Accor sinks to $2.5 billion loss in first six months of 2020

As was to be expected, the first six months of the year have not been kind to Accor.

After posting a €141 million profit in the first half of 2019, the French hospitality giant swung to a €1.5 billion ($2.5 billion) loss in the six months to 30 June 2020.

Overall revenue fell 52.4 per cent to €917 million ($1.5 billion), and RevPAR was down 59.3 per cent.

Accor said the big decline in RevPAR reflected the “dramatic deterioration” in the industry linked to the spread of the COVID-19 virus worldwide, as well as lockdown measures and border closures implemented by governments throughout the world.

“Nevertheless, we are observing signs of recovery in all regions, after a particularly hard-hit period in April and May,” the company added.

During the first half of 2020, Accor opened 86 hotels or 12,000 rooms, and the group had a portfolio of 747,805 rooms (5,099 hotels) and a pipeline of 206,000 rooms (1,197 hotels) at 30 June, of which 75 per cent are in emerging markets.

As of 3 August, 81 per cent of Accor’s hotels were open, equating to more than 4,000 units.

Accor took drastic measures earlier in the year to mitigate the impact of COVID-19 on its earnings, including a €60 million ($98.7 million) annual cost savings program which was already 60 per cent achieved by the end of June, as well as a sharp reduction in other operating costs.

In a second phase, the group reviewed its organisation to shift from its new asset-light business model to an asset-light company. Accor said this will lead to the implementation of a €200 million ($329.1 million) recurring cost saving plan.

This plan includes the simplification and realignment of the company’s operating structures in different regions, and the automation of tasks for repetitive processes. Accor expects two-thirds of these cost savings will be generated by the end of 2021, before being completed by the end of 2022.

Sébastien Bazin, chairman and CEO of Accor, described the shock that the hospitality industry is experiencing as “violent and unprecedented”.

“The peak of the crisis is undoubtedly behind us, but the recovery will be gradual,” he said.

“Having taken these emergency steps, we must now finish the job from an asset-light model to a full asset-light company. Beyond COVID-19, this is essential. Accor must become simpler, leaner, more agile and even closer to the field.

“These initiatives will enable us to extend our leadership, make our decision process more efficient and boost our recovery. They will be implemented with transparency and candour and, in a spirit true to our values of solidarity and commitment.”

Featured image source: iStock/Julien Viry