 million for the year. Working capital is stable year over year. And finally, net debt, which is 3.5 billion at the end of June. As a reminder, that's about 400 million up from December. Main movement in H1 being recurring free cash flow, which, as you know, is, you know, Seasonal and more accruing to the second half, return to shareholders and hybrid coupon. To conclude, and before I turn it over to Sebastien, let me now introduce our guidance on slide 12. REFPAR like-for-like growth is expected between 2 and 2.5%, depending on the pace of recovery in the UAE. The REFPAR guidance includes a second half scenario for the UAE, which is pretty much between where we are in June, which is around minus 40%, to minus 20%. Net unique growth is expected at circa 3.5% in line with FY25, and it's a notch below my comments from last February, taking into account a few things, one, some delay in openings in the Middle East, as well as the impact of the rebel bankruptcy and some turns in the China eco-hotel given the economic situation. That being said, as I commented before, the FIPA room of the new openings is about twice the fee per room of the closures. Recurring EBITDA is expected between 1 billion 260 million and 1 billion 285 million. That includes a negative FX impact of 10 million. And it represents an EBITDA growth year over year between 6 and 8%. And this concludes my opening remarks. And I will now turn over the floor to Sebastien for some closing remarks.

Martine, thank you so much. We're going to go into at least the H1 takeaways, the way we look at them. The first is, you've probably heard me many times, I guess it's been confirmed probably every quarter passing for the last three years now, it's the ability of our corps to navigate through the storms. And of course, we have storms in many different countries over the last few years. And the last one had been the Middle East impact between Iran and GCC countries. And I was telling the board a couple of days ago that I guess Accor has an enormous granularity on its cost. We have an enormous control on operating metrics all over the different geographies. The CEOs, the head of business departments, have a total grip on what they conduct, which actually permits us to navigate, to evaluate, to actually get into action to build buffers against countries in which we have not expected unfortunate events. And I never had seen that before in this company in terms of actually ability to get close enough to result, if not on the results. Even though it's not going according to plan. That's something which actually gives us an enormous comfort to actually be in front of you this morning. Number two, why are we able to build buffers is because we need to take actions on what we call PPP, you heard Martin, Profit Protection Plan. It's really putting together a lot of different initiatives, a lot of different decisions, impacting a lot of different people. in different countries in terms of hiring freeze, travel freeze, and a lot of actually investment no longer being made, not through the detriment of our core moving forward. But that plan has been put into action early March. You've seen the result quickly up until the first semester. That plan will not let go. We're going to be continuing deploying it as long as necessary, certainly for the second semester. The third is of a very different nature, which is all about loyalty partnership. And I'm going to go in it in a minute on the next page. But it's something which is extremely important in our ability through all membership deployment, which is going at a very fast pace, as you know, probably 15 to 20 million additional members every year is trying to actually incorporate a lot of actually daily use of the all loyalty program and we've signed deals and again I'm going to go back to it in a minute but it is a 15 to 20 percent growth per year both on revenues and on EBITDA which is basically a faster growth that we can build that the one we can benefit from from operation which is 9 to 12 percent And finally, very proud, you know about it because it was announced four or five days ago. Extremely proud for the team that had the ability to sign S&D, which is a very, very large transaction, probably by far the largest hotel transaction in Europe for the last 10 years. I think the first one, the last one was Booster. At the time, we put this 8 billion asset portfolio together. But that is today also one of the largest. It's still a 7.5 billion hotel portfolio in which we invited in Blackstone to come in alongside Colony. So very happy, very proud for the team. It's going to give us enormous flexibility moving forward on cash deployment. On the next page, I just want to tap upon two minutes on Uber, Amex, Indigo, and we're going to talk about Edge, which is Waju. The one on the left is a very different nature, and the one we really didn't dwell with before over the last few years, which is really trying to go into enhanced travel experience. It's all about kind of actually using different cars, different partnerships into your daily use. And with Uber... All the members of Uber will be able to go, members of Accor, sorry, will be able seamlessly to go on Uber mobility, Uber food deliveries through the all Accor digital ecosystem from their home or from any hotel stay. So that's going to be done every day. People are going to be earning points. It's being