Accor to Close More Hotels; Cut Costs

Over the past three weeks, the COVID19 crisis has
grown to almost unbelievable proportions, with over half of the
world’s population either confined and/or under lockdown.

With so
few people now travelling, more than half of Accor-branded hotels
worldwide have already been closed, and this is likely to increase to over
two thirds in the coming weeks.

The company has over 5,000 hotels and residences
across 110 countries in its portfolio.

One piece of good news is the

hint
of initial recovery of the Chinese hotel market
, with mild
improvements in occupancy and F&B activity.


In order to limit the impact on
earnings and cash, and to prepare for the post-crisis
recovery, the company has implemented the following measures:

– Travel ban, hiring freeze, reduced schedules and/or
furloughing for 75% of global head office teams for Q2, resulting
in a minimum €60m reduction in G&A for 2020;

– Reviewed recurring investment plan for 2020
resulting in a €60m reduction in capital expenditures; and

 – Further streamlining all other costs
(e.g. sales, marketing, IT), in line with lower system wide
revenues.

Thanks to its recent asset-light transformation
and cash preservation strategy, Accor can today rely on a strong
balance sheet, with more than €2.5bn in cash on hand and an
undrawn revolving credit facility of €1.2bn.

While much
uncertainty remains on the duration of this crisis, the group
expects a severe impact on its 2020 performance but remains
bullish on the long-term perspective of the hospitality industry,
for Accor, its employees, its owners and shareholders.

In these unchartered territories, Accor’s Board of
Directors has decided to complement the actions
outlined above, by withdrawing its proposal for a 2019 dividend
payment of c. €280m.

After consulting with the Group’s main
shareholders, JinJiang International, Qatar Investment Authority,
Kingdom Holding Company and Harris Associates, Accor has decided
to allocate 25% of the planned dividend (€70m) to the launch of
the “ ALL Heartist Fund”, a COVID19 special purpose vehicle. This
fund will typically assist:

– the group’s 300,000 employees, pledging to pay
for their COVID19-related hospital expenses, for those who do not
have social security or medical insurance:

– on a case by case basis, furloughed employees
suffering great financial distress;

– on a case by case basis, individual partners
facing financial difficulty; and

– in addition, the group will further deploy its
solidarity initiatives to support front-line healthcare
professionals and non-profit organizations.

Sébastien Bazin, Chairman and CEO of Accor,
said, “Welcoming, protecting and taking care of others is at
the very heart of what we do. In light of the urgency and the
scale of the situation, we have decided to act in an immediate and
meaningful way, in the spirit of our values and commitments.
Through this impactful gesture, we wish to express our solidarity
and gratitude to all those demonstrating courage and selflessness
during this crisis. On behalf of the board, I would like to thank
the group’s main shareholders. Without them, the “ALL Heartist
Fund” would not have been possible. I also want to pay a special
tribute to the Accor teams around the world. They are facing the
current crisis with admirable courage, dedication and
professionalism. As our industry is going through tough times, we
have to make tough decisions, but Accor has a strong balance sheet
which will enable it to withstand this crisis and emerge with
strength during the recovery period. I am confident that Accor
will soon rediscover the road to growth.”

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