Visuel H10,21 x L9,14 cm
Operational Strategy
64
Investor Day - September 13, 2011
A Value Creative Strategy
The Reference Hotel Player
Revitalize our
brand portfolio
Deploy our LT asset
management strategy
Promote our unique
operational know-how
Run a value creation
development strategy
Effective financial strategy
65
Investor Day - September 13, 2011
Operational Strategy: Our Key Levers
Promote our unique
operational know-how
Distribution Strategy
Operational Excellence
Franchise Expertise
66
Investor Day - September 13, 2011
Visuel H10,21 x L9,14 cm
Distribution Strategy
Jean-Luc Chrétien
67
Investor Day - September 13, 2011
We Master The Key Strategic Elements Of Hotel
Distribution
A significant contribution to hotel results
A dynamic growth of Direct channels
A capacity to adapt to technological
innovations
68
Investor Day - September 13, 2011
Our Distribution Drives Demand
54%*
54%*
48%*
48%*
36%*
contribution
17,6%
42,6%
2008-2011
45,
45,3%
34,7%
Le Club Accorhotels contrib.
20%
22%
24%
2009
Tars contribution
Total On line sales
14%
2008
+65%
13,2%
7,6%
40,2%
59%*
2010
2011 YTD
* Share of Room Business Volume generated
by Accor Reservation channels
and “Le Club Accorhotels” members direct bookings
69
Investor Day - September 13, 2011
Our Distribution Is Growing Direct Sales Contribution
1 Million Members
70
Investor Day - September 13, 2011
7.4 Million
Members
We Have Powerful, International & Efficient
Direct Channels
> 10 M
14
annual roomnights
languages across all
activities
200 M
9
annual Website Visits
Call center platforms
worldwide
20M
28
customer contacts in
database
Geo localized web portals
7M
71
Le Club Accorhotels
members
Investor Day - September 13, 2011
45%
conversion ratio
65%
Share of direct
Web Sales
800 000
iphone app downloads
85%
Le Club Accorhotels
members
outside France
+ 6 000
new Le Club Accorhotels
members daily
We Have A Well-Balanced Distribution Strategy
1. An aggressive multi-channel approach
Strategic agreements and connectivity
with key players
2. A strict control of channel performance
Best-in-class RM tools and processes
3. A strong commitment to customer
relationship management
72
Investor Day - September 13, 2011
We Are A Technology Innovation Leader
100% web booking system
Leader in Mobile booking solutions
e-check-in & e-check-out solutions
Direct connect Solutions
Revenue Management tools
73
Investor Day - September 13, 2011
Our Distribution Generates Value For Our Hotels
Increase Direct
contribution
Increase
Revenue
Direct
channels
Loyalty
Business
Intelligence
Improve
Performance
74
Investor Day - September 13, 2011
Increase
RevPar index
Direct
connect to
Distributors
Hotel
System
Accor
reservations
system
(TARS)
Revenue
Management
System
Payment
solutions
Improve
Productivity
Q&A session
75
Investor Day - September 13, 2011
Visuel H10,21 x L9,14 cm
Operational Excellence
Yann Caillère
76
Investor Day - September 13, 2011
Operational Strategy: Key Levers
Promote our unique
operational know-how
Distribution Strategy
Operational Excellence
Franchise Expertise
77
Investor Day - September 13, 2011
Operational Excellence
Our Know-how & Goals
78
Achieve
Highest RevPAR
Maximize
margins
Efficient hotel
renovation
RevPAR index
> 100
Flow-through
50%
Capex
5% of revenue
Investor Day - September 13, 2011
Maximize Topline & Secure Growth
Our Key Levers Of Action
Our Goal: Achieve the Highest RevPAR index
Operational Excellence combined with reinforced Brands,
and dynamic Distribution to outperform the competition
Excellence in Hotel quality of service
Trained and motivated teams to grow Revenue
Effective tools and methodology for
Revenue Management (e.g. UK)
79
Investor Day - September 13, 2011
Maximize Topline & Secure Growth
Outperforming Competition In Main Markets
2011 12-month (July) RevPAR index
RevPAR
index
Brand
awareness
136
120
125
120
116
117
Distribution
power
106
110
110
104
103
> 100
Operational
excellence
80
Investor Day - September 13, 2011
98
90
Maximize Topline & Secure Growth
At Hotel Level, Excellence In Quality Of Service
1st
4,000
116
81
Hotel Group with Tripadvisor reviews on its own
websites; 300,000 reviews collected since
August 2010
hotels measuring quality on a daily basis
(Guest Satisfaction Survey tools)
luxury industry awards won by Sofitel
(as of July 2011, doubled vs. 2010)
... and many other awards for Accor
best-in-class hotels
Investor Day - September 13, 2011
Maximize Topline & Secure Growth
Trained & Motivated People To Grow Revenue
1,000
500
1st
82
key employees trained & certified by
Accor Revenue Management training program
employees to be trained by 2013 in
Accor new Sales & Distribution training
program
Hotel company in “Great Place to Work”
rankings in Brazil, Latin America &
Austria.
