Accor misjudges the pressures on southern European market

By GARETH MACKIE
Published on 30/08/2012 02:15

Europe’s largest hotel group has warned that its full-year profits could miss analysts’ forecasts after demand for rooms across southern Europe deteriorated during the summer.

Accor, which operates under the Ibis, Mercure and Novotel brands, said earnings before interest and tax rose 10.1 per cent to €212 million (£167.9m) in the first half despite “very challenging” conditions in recession-hit southern Europe.

The French group owns more than 4,400 hotels and opened 141 sites during the first half, about 57 per cent of which were in the Asia Pacific region.

While the world’s fourth-largest hotel company said the overall trend for autumn bookings was good, the uncertain economic climate made it difficult to predict what the rest of the year holds in store.

Chief financial officer Sophie Stabile said: “Summer bookings are in line with what we expected, except in southern Europe. In that region, we thought business would stabilise and we are seeing a deterioration like we did in the first half.”

Accor predicted earnings before interest and tax of between €510m and €530m for the full year. That compares with €515m a year ago and is below analysts’ expectations of around €533m.

The company, which sold its North American discount chain Motel 6 for $1.9 billion (£1.2bn) in May, is accelerating its growth in emerging markets and stepping up its shift to an “asset light” business model – operating more hotels under contracts rather than owning them – to cut debt.