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 17 October 2007
Accor Continued Strong Revenue Growth, up 8.5% in the First Nine Months of 2007
 PARIS, | Accor's consolidated revenue for the first nine months of 2007 totaled EUR6,119 million, an increase of 8.5% over the same period of 2006. At constant scope of consolidation and exchange rates, the like-for-like increase was 6.3%, confirming the favorable trend enjoyed by the Services and Hotels businesses since the beginning of the year.
The expansion strategy accounted for 7.6% of revenue growth for the first nine months of the year. Disposals carried out under the ongoing asset-right strategy in the Hotels business and the divestment of non-strategic assets - including Go Voyages, which was sold in April - reduced revenue by 4.4%.
The currency effect was a negative 1.1% for the period.
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(in EUR millions) 2006 2007 % change % change
(9 months) (9 months) (reported) (like-for-like1)
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Hotels 4,052 4,391 +8.4% +5.5%
Upscale and 2,163 2,476 +14.4% +6.6%
Midscale
Economy 1,119 1,211 +8.2% +6.0%
Economy US 770 704 -8.5% +1.8%
Services 543 624 +14.9% +12.1%
Other businesses 1,046 1,104 +5.6% +6.5%
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Total 5,641 6,119 +8.5% +6.3%
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(1) At constant scope of consolidation and exchange rates.
Services
Reported nine-month revenue up 14.9%
Services revenue for the first nine months of the year rose 14.9%, including like-for-like growth of 12.1%.
In Europe, revenue was up 13.7% like-for-like, including growth of 14.3% in the third quarter versus 11.1% in the second quarter and 16.0% in the first quarter.
In Latin America, revenue grew 8.5% like-for-like, reflecting increases of 8.4% in the third quarter, 6.6% in the second quarter and 10.7% in the first quarter.
In line with the Group's medium-term objectives, acquisitions accounted for 4.3% of revenue growth for the nine-month period, corresponding to the contribution of Kadeos, a French gift card and voucher company.
The currency effect was a negative 0.9%, primarily attributable to the declines of the Mexican peso (negative impact of 0.5%) and the Venezuelan bolivar (negative impact of 0.7%) against the euro.
Third quarter revenue growth was 12.3% like-for-like, versus 10.0% in the second quarter and 14.1% in the first quarter. The quarter saw sharp gains in markets that benefited from product launches, such as the United Kingdom where revenue was up 17.5%, or from increased in penetration rates, such as France where Ticket Restaurant issuance volume is up 11.2%. In Brazil, the situation was unchanged, with revenue down by a slight 0.6% like-for-like, while revenue in the other Latin American countries (excluding Brazil) grew 19.5%.
Hotels
Reported nine-month revenue up 8.4%
The 8.4% reported increase in Hotels revenue for the first nine months of 2007 confirms the continuing uptrend in the European hotel industry cycle underway since fourth-quarter 2006. At constant scope of consolidation and exchange rates, the like-for-like increase was 5.5%.
Business expansion boosted revenue by 9.2%, with the consolidation of 52 Dorint hotels in Germany accounting for 5.9%, the buyout of the Amorim Group's 50% stake in the Portuguese joint venture for 0.2% and the opening of 19 626 new rooms during the period for 3.1%.
In line with the asset-right strategy, the Group is continuing to dispose of hotel properties, in most cases under sale and management-back or franchise-back agreements. This process reduced revenue by 4.9% in the first nine months of the year.
The currency effect was a negative 1.4%, mainly due to the euro's appreciation against the US dollar.
In the third quarter, Hotels revenue in Europe rose 6.7% like-for-like, compared with increases of 3.4% in the second quarter and 7.9% in the first quarter. Most of the second-quarter slowdown was due to non-recurring events that skewed comparisons, specifically the FIFA World Cup in Germany in the second quarter of 2006 and the decline in demand in France during the May 2007 presidential election.
By contrast, third quarter 2007 revenue was boosted by the Rugby World Cup, which generated an estimated EUR10.4 million in incremental revenue in September, with around EUR5 million more expected in October.
