Accor is pursuing an asset sell-off similar to many other hotel brands, but that's not enough to placate the ratings agency.
Accor SA, Europe’s largest hotel operator, dropped the most in 10 months in Paris trading after Credit Suisse Group AG downgraded the stock and said first- quarter results may fall short of the bank’s expectations.
Accor declined 4.2 percent to 25.62 euros, the biggest decline since June 11. The company may report disappointing first-quarter sales on April 17 on falling revenue per available room and weaker like-for-like profit, Credit Suisse said in an e-mailed note today. It cut Accor to underperform from outperform.
Paris-based Accor in February said it plans to widen margins and cut costs by scaling back the number of properties it owns. While the asset sales may result in a cash return, falling revpar, a measure of occupancy and rates, in France, the U.K. and the rest of Europe is likely to result in a repeat of weaker sales during the second half.
“We see an increasing risk of disappointment for Accor,” Credit Suisse said. “The asset-driven restructuring story should still drive a re-rating by 2016, with scope for a 1 billion-euro cash return, but this is insufficient to offset the increased trading risks and we downgrade to underperform.”
Accor has gained 4 percent in the last 12 months, giving the company a market value of 5.82 billion euros ($7.6 billion.)
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