announced with Uber in April. It is launched in H2. So you haven't seen the benefit of it yet. It is being launched. at the end of August. That will be made available to all the ACO members, Uber users in France, Germany, Poland, and then we'll go not on the food yet, but on the Uber service on UAE, Saudi Arabia, Qatar, and Morocco. And more coming with Uber. We won the RFP against many of our peers. Very happy to go hand in hand with Uber Group. Amex, different nature. Amex is all about elite status match for the card members. So Centurion Amex holders will go and receive all our core platinum status. Amex non-Centurion platinum card members will be eligible to gold status. That also... is launched in H2. So you haven't seen the benefit of it yet. He was signed in May. And that's going to be displayed in 12 countries, Australia, Canada, France, Germany, Hong Kong, Italy, Japan, Mexico, Singapore, UK, and New Zealand. And that's also going to improve a lot of actually daily usage between MX Group and Accor. And the third Indigo, I'll talk about India in a minute. Indigo, we are going hand-to-hand with Indigo Airline, as you know, which is the largest airline carrier in India, which is probably today 64% to 65% market share, with well over 400 airplanes in India. And that's going within the domestic Indian travelers, within the Indian traveling outside of India, mostly to Southeast Asia, to Middle East, and to Africa. H-Word, H-Word is huge. H-Word, Unova partnership, very trusting one with Chairman Xixi, the founder and CEO and larger shareholder of what is today the second largest hotel group in China, likely to be the first hotel group in China in a few years because of their pace of growth. We decided to put together their 310 million members with our 115 million members on trying to get reciprocity, not only on We actually went one step further on web distribution. So starting in August again, we're going to have all the Stogenberger Hotel, Intercity, basically all the edge word acquisitions outside of China, mostly from Deutsche Hospitality acquired in 2019. All of those going to be available on all.com platform. As a reciprocity, you're going to have the Accor Premium and Luxury Hotels, Pullman, M Gallery, Sofitel brands in China. 130 of them will be available directly on H-World booking channels. So that also going to be launched in H2 and that encompasses China, Europe and the Middle East. So it's just a confirmation of our ability to sign global deals and to be able to confirm the pace of 15 to 20% growth in partnership and EBITDA coming from loyalty members. On H2 priorities, The first one, you could not be surprised, is whatever we've done rightly, let's continue and let's do it even better if we could, which is the profit protection plan, the discipline, the rigor that I guess ACRO has been conducting over the last few years has to remain, has to be the main focus, and has to be basically our compass to move forward, because the context is not going to get better in terms of actually challenging environment, and we have actually very little control on geopolitical events, so we might as well actually control. What do we do internally? The number two is go for the growth. Reshuffle your own organization. And I'm talking about India here. Some of you know we are restructuring a lot of different holdings we had in India into one common vehicle with our partner, Indigo Airlines, which is actually the mother company of Indigo Airlines called Interglobe. And that is in the making. It should be finished by the first quarter of 2027. We have changed the CEO of India. A woman is coming from Myriad, Ranju. She's extraordinary. She came six months ago. Pace of growth signing within only nine months have tripled the pace of signing and growth we had over the last few years. and in both directions, which is very comforting. Certainly on Fairmont, Raffles, Sofitel on the luxury side, but it's also actually going much faster for Ibis, Novotel and Mercure. So a lot to talk about in India and we'll be able to actually give you better granularity coming next time. Meet with me in March or February for the UN result. Number three, yes, we should be extremely focused and disciplined on cash allocation. So there's no better use of cash today. Accelerating the pace of share buyback. We finished the first round. We are already starting to launch the second round for 225 million. And we are confirming to you that The first day we get cash in from Blackstone Colony on the buyout, about 30% of ascending, confirming to you that this additional 500 million share buyback will proceed day after closing, which is likely to be at the end of this year. And four is just to confirm, we're still spending a lot of time at the management level, at the board level, on entertaining a final decision or whether or not any small listing is appropriate, which is also a game changer in terms of accelerating the pace of any small growth, visibility, credibility, and probably ability to penetrate great markets such as America. That's where we are on my comments to you. Why not we leave floor now to many of you with your questions. Thank you.

Ladies and gentlemen, if you wish to ask a question, please dial pound key 5 on your telephone keypad. If you wish to withdraw your question, please dial pound key 6. The next question comes from Jaina Mistry from Barclays. Please go ahead.