Upscale and Midscale Hotels
Revenue in the Upscale and Midscale segment for the first nine months of 2007 rose 14.5% as reported and 6.6% like-for-like.
In the third quarter, revenue was up 7.7% like-for-like, compared with increases of 4.1% in the second quarter and 8.2% in the first quarter, reflecting the upturn in the hotel industry cycle, particularly in Europe.
In France, revenue growth was 11.4% like-for-like, versus 6.3% in the second quarter and 7.9% in the first quarter. The Rugby World Cup added 3.7 points to the growth rate for the quarter. RevPAR for the Upscale and Midscale segment was up 12.1% for the period, including increases of 11.6% for the Sofitel brand and 14.7% for Novotel.
In the United Kingdom, revenue for the quarter rose 6.7% like-for-like, led by a strong performance in London where RevPAR was 6.8% higher.
In Germany, like-for-like revenue dipped 0.4%, reflecting the high basis of comparison still created by the FIFA World Cup.
Economy Hotels (outside the United States)
In the Economy Hotel segment, revenue for the first nine months of 2007 rose 8.2% as reported and 6.0% like-for-like.
Third quarter revenue was 6.3% higher like-for-like, compared with increases of 4.0% in the second quarter and 8.0% in the first quarter.
In France, revenue growth was 6.0% like-for-like, versus 2.6% in the second quarter and 4.9% in the first quarter. In the United Kingdom, revenue increased 10.2% like-for-like. In Germany, revenue for the quarter was up 3.0%.
US Economy Hotels
In the US Economy Hotel segment, like-for-like revenue for the first nine months of the year was up 1.8%, but reported revenue was down 8.5%, reflecting the early-September disposal of Red Roof Inn, which was removed from the scope of consolidation at August 31, 2007, as well as the dollar's weakness against the euro.
Third quarter revenue generated by Motel 6 was up 1.6%, compared with increases of 0.7% in the second quarter and 1.8% in the first quarter.
Financial position and results
Changes in scope of consolidation
Development
In Services, acquisitions accounted for 4.3% of revenue growth for the first nine months, in line with the Group's medium-term objectives.
The development plan for the Hotels business provides for 200,000 new rooms to be opened in the period to 2010. During the first nine months of 2007, 19,626 rooms were opened, contributing partially to the 9.2% growth in revenue generated by development initiatives.
Disposals
In September, Accor announced that it had completed the sale of Red Roof Inn to Citi GSS Group and Westbridge, as part of its real estate strategy. The transaction added EUR470 million to the Group's cash position. Red Roof Inn contributed EUR186 million to consolidated revenue in the first eight months of the year.
In August, the Group announced the sale of its non-strategic Italian food services business to Barclay's Private Equity for EUR135 million. The transaction was completed on October 11. The Italian food services business contributed EUR312 million to consolidated revenue in 2006 and EUR248 million the first nine months of the current year.
Currency effect
The currency effect in the first nine months of the year was a negative 1.1%.
By business, the currency effect was a negative 0.9% in Services, primarily attributable to the declines of the Venezuelan bolivar (negative impact of 0.7%) and the Mexican peso (negative impact of 0.5%) against the euro, and a negative 1.4% in Hotels, mainly reflecting the euro's appreciation against the US dollar.
Debt refinanced with new EUR2 billion syndicated line of credit
In July, Accor obtained a new EUR2 billion syndicated line of credit as part of its debt refinancing process. The five-year facility, which is renewable for two one-year periods, was arranged on significantly improved financial terms and conditions. The transaction has lengthened the average maturity of Accor's financing, thereby enhancing its financial flexibility.
Share buyback program
Between May and the end of August, the Group carried out a EUR700 million share buyback program, acquiring a total of 10,623,802 shares.
At the end of August, the decision was made to launch a new EUR500 million program in light of the current weak stock market environment, the increase in capital resulting from Colony Capital's bond conversions in July and management's confidence in Accor's ability to successfully deploy the strategic plan. In September, 1,710,500 shares were bought back under the new program, representing an investment of EUR105 million.
