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Accor Posts 2013 Profit on Cost Cuts and Hotel Industry Recovery

Feb 20, 2014 1:00 pm

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Accor has plenty of money for acquisitions, and it is looking at budget and midscale properties in Europe as prime targets.

— Dennis Schaal

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Sofitel

Sofitel, an Accor brand, welcomes couples for romantic occasions. Sofitel


Accor SA, Europe’s largest hotel operator, said 2013 profit rose 1.9 percent on cost cuts and a hotel-industry recovery.

Earnings before interest and taxes rose to 536 million euros ($737 million) from 526 million euros a year earlier, the Paris-based owner of the Sofitel and Ibis brands said in a statement today. That beat the average estimate of 528.3 million euros from 18 analysts surveyed by Bloomberg and the company’s target of 530 million euros.

“While the economic environment remains uncertain in a few regions, overall we are benefiting from the global recovery,” Chief Executive Officer Sebastien Bazin said in the statement.

Accor in November scrapped a plan to sell properties and expand through operating more hotels, focusing instead on owning the hotels it runs. The strategic change was Accor’s first since Bazin took office in August after the company fired his predecessor.

Accor declined 0.7 percent to 36.49 euros at the close of trading in Paris. The shares have gained 30 percent in the past 12 months, while the French CAC 40 Index has climbed 17 percent.

The company in January said its 2013 earnings would be at the top of its target range, at about 530 million euros.

Higher Dividend

Accor reported annual net income of 126 million euros compared with a year-earlier loss of 599 million euros that was caused by the sale of its Motel 6 chain. Accor plans to raise its dividend to 80 cents a share from 76 cents.

The company sold hotels valued at about 336 million euros in 2013, Bazin said by phone. Accor has about 2 billion euros of cash to make acquisitions, although some of the funds may be used to pay back 2.3 billion euros of debt that expires between 2017 and 2021, he said.

This year’s earnings will be boosted by the company’s new strategy of running its hotel operations and hotel investment businesses as separate units, Bazin said.

“The strategy will take time to be implemented, certainly at HotelInvest, because of the the size of the portfolio,” he said.

Accor said in November it plans to make most of its acquisitions in Europe, where there is high demand for budget and mid-scale properties.

The company opened 22,637 rooms in 2013, bringing the total number of rooms it operates to 461,719, Accor said in January.

Accor cut its costs by 37 million euros in 2013, exceeding its target of 30 million euros, according to the statement. In 2014, the company plans an additional reduction of 63 million euros.

–Editors: Andrew Blackman, Ross Larsen

To contact the reporter on this story: Patrick Gower in London at pgower@bloomberg.net

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net

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