Good morning Sebastien, good morning Martine. Three questions if I may. The first question is on net unit growth. I know you're guiding to three and a half percent which is slightly short of what you communicated at full year results. Could you quantify the drivers of how much is coming from REVO, how much is from the Middle East, how much is from China and then you know how much that should shift into next year and Are you still confident in hitting the 4.7% NUG next year? My second question is around cost savings. Would you mind quantifying how much in cost savings you've delivered in H1 and how much you expect to deliver it for the full year? And should we expect these costs to come back next year or are these permanent savings? And then very lastly, I know you mentioned your Middle East scenarios in H2, but could you just give us a bit more commentary on how you expect the recovery to pan out and kind of what you're seeing on the ground in the UAE? Thank you very much.

Martine, why don't you go and then I'll add a comment at the end.

Good morning, Jenna. So, sure. So on net shooting growth, REVO is about 40 basis points, in fact, in our guidance. So that's basically the bulk of the gap versus what we had signaled in February. Middle East, yes, we have delays from H1 to H2, but NS on net unit growth, and there's a bit from China, and in China, it's really hotels that are actually closing down as opposed to switching to another brand. On cost savings, so profit protection plan, It's 40 million in the first half. The full year amount, frankly, will depend on the pace of recovery in the UAE. But if it doesn't recover, we're looking for 70 million as a full year amount. In terms of the recovery in the UAE, and those costs, by the way, and I'll give the same answer that I gave last year when we also had a profit protection plan to cover some of the FX impact, the costs won't come back unless the revenue comes back. And probably not all of it will actually come back next year. And in terms of, sorry, because I didn't answer your question on the NUG, so in fact, The pace of openings, actually, we expect to be a double-digit growth in our openings this year, and therefore we are, and the signings, as you've seen, the pipelines are very strong, so we expect definitely to be a In terms of recovery, pace of recovery, look, the UAE in June was minus 40, minus 45. April was actually minus 80, so you can already see the pace of recovery. And the way you should think about the guidance, if we stay where we are in June, which is, you know, call it minus 40% for the second half, then basically that gets you to the low end of the guidance, both in MFBAR and in EBITDA, assuming again some, you know, further profit protection plan. If we assume some recovery in the Middle East from where we are in June, not full recovery, but give or take half, so around minus 20% for the second half and progressively, then you'd be at the midpoint.

The one thing, Jenna, to add on the Middle East, which is worth noting, the The booking notice when people go to the Middle East today is seven days. Of course, people want to know better on the environment. But it's been in the past kind of actually 15 days. So the way we look at it is, as you know, the months of June, July and August have been always extremely low in terms of activity because of the heat. We need greater visibility in terms of peace being put together, agreement between different countries. Probably by the 10th of October, the end of September, that's plenty enough for us to have a very robust month of November and December. So that's really where we should be having a greater granularity and better read would be basically at the end of September and early October. Until then, it doesn't change much. The sooner the better, of course. But we have that ability to basically wait until that date.

Thank you very much.

The next question comes from Jamie Rollo from Morgan Stanley. Please go ahead.

Great, thanks. Morning, everyone. Three questions as well, please. First, starting with M&F second quarter revenue, just can we talk a little bit about the gap between the constant currency revenue growth and the sum of net unit growth and REF PAR because obviously you've got the drop in incentive fees so could you please quantify that but also you talked about some additional termination fees I thought those were Q2 but Martine maybe you said Q1 but again if you do quantify both those two numbers IMS and termination fees just as a change year on year secondly on SMDL so yeah looking at a more even split this year but that would still imply about 112 million of EBITDA so up 20% or so year on year. What is the partnership income please behind that? So you know what really accrues to Accor and when do you see the margins going back to 6% if ever? And then finally on Ellersmoor, thank you for giving us the first half EBITDA of 84 million. It would be helpful to get the year-on-year change. I know your minorities have halved, but obviously that's amplified by leverage and so on. So just be helpful to get what the EBITDA was for Ennismore. And also, in terms of timing, when do you think we might hear more about the New York listing process? Thank you.