11 more countries are joining “Great
Place to Work” rankings, + 5 countries
planned in 2012
Investor Day - September 13, 2011
Maximize Topline & Secure Growth
Effective Revenue Management (e.g. ibis Budget in UK)
Dynamic pricing since October
2010 with greater price elasticity
– Regions, OR Strategy: £18 - £55
– London, ARR Strategy: £28 - £85
Results*: ibis Budget UK Network
– RevPAR
: + 12%
– OR
: + 14%
Significant market share gains
– OR index** : + 13%
– RevPAR index**: + 5%
83
Investor Day - September 13, 2011
(*) Figures January to July 2011 vs. 2010
(**) STR market data for followed hotels
Maximize Bottom Line & Flow-through
Our Key Levers Of Action
Our Goal: Secure Flow-Through of 50%
Hotel cost optimization, thanks to effective tools
(e.g. maintenance and energy)
Country cost optimization
(e.g. France)
Group initiatives to maximize margins
(e.g. sourcing)
84
Investor Day - September 13, 2011
Maximize Bottom Line & Flow-through
Effective Tools For Hotels Cost Efficiency (e.g. Open)
OPEN
WATER &
ENERGY
Accor tool
1,300 hotels equipped with OPEN
energy costs savings
5%
i.e. ≈ €10M impact for Accor
An attractive tool for our partners
In a hotel life cycle, 80% of property costs are due to maintenance,
energy and renovation costs vs. 20% for initial investment costs
85
Investor Day - September 13, 2011
Maximize Bottom Line & Flow-through
Best Procurement For Our Hotels & Our Partners
Profit center: €30M
savings and avoided costs
in Opex & Capex
Sourcing for our O&L hotels
and for our partners
Best-in-class organization,
per expertise
86
Investor Day - September 13, 2011
Maximize Bottom Line & Flow-through
Margin Optimization Throughout The Business Cycle
50%
40%
87
Investor Day - September 13, 2011
as target flow-through ratio during growth periods
Accor flow-trough rate 2011 JuneYTD: 51%*
as target reactivity ratio during downturns
(*) Excluding exceptional Egypt, Ivory Coast
Efficient Hotel Renovation
Our Key Levers Of Action
Our Goal: Capex at 5% of revenue
Optimize Capex allocation policy
(e.g. rules & tool)
Reduce renovation costs
(e.g. Mercure Dédicaces)
Differentiate renovation to gain market share
(e.g. ibis Budget)
88
Investor Day - September 13, 2011
Efficient Hotel Renovation
Optimize Capex Allocation
Capex allocation policy
Rules and tool
Strategic
assets
Capex on existing network
in % of total revenue
Locations
AAA, BBB
Commitment
to partners
Target
Rolled out in 2012
89
Investor Day - September 13, 2011
Note: 2010-2013 Capex excluding ibis Budget
exceptional program
Efficient Hotel Renovation
Reduce Renovation Costs: e.g. Mercure Dédicaces
- 40% in renovation costs
90
Investor Day - September 13, 2011
÷2
room unavailability during works
135
rooms to be deployed per month
Efficient Hotel Renovation
Differentiate Renovation To Gain Market Shares
Strong positive impact of Cocoon renovation on performance
additional RevPAR growth for hotels renovated with
Cocoon (+9.6%) vs. hotels not renovated (+4.1%)
+5.5 pts
+6 pts
in RevPAR index vs. flat for non-renovated hotels
95% of the network renovated by 2013
2010
91
Investor Day - September 13, 2011
2011
2012
2013
Data source: France results for 20 hotels renovated vs. 54 hotels non-renovated
(JulyYTD 2011 vs. 2010), RevPAR index as of JulyYTD 2011 (12 months)
Operational Excellence “by Accor”…
… for Accor and for its Partners
Achieve
Highest RevPAR
Maximize
margins
Efficient hotels
renovation
Benefiting the entire network
Owned & Leased
92
Investor Day - September 13, 2011
Managed
Franchised
Operational Strategy: Key Levers
Promote our unique
operational know-how
Distribution Strategy
Operational Excellence
Franchise Expertise
93
Investor Day - September 13, 2011
Franchise: What Do We Sell ?
