War in the Middle East has negatively affected Accor's results, CFO Martine Gerow acknowledged on Thursday (23 April) during the company's first-quarter earnings call, but she emphasised that much of the impact on Accor's local portfolio has been isolated to the United Arab Emirates.
Accor's first-quarter systemwide revenue per available room increased 5.1 percent year over year to €69. In the UAE, RevPAR declined 9 per cent year over year. RevPAR rose in Saudi Arabia, Egypt and the broader Middle East region, which accounted for 8 per cent of Accor's room portfolio as of 31 December and 12 per cent of its full-year room revenue.
Gerow said the company's UAE properties account for 3 per cent of Accor's total network and that demand in other regions "remains healthy."
"There's not a ton of visibility given the booking windows, but when we look at the rooms on the books, we don't see any cracks in demand outside the Middle East and the UAE," Gerow said. "Europe is holding up. … Asia is still performing quite well. America is performing quite well. Canada is really performing very well when we look at rooms on the books, and the US is performing quite well."
Responding to a question about potential jet fuel shortages and the effect on Accor's businesses, Gerow said that 80 per cent of European travel stays within Europe and 70 per cent of travel in Southeast Asia stays within that region.
"To some extent, that protects us from what could happen with fuel shortages or airline prices," she said.
Even as the Middle Eastern conflict's impact appears contained, Gerow said Accor has already redirected investments toward stronger-performing markets and in March launched a group-wide profit protection plan "to protect margin and to mitigate the impact of lower trading on our [earnings before interest, taxes, depreciation and amortisation]."
Accor Q1 metrics
First-quarter RevPAR in Europe and North Africa increased 2.7 per cent year over year to €55.
Q1 RevPAR in Accor's Premium, Midscale & Economy division increased 4.5 per cent year over year to €55, and it rose 6 per cent to €149 in its Luxury & Lifestyle division.
Systemwide average daily rate grew 3.4 percent in Q1 year over year to €112. ADR in the Europe and North Africa region remained stable, increasing by 0.1 per cent to €93. It rose 2.8 per cent to €89 among the systemwide PM&E division and increased 4.2 per cent to €246 at Luxury & Lifestyle properties.
Systemwide Q1 occupancy hit 61.5 per cent, up 1 percentage point year over year, while Americas occupancy increased 2.2 percentage points to 60.3 per cent.
Total first-quarter revenue increased 2.3 percent year over year to €1.3 billion.
Accor opened 48 hotels comprised of 6,700 rooms during the first quarter, representing a net unit growth of 3.8 per cent over the last 12 months. As of 31 March, the company's portfolio totalled 5,815 hotels, or nearly 880,000 rooms, and had a pipeline 1,545 hotels or 260,000 rooms.