Sure. So on M&F revenue, the termination fee was in the first quarter, so it doesn't impact the second quarter algo. The second quarter algo fundamentally reflects the activity. It's stronger in the... Luxury and lifestyle division because you have basically you know stronger network growth but also Fairmont and Raffles performed extremely well in the North America which helped compensate the impact of incentives therefore you know incentives impacts actually lower for luxury and lifestyle than it is for PME and PME it's basically about one point of flip to franchise and give or take two points on the incentives So for the quarter, give or take about one point on flip to franchise and two points on incentive. On SMDL revenue, you're right, it is balanced, therefore your number is correct. What's driving that is essentially the distribution and the partnership Partnership Revenue. What we said on partnership and subscription EBITDA, because we were really looking at both, is that our expectation was that EBITDA would double by basically 2029, 2030. Currently, it's around 50 million if we take the two together on a four-year basis. So that gives you an estimation. Look, we gave a guidance of 6% plus for SMDL because we want to make sure that we keep a balance between growing our profits and reinvesting in the business. So the 6% plus guidance is still appropriate. Obviously, in the years where we have a more challenging situation, We also activate levers in that segment. And Eniesmoor Evita is 84 million in the first half. But I think your question was, how does it compare to the first half of 2025? It's actually slightly down a couple of points.

On the timing of the The Ennismore decision is way before the end of the year, so we probably should make a decision by the end of the third quarter and then to decide to go or not go on the potential listing of Ennismore. And you're right to say, which is of no surprise to any of you listening to us, that if we were to list Ennismore, you're correct, it will be listed in America.

Thank you very much.

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

Good morning. Thank you. Could I ask, firstly, some more details on the composition of the pipeline signings in H1, both in terms of the region and also PME versus luxury and lifestyle? And would it be fair to assume, given the Very high level of fuel pipeline growth. Does this indicate more new-build, ground-up hotels moving into the pipeline as you sign them rather than conversions? And then second final question, I'm very curious to see that positive and healthy gap between fees from additions well ahead of those from churned hotels. Can this gap be sustained as the PME churn normalizes down as the China closures slow down or do the two converge eventually? Thank you.

So on the composition of the pipeline, I mean, basically, if we look at, you know, if we look at PME, the pipeline is still, you know, the number one region is still Mayapak, but you have to remember that in Mayapak, it's mostly Saudi Arabia and Egypt. There's a very low share of our pipeline that's actually in the UAE, both for PME and and Luxury & License, so primarily KSA, and Egypt. And then we have our steel pipeline in China and Europe and North Africa, so the European region. And the pipeline is actually more skewed toward premium and mid-scale than ECO. For luxury and lifestyle, you know, pretty much the same thing. It's, you know, again, Mayapak. The Americas region is stronger from a pipeline perspective for luxury and lifestyle than for PME, but Mayapak is still the largest region when it comes to pipeline, and it's true for growth. I mean, actually, you know, we haven't seen a slowdown in signing in the Middle East. But again, you know, mostly KSA and Egypt. With regard to your question, the mix of conversion is 55%. That's pretty steady with where we've been. We've been between 50% and 60%. And frankly, we don't expect that mix to change. And I'm sorry, could you repeat your last question, Leo? Because I'm not sure I got that.

China, it's the difference between the change being of a lower fee level versus additional rooms being signed of a much better fee stream. And how is China? Is China going to get better, going to get worse? Just on China in minutes, I'm actually... and Wajoo expert. It's too strong, but at least very close to the situation. Wajoo is opening well above 2,000 hotels a year now, and they're closing 500 or 600 hotels. So they actually, every year passing, they're cleaning their own network. And we are impacted because of this. A lot of the Ibisers that opened seven, eight years ago with us have been basically closing Certainly in secondary tertiary cities. It doesn't occur into primary cities within China. But Chairman Xixi is really looking for a better product in those different cities at the expense of an older product, which is fine. All of that is done in total coordination with us. So you are... absolutely correct whatever we lose out of those ibis closing in China on tertiary cities it's very very low fee stream for us and we are much better off for him to open a better product in that same city of a greater quality so which is why we're not we don't have any resistance factor which is also why and some of you I sound like a broken record here but I've been really Putting a lot of sensibility to each of you on the fee per room on the net unit gross is one thing. What matters to me 10 times more is what is the absolute level of fees that we get every year compared to the year before. And I can confirm to you, 2026, we're going to have a much better absolute fee stream from all the hotels we opened this year versus the hotels we've opened last year and the year before. So, yes. Nerg and the trend sounds to be probably heavy, but all of that, if not 80% of that, is volunteering, both on accepting what's being done in China and finishing the job, as we said to you, on the Pure project, which is the detractors of many of our brands closing. Rivo, clearly, that was not in the plan, and we have to accept it. That's an unforeseen event. But yes, I'm encouraging each of you to look at the fees per hotel being open versus the fees per hotel being closed, and that should give you an enormous comfort.

