French hotel group Accor to sell off 535 hotels

6th September 2006, Comments 0 comments

PARIS, Sept 6, 2006 (AFP) - French hotel group Accor said Wednesday it planned to sell 535 hotels in the next few years but would create as many as 200,000 new rooms, half of them in emerging markets, under a new strategic plan for the group.

PARIS, Sept 6, 2006 (AFP) - French hotel group Accor said Wednesday it planned to sell 535 hotels in the next few years but would create as many as 200,000 new rooms, half of them in emerging markets, under a new strategic plan for the group.

The sale of the hotel real estate is to take place by 2008 and is expected to raise 3.2 billion euros (4.1 billion dollars), including 1.6 billion euros in cash. Accor has sold 261 hotels in the last 18 months for 1.6 billion euros.

Accor, which owns hotel chains Sofitel, Novotel and Ibis, intends to add the 200,000 new rooms to its hotel portfolio by 2010. Most of them will be opened though franchise and management agreements.

"The expansion plan is focused on emerging markets in the Middle East, in Latin America and in the BRICs -- Brazil, Russia, India and China, which represent 50 percent of openings," the group said in a release.

Fifty-one percent of the new rooms are to be in economy class and 34 percent in the mid-range category.

The expansion plan "represents an investment of 2.5 billion euros between 2006 and 2010. Half of the investments will be committed in Europe and 44 percent in emerging markets".

The group also said that the shake-up of its business would include the sale in 2007-08 of non-strategic assets worth 500 million euros, with proceeds to be returned to shareholders.

Accor chief executive Gilles Pelisson told analysts during a conference call that these sales included the group's online travel agency Go Voyages and its Italian catering business Gemeaz Cusin.

The divestments are the result of a strategic review undertaken by the Accor that has identified two focus areas for the business, namely the hotel and related services industry.

The group plans to invest in marketing and will create a new brand for an economy chain of hotels in Europe, as well as re-position its luxury Sofitel brand and invest in other hotel chains Formule 1, Ibis and Novotel.

"Accor intends to revitalize its brand portfolio by taking a new marketing approach," it said in a statement.

It also announced a strategic review of its Red Roof Inn motel business in the US, which is an underperforming 336-strong chain of hotels present in the Midwest, the East Coast, and the South.

The announcement of a strategic review by a company often foreshadows a sale or spin-off. Accor said that a decision about its possible divestment would be taken in the next few months.

For its service business, Accor intends to spend as much as 500 million euros on acquisitions. Its service businesses are mainly meal and food ticket issuers.

Separately on Wednesday, the group announced that its first-half net profit totalled 241 million euros, an increase of 54 percent from the same period of last year.

On the Paris stock exchange in early afternoon trading, shares in Accor showed a gain of 0.67 percent to 49.76 euros.

"The results for the first half were slightly higher than forecast and the new strategy largely in line with expectations," said analysts at French investment bank CA Cheuvreux.

Copyright AFP

Subject: French news

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