Powerful
Distribution
Brand
Support & Training
Brand License
Know-How & Expertise
A partnership
94
Investor Day - September 13, 2011
Business
Solutions
Support & Training
The Franchise’s Virtuous Spiral – Recruit
Recruit
95
Investor Day - September 13, 2011
Support & Training
The Franchise’s Virtuous Spiral – Recruit
96
Investor Day - September 13, 2011
Support & Training
The Franchise’s Virtuous Spiral – Integrate
Recruit
Integrate
97
Investor Day - September 13, 2011
Support & Training
The Franchise’s Virtuous Spiral – Integrate
98
Investor Day - September 13, 2011
Support & Training
The Franchise’s Virtuous Spiral – Share
Recruit
Share
Integrate
99
Investor Day - September 13, 2011
Support & Training
The Franchise’s Virtuous Spiral – Share
100
Investor Day - September 13, 2011
Support & Training
The Franchise’s Virtuous Spiral – Share
101
Investor Day - September 13, 2011
Support & Training
The Franchise’s Virtuous Spiral – Grow
Grow
Recruit
Share
Integrate
102
Investor Day - September 13, 2011
Support & Training
The Franchise’s Virtuous Spiral
Grow
Recruit
Share
Integrate
103
Investor Day - September 13, 2011
Visuel H10,21 x L9,14 cm
Asset Management Strategy
Marc Vieilledent
104
Investor Day - September 13, 2011
A Value Creative Strategy
The Reference Hotel Player
Revitalize our
brand portfolio
Deploy our LT asset
management strategy
Promote our unique
operational know-how
Run a value creation
development strategy
Effective financial strategy
105
Investor Day - September 13, 2011
Asset Management Strategy
Our Key Strategic Objectives
Reduce Capital employed
Increase profitability
Reduce volatility
Externalize real estate value
Facilitate strategic developments
(both internal & external)
106
Investor Day - September 13, 2011
Asset Management Strategy
Analysis Matrix
Sale & Mngt Back
or Sale & Var. lease Back
Tier 2 cities
Tier 3 cities
Suburbs
Second loc.
Prime loc.
Tier 1 cities
Sale & Franchise Back
or Outright Sale
Clear asset management guidelines
107
Investor Day - September 13, 2011
(1) ROCE calculated on normalized EBITDA divided
by replacement costs
Asset Management Strategy
Variable Lease – Strong Cash Generation Model
Owned model
Variable lease model
Capital Employed
€ 12,000 k
€ 2,250 k
EBIT
€ 720 k
€ 363 k
In % of revenues
18%
9%
Cash before
taxes
€ 1,234 k
In % of capital
employed
10%
108
Investor Day - September 13, 2011
Real estate value
€ 11 m (*)
Example of a 150-rooms hotel at €80k / rooms
Revenues = € 4,114 k
EBITDAR = € 1,440k – 35% margin
€ 519 k
23%
(*) based on a rent at €756k
capitalized at 6.5%
Asset Management Strategy
3 Operation Types For 3 Rationale
Variable Lease
Management Contract
Franchise Contract
Targeted assets :
Targeted assets :
Targeted assets :
Most profitable
Economy hotels &
Selected Midscale hotels
Upscale hotels &
large Midscale hotels
All Midscale & Economy
hotels with profitability
below Group standards
Expected benefits :
Expected benefits :
Expected benefits :
Keep the operational
lever of strong cash
generation & profitable assets
Recover capital employed
and limit results volatility
Withdraw commitment
from non strategic locations
Keep the operational
lever on strategic assets that
have low cash generation
Maintain network size with
positive contribution from
franchise
Reduce future results
volatility
Externalize real estate
value
109
Investor Day - September 13, 2011
Asset Management Program
Update On 2010-2013 Objectives
2010 Mid 2011 *
Total
2010-2013
Sale & Variable Lease Back
55
95
Sale & Management Back
12
35
126
220
45
100
Total
238
450
Cash proceeds
796
1,600
Impact On Adj. Net Debt (in €M)
936
2,000
Type of operation
(in nb of hotels)
Sale & Franchise Back
Outright Sale
(*) including Sales & Management Back of
Pullman Bercy & Sofitel Arc de Triomphe
Existing program already half-completed
110
Investor Day - September 13, 2011
Asset Management Program
Sale & Management Back Transaction Examples
Sofitel Arc de Triomphe
Pullman Paris Bercy
– Enterprise value = €69m
– Enterprise value = €105m
– Sold to a consortium of French
private investors
– Sold to Host Hotel & Resorts, Inc
European joint venture with APG
and an affiliate of GIC
Characteristics of the deals
Valuation in line with our value-per-room objectives
Capex financed by investors
Long term contracts
Cash generating contracts with low volatility
111
Investor Day - September 13, 2011
Asset Management Program
Valuation Elements
Sale & variable lease back :
– Target yield between 6.0% and 6.5%
Sale & management back :
– Value per room reflecting asset location, cash generated and real estate value
– Examples :
• Sofitel Arc de Triomphe :
• Pullman Bercy :
556k€ per room
265k€ per room
Sale & franchise back / Outright sales :
– Last 18 months disposals at an average valuation of 13x EBITDA
Transactions at best market conditions
112
Investor Day - September 13, 2011
Asset Management Program
Update On €1.2bn 2011-2012 Program
In a more uncertain environment, objective on track
Objective supported by :
– Historical track record, experienced & committed asset management teams
– Attractive Accor brands, locations and products for investors
– Considering transactions of single unit or portfolios with limited numbers of
hotels
– Strong appetite by individual entrepreneurs for Sale & Franchise back and
outright sales
– Several deals already in progress
113
Investor Day - September 13, 2011
A New 2013-2015 Disposal Plan
2011-2012
2013-2015
2011-2015
Hotels
225 h.