Thank you, Sebastien. Thank you, Martine.

The next question comes from Kate Xiao from BOFA. Please go ahead.

Thank you very much for taking my questions. First question. A follow-up to an earlier question on signings. Martin, can you give some color on signings growth? You mentioned it was strong. Was it above or below that 10 or 11% pipeline growth lately? I just want to get a sense of latest signings growth there, especially in the Middle East region. Second question, recurring free cash flow conversion. Obviously, that's down quite a bit in the first half. How should we think about it for the full year? Would you say probably around the same level of for the full year from EBITDA. And my third question, Sebastien, I wanted to ask you, obviously, congratulations on the S&D transaction. What, in your mind, is the next focus of the asset line and simplification journey? Anything else you can kind of point to for us to understand what's the next focus for you? Thank you.

Thanks for your question, Keisha. So on signings at group level, they're up 13%. So that's two points above the pipeline growth. And the signs are pretty much in the regions where the pipeline is. And again, no slowdown. In the Middle East, with respect to free cash flow, our free cash flow is seasonal. So when you actually look at the cash flow conversion in the first half, it was 34%. So yes, it is less than the full year cash conversion, but it's actually up nine points from last year. Last year was 25%. So it's just seasonality in our cash flow on a full year basis. We're probably going to be slightly below where we were last year just because we have a bit higher capex, but still very strong cash flow generation. And I will let Sebastien answer the question.

I almost wanted to say a job is done in terms of S&D being closed. We're going to be less than 1.5% asset light. There is mantra is probably what we need to clean up, but we've done two-thirds of the job over the last couple of years. We still have some Small lease obligation in Australia and we're tackling it. Not an easy environment today but not an impactful at the group level but we need to finish that last third. The rest we have like a very performing lease on Cairo, a very big Sofitel and very happy to keep it as it is. and it's probably what you're going to be noticing as probably the greatest exposure to leases happens to be Paris Society on the restaurant angle which is very very profitable for us and on a management model we're going on we on the restaurant model we're going more and more on on management contract, but those are of a much lesser profitability in terms of EBITDA contribution. Margin is actually better, but EBITDA contribution. So Pair Society, through Enismore, will continue probably doing half and half between signing leases and management contract. I'll give you a very small example, which is very, very telling. Gigi, which is one of the most robust brand in restaurant, We signed a lease in boardroom actually at the Mandarin Hotel where they've been looking after having Gigi in their own premises. It's an extraordinary success for the last month and a half and for the summer. And you're talking millions of EBDA compared to maybe hundreds of thousands of euros had we done a management contract. It's rewarding. It's done in a very controlled manner. We don't take much risk on basically what we sign it. But it is part of the any small food and beverage model, and we should not be departing from it.

Thank you.

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

Good morning, everyone. Also three from me. There was a $44 million write-down in the P&L linked to Ascendi on the earn-out. And just thinking forward, I mean, is this a once-off, or I guess what assumptions changed? I know you mentioned it's time, value, or money, but if you can just give a bit more color around that write-off. And then also, really good control and, I think, decent cash conversion. But one of the items you mention is You're pretty tight on your investments. And you also mentioned key money. I'm just wondering what's going on with key money. It seems like you don't have to spend as much, which is a bit surprising given your signings and your pipeline growth. So any color on key money, please? And then maybe one for you, Sebastien. I guess pre-COVID you undertook an agreement with Air France on loyalty point sharing, et cetera. You're obviously expanding a lot of partnerships. I just want to get some color from you in terms of how you think that's gone and the opportunity for more signings like this. Thanks.

Sure, thanks for your question. So on S&D, so basically we put this stake as an asset held for sale. When we do that, we need to basically put the asset at fair value. And that means taking the earn out or taking a view on the potential earn out and taking the NPV of that earn out. And fundamentally, the way you should think about that 44 million, it is the time value of that earn out. When that earn out is paid, essentially that 44 million is a non-cash item if you wish. In terms of the, and it's a one-off, in terms of the capex, so the reason, you know, the reason there's not a ton of key money in the first half is just because we haven't had a lot of openings in the first half. Typically, you know, they're more screwed to the second half. We haven't seen anything, you know, we haven't seen a Thank you very much.