2007 earnings objective
Based on results for the first nine months, the Group confirms its target of reporting profit before tax and non-recurring items of around EUR870 million to EUR890 million over the full year (excluding the financial impact of the new share buyback program). This target takes into account the prospects for continued strong demand in the fourth quarter, marketing expenditure related to the launch of the new hotel brands, and the disposals of Go Voyages (removed from the scope of consolidation in April), Red Roof Inn (removed from the scope of consolidation at August 31) and the Italian food services business (removed from the scope of consolidation in October).
Significant transactions and events of the period
Disposal of Red Roof Inn in the United States
The sale of Red Roof Inn (341 hotels, 36,683 rooms) to a consortium comprised of Citi's Global Special Situations Group and Westbridge Hospitality Fund II, L.P. for $1,313 million was completed in September. The transaction had a EUR470 million favorable impact on the Group's cash position.
Sale of the Italian food services business
On October 11, Accor completed the sale of its non-strategic Italian food services business, which was announced in August. The business was sold to Barclay's Private Equity for EUR135 million.
Acquisition of PrePay Technologies Ltd in the United Kingdom
In September, Accor Services announced the acquisition of the entire capital of PrePay Technologies Ltd, the UK's leading issuer of prepaid card solutions, for GBP50 million.
Sustained market growth and the development of synergies with Accor Services' existing brands are expected to generate ROCE of more than 15% by 2010.
Consolidation of Accor's presence in Portugal
In July, Accor announced that it was buying out the Amorim Group's 50% stake in the joint venture the two companies created in 1997 to develop and operate hotels in Portugal, for EUR69 million. At the same time, Accor sold the 131-room Sofitel Thalassa Vilalara to Amorim for EUR25 million.
The two transactions will have a slightly positive impact on 2007 profit before tax.
Following these transactions, Accor is now the sole owner of its hotel operations in Portugal, with a portfolio of 29 hotels (18 Ibis, 6 Mercure, 4 Novotel and 1 Sofitel, representing a total of 3,093 rooms) that generated 2006 revenue of EUR49 million (excluding the Sofitel Thalassa Vilalara).
Acquisition of an additional 4.9% of Orbis in Poland
In August, Accor increased its stake in Poland's Orbis by 4.9%, from 40.58% to 45.48%, at a cost of EUR42 million.
Accor, the European leader and a major global group in hotels, the global leader in services to corporate clients and public institutions, operates in nearly 100 countries with 170,000 employees. It offers to its clients over 40 years of expertise in its two core businesses:
- Hotels, with the Sofitel, Pullman, Novotel, Mercure, Suitehotel, Ibis, All Seasons, Etap Hotel, Formule 1 and Motel 6 brands, representing more than 4,000 hotels and nearly 500,000 rooms in 90 countries, as well as strategically related activities, such as Lenotre.
- Services, with 23 million people in nearly 40 countries benefiting from Accor Services products in human resources, marketing services and expense management.