175 h.
400 h.
Impact on
adj. net debt
€1.2bn
€1.0bn
€2.2bn
Identification of a 2013-2015 new plan
€1bn impact on adjusted net debt
114
Investor Day - September 13, 2011
Asset Management Strategy
Deploy A Long Term Asset Management Strategy (1/2)
Ongoing restructuring
of assets
EBIT Margin improvement
Owned
hotels
Ongoing program
with value creation objectives
Fixed lease
hotels
Implementation of asset light guidelines,
subject to owner's approval or lease term
Variable lease
hotels
Ongoing review of
strategic interest hotel by hotel
115
Investor Day - September 13, 2011
Asset Management Strategy
Deploy A Long Term Asset Management Strategy (2/2)
Lever for strategic development
Profitable growth
Owned
hotels
Ability, on a selective basis, to build or acquire hotels
with a view towards future sale & management back
and/or sale & variable lease back
Fixed lease
hotels
Only for strategic locations
(Economy & Midscale segments)
Variable lease
hotels
Preferred model for hotels to be operated as subsidiaries
(organic growth or acquisitions)
116
Investor Day - September 13, 2011
Asset Management Strategy
Conclusion
Current program well on track
A new 2013-2015 disposal plan with €1bn impact on adjusted net debt
A long term strategy with an ongoing restructuring of our portfolio,
aiming to improve EBIT margins
A virtuous cycle providing room for potential investments with asset
management acting as a facilitator of Accor’s growth
A strong value creation driver
117
Investor Day - September 13, 2011
Visuel H10,21 x L9,14 cm
Development Strategy
Denis Hennequin / Michael Issenberg
118
Investor Day - September 13, 2011
A Value Creative Strategy
The Reference Hotel Player
Revitalize our
brand portfolio
Deploy our LT asset
management strategy
Promote our unique
operational know-how
Run a value creation
development strategy
Effective financial strategy
119
Investor Day - September 13, 2011
Development Strategy
Expand our European
leadership
Major markets, with an
existing leadership
120
Investor Day - September 13, 2011
&
Take or secure leading
positions in emerging
countries
Priority markets with significant
development ambition
Selective development in
AAA locations
European Hospitality Market
Accor Footprint & Competitive Position By Segment
2,368 hotels
259,500 rooms
as of end of 2010
Top5
8%
1st player
18% of branded supply
1st
18%
1st
21%
1st (1)
1st
46%
Rank
%
Accor ranking
&
% of branded supply
Top5*
2nd
5%
10%
A clear position as global leader in all European countries,
especially in Economy & Midscale
121
Investor Day - September 13, 2011
Source : MKG analysis 2011
(*) excluding resorts offer
(1) Including Switzerland, Austria, Poland, Czech Rep., Slovakia, Hungary
European Hospitality Market
Growth Opportunities
Potential for chain development
6,400 k r.
through conversion
European
market
Existing supply
6.4m rooms
Chain penetration
25%
&
Potential for new supply offer
in Eco / Budget segments
Maturing
markets
Spain / Italy
Germany
vs
US
market
Existing supply
5.0m rooms
Chain penetration
67%
122
Investor Day - September 13, 2011
Eco & Budget market
< 30% of total market
Chain penetration
< 10%
vs
Mature
markets
France / US
Source : MKG 2011 report
Eco & Budget market
≈ 50%
Chain penetration
≈ 60%
Expand Our European Leadership
Invest in key strategic locations to create value
Increase our development through franchise
especially in Midscale & Economy segments
Consider very selective acquisitions in specific markets
to take or secure leadership
123
Investor Day - September 13, 2011
Invest In Key Strategic Locations To Create Value
ibis & Novotel London Blackfriars
Project negotiated and signed in 2009 & 2010
– Located in Central London's south bank
– 297-bedroom ibis and 182-bedroom Novotel
– Opening scheduled in 2012
ibis & Novotel
Blackfriars
Third operating year
• Turnover : £17.3m
• EBITDAR : £9.0m
EBITDAR margin : 52%
Lease agreement with McAleer & Rushe Group
– 20-year, triple net lease with renewal options at Accor hand
• Rent : £4.8m
• EBIT : £3.3m
• FCF : £3.4m
– ibis : Fixed lease
– Novotel : Variable lease with a capped minimum guarantee
Strong, stable cash flow generation with a limited risk
– One of the strongest and most resilient market in Europe
– Proven track record of ibis and Novotel in central London
– £19m NPV of free cash flows with a limited investment of £4.6m (FF&E)
124
Investor Day - September 13, 2011
Increase Development Through Franchise
A Very Limited Existing Franchise Supply
1,011 kr.