So it's going better than we expected when it comes to when we signed with Air France on Flying Blue. We have now this double dipping in between the two companies on earning miles when we stay at Anaco Hotel and we earned whole points when you fly with Air France KLM. The volume is better than we expected. and the price is actually very profitable for Accor. What we're doing with the airline industry is we're going actually further ahead on two fronts which is interesting. The first front which we started seven years ago with Qantas in Australia is on Accor being participant on what I talked about, which is enhancing the travel experience. So Quantas, we signed with them. Accor on the white label is fully responsible for managing the first class business class loungers of Quantas all over the world. We are doing it and we are conducting the same kind of analysis with a lot of actually Emirates carriers. So are we with U.S. carriers looking at us for their first-class landers, which Accor could be the service operator. And on the elite match status, we're also progressing on many of those airlines on giving cross-benefit, not only earning points and burning, but actually on status match. I think on a scale of 10, we're only at 3 or 4, and you're going to see visible action and initiative being confirmed to you likely in the next 12 months of significance. So that has to do with the display of the 115 million of Accor in so many geographies and so many hubs. and Uber is also part of it because since you can actually have your airline partnership and then when you get to the airport you can through the old.com get to Uber services all of that comes together between the airspace and when you actually get on the floor that's that's where we are but it's a big priority for us because as some of you Jamie talked about is that partnership revenues doesn't cost Accor much and it's extremely rewarding part of SMDA, DBDA and that permits to get that 50 to 20 percent gross a year and there's no reason why we should not be accelerating on those. Great, thank you.

The next question comes from Alix Boulnois from Rothschild and Co. Redburn. Please go ahead.

Good morning. Thank you. I'll go for three as well then. Two relatively simple ones and then one which is an opinion one really. On China, you obviously talked about higher churn rates and then churn coming down just for the overall portfolio. How do we think about the churn in China within that? Is this a sort of pull forward of churn that had You're broadly expected with Wazoo, or is this just sort of different to the cadence of churn that you had talked about historically? On Ennismore, could you just reiterate, I think, Martine, you've told me directly in the past that you would never go below a controlling interest in Ennismore. Could you just talk about what the options are potentially with an IPO?

And then the third one is owner costs, something I've had an interest in for a while, but it seems like Marriott's let the cat out of the bag a little bit on economic balance between franchisors and franchisees with their credit card deal. Could you just talk a little bit about your relationship with your owners, the fees that you're paying? You obviously make materially less credit card. Thank you. Yeah, on China, I should have said it earlier.

Let's not underestimate the impact of the real estate crisis in China. Most of the wealth of families in China happen to be in real estate. And that real estate has been going south for the last two and a half years, which is why you have an enormous GDP slowdown. And since those guys have less wealth, they travel less, and the most impacted segment is the lower economic segment and lower mid-scale, which is why IBIS is kind of actually going from tertiary cities to actually capital cities in which there is more wealth. So when you're going to see a recovery, when and if you're going to see a recovery on the real estate-depending economy, you're probably going to have a lesser turn in IBIS segment within China. However, I really believe that Edgeworld will continue basically improving their own network with better quality premises as opposed to the one opened 12 or 15 years ago. So it's still going to be significant, but as I told you, and again, I'm so draconian on this one, It is fine, absolutely fine. It has no financial impact on us of significance if they were to close more Ibiza's hotel in China. As long as the Ibiza brand continues to be open with a better fee stream, it's fine. I know it bugs you on the net unique growth percentage, but please go deep into it, dive in, and then you'll understand that, yes, it is very much non-material at the air core level. On any small, it's... I can't say too much. One is because this decision has not been made. What I can actually confirm to you, which is very, very true, is there is no scenario in which Accor will go underneath 51% of Enismore. We have today 60%. If we were to do a transaction, that diamond has to be preserved within the Agro Consolidated ABDA. It is the fastest growth ABDA machine of Agro. It is impacted by the Middle East this year, but Middle East has been super, super robust for the last 10 years and will be very robust for the next 10 years. So we're very happy of the Middle East footprint, both from Agro and for Enismore. So it is a vital, crucial subsidiary of Agro, and we should preserve that control of it. and a lot of decision-making of any small. And on the owner's cost, we have absolutely no debate whatsoever on the relationship on who gets what. Everything is fully transparent. We have so-called marketing fund. Everything is done. We have a very, very good relationship with the largest franchisee association in Europe. Actually, better and better every year passing. I was with them two weeks ago in a big forum. The one thing I'm going to talk about, and surprisingly enough, none of you has a question so far, because that is part of the ongoing discussion for the last six months with the owners, is AI. Is what they're looking at our core as a guide, as basically the curator, the orchestrator, is how could we, at core level, incorporate AI automation within the premises of theirs? Can we actually help them reduce their costs? Likely 15% to 30% over the next 12 to 18 months. How could we actually have a better personalized itinerary journey knowledge database of the old members, not old members, How could we actually deliver a better service? How could Accro incorporate AI on anything which is PMS, CRS, CRM? Those are the bulk, if not two-thirds of our conversation, as it should be, with our owners over the last 12 months, and will be probably 90%. of our conversation next one month has nothing to do with who gets what on the fees is how could we be better both for them on both for for them on the margin and net in their pocket and for us as a better orchestrator distributor so and that's really the and it's a very open and constructive discussion because there's a lot of savings to be made and a lot of actually rough part to be gained that's that's the relationship it stands

