Accor says marked U.S. slowdown

May 29, 2001
Web Posted at 1438 GMT

PARIS, (Reuters) - French hotel giant Accor has seen a marked slowdown in its U.S. hotels business since the start of April, Accor Chairman Jean-Marc Espalioux told an annual shareholders' meeting on Tuesday.

Accor shed more than three percent as some players interpreted his commments as adding a note of uncertainty to the company's outlook.

"An economic slowdown was incorporated in our forecasts at the start of the year. We expected 2.5 percent growth in revpar (revenues per available room) at our U.S. hotels," Espalioux said.

Accor is represented in the United States chiefly through its budget Motel 6 (M6) and economy Red Roof brands.

"We had three percent growth in revpar through April, with a marked slowdown in April compared to January, February and March," Espalioux said of the group's U.S. performance over the first four months of this year.

That was a decline from revpar growth of 3.8 percent at Accor's U.S. hotels in the first quarter.

"In the coming weeks we will see how deep and prolonged the slowdown will be with the start of the U.S. hotel season for Motel 6 and Red Roof. This slowdown will be followed by an inevitable rebound," Espalioux said.

Accor's U.S. hotels represent 34 percent of the 389,437 rooms the group operates around the world as of December 2000.

They account for 30 percent of Accor's hotel turnover and 25 percent of sales for the entire group, which also includes a highly cash-generative services voucher division.

Accor stock fell 3.55 percent to 48.9 euros at 1232 GMT.

Though analysts saw no need to revise their forecasts, one said the stock fell because of fresh short-term uncertainty.

"The market is reacting to a lack of certainty that Espalioux has given rise to, but it is more a case of bad presentation over fact," said Lehman Brothers analyst Fraser Ramzan.

He said most players were basing valuations on next year's forecast pick-up and considered Accor to be performing well.

In Europe, Accor said revpar at its business and leisure hotels slowed to 7.4 percent in the four months through April from 8.8 percent in the first quarter.

For European economy hotels revenue growth slowed to 8.7 percent from 9.8 percent in the first three months of the year.

Espalioux gave no further forecasts for 2001, but reiterated the group's target for double-digit growth in pre-tax profit in 2001, and doubling earnings per share in five years' time.

Its total debt slipped to 2.547 billion euros at end-2000 after 2.665 billion in 1999. That meant Accor's gearing eased to 64 percent of equity from 77 percent in 1999, while interest cover stood at 5.1 times after 4.6 times previously.

Accor, which has beaten the DJ European cyclical goods index by 13 percent since January, is trading in line with its European peers at 8.5 times enterprise value to estimated 2001 core earnings (EV/EBITDA) against Sol Melia's 8.6 times.