3,750 kr.
5,000 kr.
750 kr.
Independent supply
654 kr.
Branded supply
Of which
Franchise supply
608 kr.
579 kr.
XX% Franchise supply
vs total supply
50%
159 kr.
18%
9%
France
Germany
9%
12%
UK
2%
3%
18%
Spain
Italy
Benelux
West. Europe *
USA
In Western Europe, globally a low penetrated market (30% of supply),
with high discrepancy in Franchise model appeal
125
Investor Day - September 13, 2011
* Based on Top 6 key countries
Increase Development Through Franchise
2 Strategic Levers For A Focused Approach
Stronger & better
suited brands
&
Restructuring of our
service offering
Focused efforts
on 4 high-potential countries
126
Investor Day - September 13, 2011
Increase Development Through Franchise
Focused Development – Economy & Midscale
Economy
200 h.
Midscale
300 h.
200 h.
200 h.
Key market for
franchise dvpt
300 h.
No sizeable Franchise
dvpt at this stage
100 h.
200 h.
Depth of the franchise market
A potential of
300 - 500 hotels for Accor
300 h.
Depth of the franchise market
A potential of
250 - 400 hotels for Accor
A global franchise development plan for Economy & Midscale
focused on 4 countries looking for density & volume
XXXh.
127
Investor Day - September 13, 2011
Nb of potential existing hotels that can be
converted through franchise, from an Accor
perspective (30 to 50% of potential)
Take Or Secure Leading Positions
In Emerging Countries
Ease / accelerate organic development
with better suited & attractive brands
Consider very selective acquisitions / partnerships in specific markets
in Midscale & Upscale segments, giving us flagship hotels
essential for development of the brand
2 regional examples
– Asia / Pacific
– South America
128
Investor Day - September 13, 2011
Asia Pacific Hospitality Market
Accor Footprint
2nd *
430 hotels
83,600 rooms
as of end of 2010
6%
2nd **
1st
11%
1st Int’l player
In number of hotels
~ 7% of branded supply
1st
23%
In number of rooms
1st
Rank
%
Accor ranking
&
% of branded supply
20%
1st
Accor undisputed leader in South East Asia & Pacific,
China and India, the most competitive markets
* Among International players
129
Investor Day - September 13, 2011
** Including pipeline
China
International Players Also Very Active
Pipeline
Network end 2010
> 220h.
> 210 h.
107 h.
International brands
- Multi segments and
international brands
*
> 180h.
- International standards
- Priority market for
development
> 140h.
(e.g. : 20% of total pipeline for IHG,
37% for Starwood)
> 75h.
50 h.
130
Investor Day - September 13, 2011
100 h.
150 h.
200 h.
250 h.
Sources : Company Annual reports 2010, Lodging Q4 2010
* Wyndham network excluding Super 8 brand (192 h.)
Our Strategy For China
Position Accor as the leading International Hotel Company by 2015
with almost 400 hotels committed
The only hotel company operating Budget through Luxury, including an
Upscale China-specific brand
The only operator with an “Asset Right” mix : investment, management
and franchise
A dynamic management team of domestic and international experts
“China-centric” Sales, Marketing and Distribution platforms
A committed network of 400 hotels by 2015 delivering an asset light
profitable business model
131
Investor Day - September 13, 2011
A New COO For Accor Operations In China
Samuel SHIH
Started early September 2011
Extensive experience working with strong
international brands such as Red Bull and Pepsico
®
–
–
Managing Director for Asia Pacific
®
Vice President Beverage, Greater China
A wealth of experience in working in China
Broad marketing and operational experience
Education :
– Bachelor of Science
• University of British Columbia, Canada
– M.B.A.
• University of Macau, Taipa
132
Investor Day - September 13, 2011
Our Strategy For China
In Midscale To Luxury Segments
Strengthen our position in the Midscale to Luxury segments
leveraging our brand strategy
133
Investor Day - September 13, 2011
Sofitel In China
Leading network in luxury segment in China
Well-positioned as a French luxury product
134
Investor Day - September 13, 2011
Pullman In China
Experiencing unparallel and sustained expansion
Extensive opportunity beyond existing network and commitments
Brand resonates well with developers in China
Brand specifications suit upper-upscale developments in China
135
Investor Day - September 13, 2011
Grand Mercure In China
Announcement in China during October 2011
First-to-market with tailored China upscale non-standardized product
Fast-paced deployment through organic growth
Network of 14 hotels committed & 14 hotels under advanced negotiation
136
Investor Day - September 13, 2011
Our Strategy For China
ibis Strategy
Play a key role in the eco segments with a “quality product”
suited to market conditions
Improve ibis business model,
restructured towards a more “asset right” model
Restructure our network through aggressive Asset
disposals (Sale & Franchise Back)
retaining only the best performing assets
Enhance development
– Priority to manchise, and management for big hotels
– Capitalizing on ibis MegaBrand to accelerate
development with the opportunity to launch ibis Styles
– Review partnership and acquisition opportunities
137
Investor Day - September 13, 2011
Accelerated Growth Options
China - Accor Network and Pipeline
250
Network as of June 2011
Pipeline
Opened or committed by 2015
> 200
200
150
100
60
50
8
21
29
Sofitel
June 2011:
107 hotels
138
40
35
0
Investor Day - September 13, 2011
35
55
10
14
13
18
10
Pullman
Grd M
Novotel
Pipeline as of Aug. 2011 > 100 h.