Brilliant, thank you very much.

The next question comes from Simon Lechepre from Jefferies. Please go ahead.

I've got three as well, please. First of all, on hotel assets and others, could you quantify the revenue performance of Paris, Society, and Eureka for each one, and how much cost savings came to offset this revenue drop? Secondly, on branded residences, if you can give us an update, I think total fees last year were around 50 million, so how So how should we think about next year? Is there any delay in construction and openings on the back of the conflict, given the Middle East exposure there? And lastly, coming back to your question on the NERG and looking at luxury and lifestyle, I think it was up 7.2% in H1, 7.5% last year, so quite impressive, but still slightly short of your medium-term target of 8% to 10%. Can you explain where is the gap coming from and also if you can give us some color on the turn versus the growth openings in luxury and lifestyle. Thank you.

Sure. So, hey, good morning. So, on HA and other, if you look at the first half results, and most of the impact is really in Paris Society and Rika's business, I mean, basically, the way you should think about it is there's about a 10 million EBITDA impact on H1 from NHA Hotel Assets and Other. And that's basically the impact on the restaurant business. And that's net of the profit protection plan, obviously. Branded residents should be a bit lower in terms of fee this year because we're going to have potentially some delays in the openings. We're still very optimistic about this business. We're not seeing cancellations, really. Thank you very much.

On the Lux lifestyle, on the pace of growth, it's 6.5% to 7.5% versus 8% and 10%. It's mostly due to Servitel and Fairmont and Independ on the year. Fairmont was actually good last year, it's actually much lower this year. It is 8% if you exclude the Joe and Joe transfer, so I guess close enough to 8% and 10%. But it varies depending on the year. I'll give you an example. Fairmont raffles, a bit slower today in terms of opening, but it's going to be much faster in the next 12 to 18 months. We've been signing big raffles, Fairmont, in Paris, in Lake Cuomo, in Courchevel, and many great places in Paris. in Jaipur and others in India. And Sophie Den has a great pipeline. The brand has been totally re-established by Maud Bailly and Soheys M. Gallery. So it is not as robust for the years 26, 25, 26, probably because they spend more time in basically looking after the detractors, basically trying to get a lot of the hotels being redeveloped and normally being spent at. Nothing to worry about. On the dot, in terms of the lifestyle is on the dot on what they need to do. I'm just saying something which sounds evident to you is we have to be also cognizant, I guess, the guys and the management level of Ennismore, they have to face the Middle East crisis and they have to work their ass off on whether Ennismore could be public. That basically implies a lot of different filings in terms of actually administration, bureaucracy, disclosure, and so forth. Yes, they're trying to do everything at the same time. But I guess let's actually not be asking too much of them. They cannot be on the road developing at the same time. They're actually with us on trying to get the best decision ever. So nothing to worry about. And we're going to be between the 8 and the 10, certainly moving forward. And we are today the 8.2 with Joe and Joe not having been transferred. Voilà. So I don't know whether we probably should have a last question because then we need to get going. Maybe there was no last question then.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad.

Well, again, so it's, well, I shouldn't have said what I said because you had no further question. I'm, again, very thankful for you connecting. We're going to go on a road with Jean-Jacques, which is right across the table from me, Martine and the team. Very much looking forward to meet some of you in the next four or five days. And we keep fighting. We keep fighting and we're going to end up where we need to be to be on the mark for. and the UN numbers.