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Accor Hotels has announced a cost cutting programme that will see hundreds of millions of Euros lopped off its hotel expansion and renovation programmes.The Paris-based hotel group said it planned a general cost cutting programme of €75m with €50m being saved in the coming year.
But the hotel groups whose brands include Sofitel, Novotel, Ibis and Mercure, said it also planned to take €100m of its hotel renovation programme, reducing it to €415m.
There would also be a further €100m taken from its hotel expansion programme, leaving €400m for new acquisitions.Accor said the move comes after four years of "strong investment." It said the €400m expansion budget represented 10% of it planned spending to acquire 40,000 new rooms a year until 2010.Accor's announcement comes just days after the group announced a "resilient" performance in its results for the first nine months of 2008.It reported consolidated revenue for both its hotel and services sectors for the nine months of €5,787 million, up 4.1% like-for-like over the same period in 2007.Revenue for hotels in the three quarters was €4,389m, a rise of 3.7% on the 2007 figures.It predicted full year pre-tax profits of €870m-€890m.It said this prediction represented a 12% growth in pre-tax profits compared with 2007.25% of this would come from growth in the first six months and 3% from growth in the second six months.But the group also warned that the third quarter had also given the first signs of a "real economic downturn."It added in a statement: "Given the unusual lack of visibility for the coming months, Accor is revising slightly its 2008 earnings guidance."The Group now expects profit before tax and non-recurring items to stand at between €870m and €890m against €910m to €930m previously."In its hotel sector, it said its up- and mid-market hotels saw a 4.7% rise to €2,569m while economy hotels' revenue rose by 4.5% to €1,306m.The group said two of the factors contributing to its three quarters' performance were its policy of expansion which added €298 million or 4.9% to growth and the sale of Red Roof Inns in the US and of other assets.Accor said that third quarter growth in its up- and mid-market hotels slowed to 1.8% compared with 6.2% in the first half of the year.Revenue in France was slightly up if the effects of the Rugby world Cup, held in the country last autumn were excluded.In Germany revenue for the third quarter was up 2.2% like for like with revenue per available room (revPAR) up 4.8% while in the UK, it rose 4.1% like for like with revPAR up7.6%.Visit www.accor.com.