The cost cutting program, unfortunately, was inevitable. The healthy occupancy rates from China, France, and Germany were unexpected. Is recovery in sight?
Showing further strains from the pandemic’s fallout, French hotel giant Accor is launching a 200 million euro ($235 million) cost-saving plan that will see it cut 1,000 roles, while it is also considering selling the iconic Paris headquarters it purchased in 2016 for 363 million euro (£427 million).
Accor posted revenues of 917 million euro ($1.079 billion) for the first half of 2020. This is down 52.4 percent compared with the first half of 2019.
“That couple hundred million (in cost savings being implemented) basically implies 1,000 jobs laid off,” said Sebastien Bazin, chairman and CEO of Accor, during an earnings call on Tuesday. The job cuts represent about 5.5 percent of its total workforce, Bazin said.
Skift contacted Accor, but it declined to comment further on the job cuts.
Bazin also said if any of those workers with salaries below 50,000 euro ($59,000) were affected by the cuts, they would still be paid and kept on the Accor payroll for at least two years, where they could also undergo training. “No way are we leaving underprivileged people on the streets of the world today,” he said.
The company also noted the shorter booking windows, with 50 percent of bookings now being made less than five days out. This time last year it was 10 days.
Occupancy Rate Recovery
As of August 3, 81 percent of the group’s hotels were open, equivalent to 4,000 units.
In terms of occupancy rates, it said China was at 60 percent; France 56 percent; Germany 39 percent; UK 35 percent; and North and Central America 35 percent.
However, the Middle East and Africa remained penalized by the lack of religious pilgrims to the holy city in Saudi, which is a lucrative part of its business in the region.
Overall, its revenue per available room, or RevPAR, dropped 59.3 percent in the first-half 2020.
Revenue from its hotel services division fell a similar amount, down 52.8 percent to 650 million euro ($764 million).
Healthier Balance Sheet
Accor’s net debt as of end-June 2020 came to 1.092 billion euro ($1.285 billion), which was lower that than the 1.333 billion euro ($1.568 billion) it reported on 31 December, 2019.
This improved figure was due to the disposal of Orbis for 1.06 billion euro ($1.246 billion) in March 2020, and the classification of Accor’s headquarters at the Sequana Tower, located in Issy-les-Moulineaux, Paris, as asset and liabilities held for sale. “It’s going to be a reduction in net debt of a couple hundred million,” said Jean-Jacques Morin, deputy CEO.
Going forward, its liquidity position exceeds 4 billion euro ($4.7 billion), which means it could survive another 40 months under current market conditions. Accor also expects 5 to 10 percent of its room counts in the future to be used as workplaces, due to the growing trend of working from home.
Photo credit: For sale: Sequana Tower, Accor's corporate headquarters in Issy-les-Moulineaux, Paris. Accor