French hotel group Accor SA (ACRFF.PK,ACRFY.PK) on Wednesday reported a hefty loss in its first-half due to a loss related to the sale of its U.S. budget hotel chain Motel 6. EBITDAR, a key earnings metric, improved on effective implementation of the asset management program, while revenues declined slightly. Looking ahead, the company issued a cautious earnings view, seeing a downturn in demand in Southern Europe.
For the first half, net loss, Group share was 532 million euros, as against a profit of 41 million euros a year ago. The latest results included 612 million euros of loss from discontinued operations of U.S. budget hotel chain Motel 6, while prior year's loss was 21 million euros.
It was on May 22 that Accor agreed to sell Motel 6 to US-based investment and advisory firm Blackstone Group LP (BX) for $1.9 billion as the French hotel group aims to focus on regions with tremendous growth potential. The company now said the prior year results have been restated to reflect the Motel 6 deal.
On a continuing operations basis, excluding the Motel 6 operations, net profit increased to 80 million euros from prior year's 62 million euros.
Earnings before interest and tax or EBIT improved 4.1 percent from last year to 212 million euros. Operating profit before tax and non-recurring items was 190 million euros.
Earnings before interest, taxes, depreciation, amortization and rental expense or EBITDAR grew 1.1 percent, and EBITDAR margin grew 0.3 percentage points to 30.7 percent.
Funds from operations rose to 310 million euros from 303 million euros in first-half 2011.
Meanwhile, revenue edged down 0.1 percent to 2.717 billion euros. On a like-for-like basis, revenues increased 3.6 percent with a solid performance in every segment, led by steadily rising room rates.
In July, its revenue per available room or RevPAR rose 2.9 percent like-for-like in the Upscale & Midscale Hotels segment and 0.2 percent in Economy Hotels.
Looking ahead, for fiscal 2012, the company projects EBIT between 510 million euros and 530 million euros. This is compared to last year's EBIT of 515 million euros.
Accor noted that business volumes remained firm throughout the summer and it has not yet observed any tangible signs of a downturn in demand, except in Southern Europe, while visibility on the second half is still limited by the uncertain economic environment.
In addition, Accor said it is now committed, by end-2016, to operating a room base 40 percent under franchise agreements, 40 percent under management contracts and 20 percent in owned or leased hotels.
The company has 108,700 rooms in the pipeline for the period to 2016.
In Paris, Accor shares closed Tuesday's trading at 26.43 euros, down 0.09 euros or 0.36 percent.
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