52
Ibis
End 2015:
≈ 400 hotels
committed
Our Strategy For India
Be the 1st International Hotel Company
with 90 hotels / 20,000 rooms opened by 2015
Target Network 2015
Accelerate our development in Upscale & Luxury, and
anchor our presence in key locations throughout the country
12 h.
Take a leadership position in the Midscale segments, and
further exploit our strategic partnership with GIC / Host
33 h.
Develop the Economy & Budget segments to build our
leadership, capitalizing on our partnership for ibis
(Interglobe)
45 h.
139
Investor Day - September 13, 2011
South America Hospitality Market
Accor Footprint
166 hotels
25,400 rooms
x%
1st
as of end of 2010
20%
4th*
1st player
In number of hotels
~ 10% of branded supply
In number of rooms
Rank
%
Accor ranking
&
% of branded supply
(*) Ranking for the region Argentina, Chile, Colombia, Peru among int’l players
Accor is the major multi-segment leader in key South American markets
with a strong leadership in Brazil
140
Investor Day - September 13, 2011
(1) Accor network as of end 2010
Brazil
Accor Strong Leadership vs Local & Int’l Players
Network
Pipeline
143 h.
Atlantica
Local players
Local, with
int’l brands
Allia
Local
Nacional Inn
Local
BHG
217 h.
- Owned and Managed models
- Aggressive development plans
Local, with
int’l brands
Blue Tree
Local
Transamerica
Local
Slaviero
Local
Othon
Local
International chains
- Accor, strong leader with
differentiated model :
multi-segment, no local partner
- Other international players :
- Recent but strong interest for
Brazil
Wyndham
- Midscale segment mainly
Sol Melia
- Mainly partnership with local
operators : Starwood, Choice
& Carlson with Atlantica, Louvre
Hotels with BHG
IHG
141
Investor Day - September 13, 2011
Sources : Company Annual reports 2010, Lodging Q4 2010
Our Strategy For Brazil
Expand our Brazilian leadership
with more than 250 hotels opened by 2015
Target Network 2015
Strengthen our positions in Midscale & Upscale
segments thanks to aggressive development
85 h.
Consolidate our leadership in Economy & Budget
segments through development combining
170 h.
– subsidiaries in key locations
– franchises in secondary locations
Consider acquisitions in this strategic market
142
Investor Day - September 13, 2011
Development Plan
Split by segment
Almost 60% in Economy & Budget segments
Budget
11%
Budget
US
11%
Up & Lux
15%
Midscale
27%
Economy
36%
Eco & Budget = 58%
Split by Geography
Other emerging markets
27%
… 54% in emerging markets, with 27% of total
in fast growing countries (China, India & Brazil)
Mature
markets
46%
China,
India,
Brazil
27%
Split by Operating mode
Owned
6%
… with a strong focus on Mngt & Franchise
contracts (91% Asset Light, incl. variable
lease)
Investor Day - September 13, 2011
Variable
L.
10%
Franch.
36%
Asset Light = 91%
143
Fixed L.
3%
Mngt
45%
2011-2013 Development Plan
50000
40,000
35,000
40000
30000
5kr.
5kr.
35kr.
35kr.
2012
2013
5kr.
214h. / ~25kr.
16kr.
20000
10000
~14kr.