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REVENUE
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Quarter 1 Quarter 2
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In Euros thousand 2,006 2,007 2,006 2,007
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HOTELS
Upscale and Midscale 667,354 752,107 765,185 865,902
Economy 323,411 355,471 393,521 416,654
Economy US 231,601 215,940 260,157 245,286
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Total HOTELS 1,222,367 1,323,519 1,418,863 1,527,843
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SERVICES 179,360 206,984 185,118 210,783
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Other Businesses
Casinos 76,980 78,172 80,759 80,619
Restaurants 141,609 151,766 141,505 164,521
On-board train services 59,343 59,704 65,572 70,568
Other 53,551 67,292 65,202 72,771
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Total other businesses 331,483 356,935 353,038 388,480
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Total 1,733,210 1,887,437 1,957,020 2,127,106
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Half Year Quarter 3
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In Euros thousand 2,006 2,007 2,006 2,007
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HOTELS
Upscale and Midscale 1,432,540 1,618,009 730,509 857,524
Economy 716,933 772,126 402,604 439,360
Economy US 491,757 461,227 278,115 242,971
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Total HOTELS 2,641,230 2,851,362 1,411,227 1,539,856
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SERVICES 364,479 417,767 178,503 206,261
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Other Businesses
Casinos 157,738 158,791 86,099 91,942
Restaurants 283,114 316,287 130,816 147,666
On-board train services 124,915 130,272 73,360 75,109
Other 118,753 140,064 70,899 43,818
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Total other businesses 684,521 745,414 361,173 358,534
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Total 3,690,230 4,014,543 1,950,904 2,104,651
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September-end (YTD)
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In Euros thousand 2,006 2,007
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HOTELS
Upscale and Midscale 2,163,048 2,475,533
Economy 1,119,537 1,211,486
Economy US 769,872 704,198
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Total HOTELS 4,052,457 4,391,218
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SERVICES 542,981 624,028
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Other Businesses
Casinos 243,837 250,733
Restaurants 413,930 463,954
On-board train services 198,275 205,381
Other 189,652 183,882
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Total other businesses 1,045,695 1,103,949
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Total 5,641,133 6,119,194
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REVENUE
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Quarter 1 Quarter 2 Half Year
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Change Change Change Change Change
Reported% L/L %(*) Reported% L/L %(*) Reported%
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HOTELS
Upscale and Midscale 12.7% 8.2% 13.2% 4.1% 12.9%
Economy 9.9% 8.0% 5.9% 4.0% 7.7%
Economy US -6.8% 2.0% -5.7% 1.8% -6.2%
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Total HOTELS 8.3% 7.0% 7.7% 3.7% 8.0%
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SERVICES 15.4% 14.1% 13.9% 10.0% 14.6%
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Other Businesses
Casinos 1.5% 3.5% -0.2% 1.2% 0.7%
Restaurants 7.2% 9.1% 16.3% 15.2% 11.7%
On-board train services 0.6% -2.3% 7.6% 4.3% 4.3%
Other 25.7% 13.2% 11.6% -1.4% 17.9%
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Total other businesses 7.7% 6.4% 10.0% 6.9% 8.9%
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Total 8.9% 7.6% 8.7% 4.8% 8.8%
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Half Year Quarter 3 Septembre-end (YTD)
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Change Change Change Change Change
L/L %(*) Reported% L/L %(*) Reported% L/L %(*)
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HOTELS
Upscale and Midscale 6.0% 17.4% 7.7% 14.4% 6.6%
Economy 5.8% 9.1% 6.3% 8.2% 6.0%
Economy US 1.9% -12.6% 1.5% -8.5% 1.8%
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Total HOTELS 5.2% 9.1% 6.1% 8.4% 5.5%
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SERVICES 12.0% 15.6% 12.3% 14.9% 12.1%
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Other Businesses
Casinos 2.3% 6.8% 8.2% 2.8% 4.4%
Restaurants 12.1% 12.9% 10.6% 12.1% 11.6%
On-board train services 1.2% 2.4% 2.3% 3.6% 1.6%
Other 5.2% -38.2% -0.9% -3.0% 2.9%
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Total other businesses 6.7% -0.7% 6.1% 5.6% 6.5%
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Total 6.1% 7.9% 6.6% 8.5% 6.3%
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*Based on constant scope of consolidation and exchange rates
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RevPAR by Segment
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HOTELS : RevPAR by segment Occupancy Rate Average room rate
at September-end 2007 Subsidiaries (reported) Subsidiaries (reported)
(YTD) (in %) (chg in pts) (chg in %)
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Upscale and Midscale Europe
(in EUR) 67.4% +2.0 102 +5.1%
Economy Europe (in EUR) 74.6% +1.0 54 +4.3%
Economy US (in $) 66.7% +0.3 48 +1.8%
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HOTELS : RevPAR by segment RevPAR
at September-end 2007 Subsidiaries (reported) Subsidiaries Subsidiaries
(YTD) (chg in %) (like-for & managed
-like(1)) (reported)
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Upscale and Midscale Europe
(in EUR) 69 +8.3% +7.8% +10.5%
Economy Europe (in EUR) 41 +5.7% +5.5% +5.9%
Economy US (in $) 32 +2.2% +2.1% +2.2%
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(1) at comparable scope of consolidation and exchange rates.
