Accor Expects a Full Occupancy Rebound Early Next Year

25.08.2023 - 13:42 / skift.com / Sean Oneill / Next Year

Accor, the Paris-based hotel group, expects a recovery in occupancy rates to pre-pandemic levels will increasingly fuel its revenue growth over the next year. But it will take time to play out.

“I don’t see occupancy getting back to the level of 2019 before the end of this year or the beginning of next year,” said Group Deputy CEO Jean-Jacques Morin Thursday during a first quarter earnings call. “My hunch is the beginning of 2024.”

Accor’s hotels had an average occupancy of 60 percent in the first quarter. That was 4.5 percentage points below its 2019 level.

Accor produced systemwide revenue per available room, or RevPAR, of $70.50 (€64) — or 19 percent above the 2019 pre-pandemic period.

That performance was driven by having an average room rate 27 percent above the 2019 level.

The company — which runs brands such as Ibis, Sofitel, Novotel, Fairmont, and Pullman — forecasted it would generate more than 10 percent growth in revenue per available room growth this year. That represented a hike in guidance from a previously predicted range of between 5 percent and 9 percent.

“Over time, we’ll see pricing be less of a contributor to RevPAR,” Morin said.

From January to March, the Paris-based group generated revenue of about $1.25 billion (€1.139 billion). That represented a year-over-year revenue jump of 54 percent for the world’s sixth-largest hotel group (depending how you measure).

But the hospitality operator curiously didn’t report how much net income it produced or its earnings before interest, taxes, depreciation, and amortization. In February it reported significant profit margins for the fourth quarter.

At the end of March 2023, the group had a hotel inventory of 5,444 properties, or 800,321 rooms, and a pipeline of about 1,241 hotels, or 214,000 rooms. In the year through March 31, it grew its network of rooms by 2.9 percent — below its higher average of more than 4 percent in the years before the pandemic.

Morin partly explained the low net room growth rate by saying the company had been kicking out some properties that hadn’t been maintaining the company’s brand standards.

“It’s not a lot of hotels,” Morin said. “But what you see coming out of the crisis is that some hotels haven’t done the investment or aren’t doing the investment the way they should be in quality.”

But Accor still expects a return to its historical level of network growth over time, though executives didn’t predict the pace at which that returning growth would unfold.

“We will continue to grow in terms of net room growth, and we will grow it faster,” Morin said.

A couple of analysts asked on the call about the possible impact of tighter lending standards because of rising interest rates and banking upheaval, which might