0
2010
2011
Opened (as of end of June 2011)
Development plan
Potential acquisitions
Citéa operation
35k / 40k room openings per year from 2011
taking into account potential acquisitions
144
Investor Day - September 13, 2011
Visuel H10,21 x L9,14 cm
Financial Strategy
Sophie Stabile
145
Investor Day - September 13, 2011
A Value Creative Strategy
The Reference Hotel Player
Revitalize our
brand portfolio
Deploy our LT asset
management strategy
Promote our unique
operational know-how
Run a value creation
development strategy
Effective financial strategy
146
Investor Day - September 13, 2011
2011 Outlook
Hotels Business Trends In July & August
YoY RevPAR change
in July L/L(1)
Excl. VAT
YoY RevPAR change
in August L/L(1)
Excl. VAT
+7.3%
+7.4%
+11.2%
+12.7%
Germany
+6.5%
+2.2%
UK
+8.1%
+9.0%
Other
+2.5%
+3.6%
Economy Hotels Europe
+7.7%
+5.7%
France
+6.9%
+6.6%
Germany
+7.9%
+5.0%
+10.5%
+9.7%
Other
+7.5%
+3.1%
Economy Hotels US
+4.0%
+3.4%
in %
Upscale and Midscale Hotels
Europe
France
UK
147
Investor Day - September 13, 2011
2011 Outlook
Full-Year EBIT Target
A favorable cycle upturn, illustrated by the solid first-half operating
performance and 3rd quarter trends
No sign of slowdown in the recovery at this stage
Flow-through target confirmed at 50%
– No significant impact from today’s announcements
Full-year 2011 EBIT target of
€ 510 million to € 530 million
148
Investor Day - September 13, 2011
Financial Strategy
Maximize value creation thanks to an effective financial strategy
Track operational profitability
Monitoring tool
P&L Performance
Follow asset management optimization &
development contribution
Monitor owned & leased EBIT performance
Brands & Operational excellence
Strong Value
Creation drivers
Asset Management
Asset light development
149
Investor Day - September 13, 2011
P&L Performance
Key Principles
Manager and
franchisor
Sales & Marketing
fund
Owned & Leased
Remuneration on a
fee basis including
subsidiaries
Sales, distribution
and marketing fund
Hotels owned or
leased by Accor
Fees
Services
Owned &
leased
Managed
Franchised
Full P&L contribution
Owned &
leased
A key management tool & performance monitor
150
Investor Day - September 13, 2011
P&L Performance
FY 2010 Results
December 2010
Manager and
franchisor (1)
Sales &
Marketing
Fund(1)
Owned &
Leased
Unalloc.,
platform &
intercos
Total
Gross revenue
9,810
n.a.
5,330
255
10,065
o/w revenue
593
258
5,330
(233)
5,948
EBITDAR
Contrib. margin
312
53%
(18)
(7%)
1,530
29%
(10)
n.a.
1,814
30%
EBIT
EBIT margin
312
53%
(18)
(7%)
226
4%
(74)
n.a.
446
8%
Our targets :
50% contribution margin from Manager & Franchisor activity
Breakeven at EBIT level for Sales & Marketing Fund
(1) Including fees from subsidiaries
151
Investor Day - September 13, 2011
P&L Performance
Details On Owned & Leased P&L
December 2010
Manager and
franchisor (1)
Sales &
Marketing
Fund(1)
Owned &
Leased
Unalloc.,
platform &
intercos
Total
Gross revenue
9,810
n.a.
5,330
255
10,065
o/w revenue
593
258
5,330
(233)
5,948
EBITDAR
Contrib. margin
312
53%
(18)
(7%)
1,530
29%
(10)
n.a.
1,814
30%
EBIT
EBIT margin
312
53%
(18)
(7%)
226
4%
(74)
n.a.
446
8%
(1) Including fees from subsidiaries
152
Investor Day - September 13, 2011
Owned
Fixed lease
Var. lease
Nb of hotels
699
734
741
Revenue
1,380
1,686
2,264
EBITDAR
Contrib. margin
344
25%
509
30%
676
30%
EBIT
EBIT margin
122
9%
(33)
(2)%
137
6%
3 Value Creation Drivers, One Key Target
Brands & Operational
excellence
Asset Management
Asset Light
Development
Maximized RevPar
Flow-through = 50%
2011-2015 plan
400 hotels / €2.2bn adjusted
net debt impact
80% through
management & franchise
Maximize Free cash flow generation
before asset disposals
153
Investor Day - September 13, 2011
Value Creation Drivers
Impact of Operational Excellence – Top Line
Brand
initiatives
&
Operational
excellence
Up & Mid
scale
RevPar
maximization
Eco &
Budget
RevPar Index
increase
Strategy to give priority
to our distribution channels
vs 3rd party contributors
Distribution
solutions
59% Tars contribution
to room revenues
RevPar Increase
with a growing
part of price
(limited related
costs increase)
Maximized
RevPar increase
transformation
into revenues
Maximization of Revenues increase (Price & transformation)
+ 1.0 – 1.5 pts on EBITDAR Margin
154
Investor Day - September 13, 2011
Value Creation Drivers
Impact of Operational Excellence – Bottom Line
Hotel Costs
monitoring
Hotels cost structure
savings
(energy, maintenance)
Procurement
P&L and capex
effectiveness
Support cost
optimization
Adaptation according to
business model
evolution
towards Asset Light
Limited
costs increase
as compared to
revenues increase
Optimization of Costs at all levels from hotel to corporate
+ 0.5 – 1.0 pts on EBITDAR Margin
155
Investor Day - September 13, 2011
Value Creation Drivers
Impact of Operational Excellence
Top line maximization
Brand initiatives &
Operational