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RevPAR by Country
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UPSCALE AND MIDSCALE HOTELS Number Occupancy Rate
RevPAR by country at of
September-end 2007 (YTD) rooms Subsidiaries (reported)
(in local currency) (in %) (chg in pts)
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France 30,236 67.3% +4.0
Germany 21,209 64.5% -1.2
Netherlands 4,278 68.9% +1.9
Belgium 2,232 71.3% +2.9
Spain 2,259 67.0% +4.9
Italy 3,104 63.3% -1.6
UK ( in GBP) 5,347 78.3% +1.5
USA (in $) 520 91.9% +20.4
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UPSCALE AND MIDSCALE HOTELS Average room rate RevPAR
RevPAR by country at
September-end 2007 (YTD) Subsidiaries (reported) Subsidiaries (reported)
(in local currency) (chg in %) (chg in %)
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France 108 +5.0% 73 +11.7%
Germany 90 +15.7% 58 +13.5%
Netherlands 112 +1.8% 77 +4.8%
Belgium 101 +3.2% 72 +7.6%
Spain 99 +3.4% 66 +11.6%
Italy 118 +2.6% 75 +0.0%
UK ( in GBP) 84 +6.5% 66 +8.6%
USA (in $) 225 +11.1% 207 +42.8%
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UPSCALE AND MIDSCALE HOTELS RevPAR
RevPAR by country at
September-end 2007 (YTD) Subsidiaries Subsidiaries & managed
(in local currency) (like-for-like(1)) (reported)
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France +10.1% +11.2%
Germany +3.8% +6.8%
Netherlands +5.5% +4.5%
Belgium +7.6% +9.0%
Spain +11.6% +11.7%
Italy +2.2% +0.0%
UK ( in GBP) +7.0% +1.2%
USA (in $) +19.4% +22.6%
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(1) at comparable scope of consolidation and exchange rates.
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RevPAR by Country
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ECONOMY HOTELS Number of Occupancy Rate
RevPAR by country at
September-end 2007 (YTD) rooms Subsidiaries (reported)
(in local currency) (in %) (chg in pts)
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France 44,074 74.3% +0.5
Germany 15,146 71.7% -0.2
Netherlands 2,215 83.7% +2.7
Belgium 2,566 77.3% +1.6
Spain 3,984 79.0% +1.3
Italy 1,436 64.0% +3.9
UK ( in GBP) 7,310 77.3% +3.3
USA (in $) 103,551 66.7% +0.3
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ECONOMY HOTELS Average room rate RevPAR
RevPAR by country at
September-end 2007 Subsidiaries (reported) Subsidiaries (reported)
(in local currency) (chg in %) (chg in %)
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France 47 +4.0% 35 +4.6%
Germany 56 +3.5% 40 +3.3%
Netherlands 77 +5.1% 65 +8.6%
Belgium 64 +3.0% 50 +5.2%
Spain 54 +4.5% 43 +6.3%
Italy 73 +0.8% 47 +7.4%
UK ( in GBP) 53 +4.9% 41 +9.6%
USA (in $) 48 +1.8% 32 +2.2%
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ECONOMY HOTELS RevPAR
RevPAR by country at
September-end 2007 Subsidiaries Subsidiaries & managed
(in local currency) (like-for-like(1)) (reported)
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France +4.3% +4.6%
Germany +3.1% +3.6%
Netherlands +8.5% +8.6%
Belgium +7.5% +5.2%
Spain +5.8% +6.3%
Italy +7.6% +7.4%
UK ( in GBP) +11.1% +9.6%
USA (in $) +2.1% +2.2%
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(1) at comparable scope of consolidation and exchange rates.
Éliane Rouyer-Chevalier
Phone: 33 (0)1 45 38 86 26
Email: comfi@accor.com
 Accor
www.accor.com
Immeuble Odyssey, 110 avenue de France
Paris , 75013
France
Phone: +33 (0)1 45 38 86 00
Fax: +33 (0)1 45 38 85 95
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