excellence
Distribution
solutions
50%
Flow-through ratio
on EBITDAR
Bottom line optimization
Hotel Cost
monitoring
Procurement
Support cost
optimization
156
Investor Day - September 13, 2011
+2-3pts on EBIT
Margin at mid term
Value Creation Drivers
Impact of Asset Management
Ongoing restructuring
of assets
Target
EBIT margin (*)
Owned
hotels
Ongoing program
with value creation objectives
12-15 %
Fixed lease
hotels
Implementation of asset light
guidelines, subject to owner's
approval or lease term
6-8 %
Variable lease
hotels
Ongoing review of
strategic interest hotel by hotel
8-10 %
157
Investor Day - September 13, 2011
(*) Including impact from operational excellence in
flow-through objective
Value Creation Drivers
Impact of Development
High margin
incremental
revenues
158
For each project,
The right brand,
The right operating mode,
The right location
Double digit EBIT
margin after ramp up
Low volatility
80% through Management
& Franchise contracts
70% of EBIT from
Development
relying on fees
business
Selective
investment
€200m
Focus on key profitable
geographies / segments
Target ROCE
of 15%
Investor Day - September 13, 2011
Value Creation Drivers
Targets
Brands & Operational
excellence
Asset Management
Asset Light
Development
Maximized RevPar
Flow-through = 50%
2011-2015 plan
400 hotels / €2.2bn adjusted
net debt impact
80% through
management & franchise
+2-3pts EBIT Margin
Capex = 5% of revenues
+1-2 pts EBIT margin
on owned & leased perimeter
15% ROCE
Investments = €250m *
Positive Free cash flow generation
before asset disposals across the cycle
159
Investor Day - September 13, 2011
(*) Including capex on major renovations
Value Creation Drivers
P&L Performance Mid-term Targets
Mid term
targets
Manager and
franchisor (1)
Sales &
Marketing
Fund(1)
Contrib.
margin >
50%
Breakeven
at EBIT
level
Mid term
targets
Owned &
Leased
Investor Day - September 13, 2011
Total
EBIT
Margin
10-12%
Owned
Fixed lease
Var. lease
EBIT
margin
12-15%
EBIT
margin
6-8%
EBIT
margin
8-10%
(1) Including fees from subsidiaries
160
Unalloc.,
platform &
intercos
(*) Including capex on major renovations
Value Creation Drivers
A Less Volatile & More Resilient Business Model
A strong move towards Asset Light model
From 43% of owned & fixed leased in 2004 to 22% in 2011 in Up & Midscale
From 69% of owned & fixed leased in 2004 to 24% in 2011 in Eco & Budget excl. US
Revenues
A network evolution to 66% asset light in 2011
Vs 37% in 2004
EBITDAR & EBIT
margin
Reactivity rate at 40% at EBITDAR level
c.50% EBIT generated by fees
Maximized EBITDAR margin : +2-3pts
Free Cash Flow
Selective Renovation & Development Capex at c. €500-600m
Less volatile & more resilient business model
Higher cash generation
161
Investor Day - September 13, 2011
A Sound Financial Position
In € millions
Gross debt
Current financial assets
Net debt
Adjusted Funds from Operations / Adusted net debt(1)
June 2010
Dec. 2010
June 2011
2,303
1,988
1,882
(1,339)
(1,258)
(1,323)
964
730
559
16.7%
20.1%
23.1%
(1) Net debt adjusted for NPV of minimum lease payments discounted at 8% ( Standard & Poor’s methodology)
A sound financial position, including €1.8bn
in unused and confirmed credit lines
162
Investor Day - September 13, 2011
Financial Strategy
Conclusion
Maximization of revenues through RevPar and transformation
A growth of EBIT margin between 2-4pts ad mid term
A more resilient EBIT
Increased ROCE through a less capital-intensive model
A highly positive Free Cash Flow before asset disposals over the period
allowing flexibility for growth and return to shareholders
A financial strategy aiming to create value
and to increase Group attractiveness for shareholders
163
Investor Day - September 13, 2011
Visuel H10,21 x L9,14 cm
Conclusion
Denis Hennequin
164
Investor Day - September 13, 2011
A Strategy For Value Creation
The Reference Hotel Player
Revitalize our
brand portfolio
Deploy our LT asset
management strategy
Promote our unique
operational know-how
Run a value creation
development strategy
Effective financial strategy
165
Investor Day - September 13, 2011
A Strategy For Value Creation
Brands & Operational
excellence
Asset Management
Strong Cash Flow generation
Net debt free by the end of 2011
Use of cash to optimize gross debt
Cash utilization in line with
Investment Grade status
166
Investor Day - September 13, 2011
Asset Light
Development
A Strategy For Value Creation
Investment in
existing network
Network Growth
Return to
shareholders
Brands & distribution
Investment with ROCE >12%
Pay out ratio = 50%
Our major objective is to keep financial room for growth
in order to seize opportunities and for return to shareholders
167
Investor Day - September 13, 2011
A Strategy For Value Creation
The Reference Hotel Player
168
Investor Day - September 13, 2011
Q&A session
169
Investor Day - September 13, 2011
170
Investor Day – September 13, 2011