Accor Develops Strategic Priorities for New Divisions — LODGING

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During a Capital Markets Day to be held at the Group’s head office, Accor presented its medium-term ambitions for a new chapter of growth. With strong brands and teams, an optimized operating model, and processes, Accor intends to accelerate its sustainable growth and is taking advantage of the strengths of each of the two new divisions created in January 2023. For each of them, Accor has defined clear strategic priorities.

The Premium, Midscale, and Economy Division (PM&E)

To maximize growth in EBITDA, the Premium, Midscale, and Economy division (PM&E) is organized by geography and focuses on three priorities:

  • its brands: by consolidating the leadership of its three brands (ibis, Novotel, and Pullman), increasing network density thanks to its conversion brands (Mövenpick, Mercure, Handwritten, and greet), and strengthening compliance with brand standards.
  • its key markets: it’s profitable, by consolidating its leadership in Midscale and Economy, and by seizing growth opportunities in the Premium segment.
  • the efficiency of its growth model: to take advantage of scale effects with a development strategy, tools, and processes as well as discipline on cost control.
The Luxury & Lifestyle Division

The development of the Luxury & Lifestyle Division, organized by brand, is part of a strategy to strengthen the identity of brands, offering experiences. The priorities of this division are focused on three areas:

  • the brand promise, which guarantees experiences with each brand.
  • the originality and quality of products and services as a priority to guarantee customer loyalty, attractiveness for owners, and a sense of belonging for talents.
  • an ambition to generate strong EBITDA growth.

These two divisions leverage the shared services platform including Procurement, Accor Tech, and the Digital & Business Factory. All group activities are based around a Sustainable Development strategy with objectives: the trajectory of reducing GHGs in line with the Paris Agreement and validated by the SBTi, implementation of energy and water sobriety plans, elimination of single-use plastics, reduction of food waste, and implementation of a voluntary Diversity and Inclusion policy.

Sébastien Bazin, chairman and CEO of Accor, said, “Over the past 10 years, Accor has undergone a radical transformation. With its two recently created divisions—Premium, Midscale, and Economy on the one hand, and Luxury & Lifestyle on the other—the group is embarking on a new chapter of rapid, profitable growth. We have set ambitious targets for the coming years: an EBITDA target for 2023 of between €920 and €960 million, an average annual EBITDA growth rate for 2023-2027 of between 9 percent and 12 percent, and a return to shareholders of around €3 billion.”

Backed by its priorities and its current activities, Accor is now anticipating 2023 RevPAR growth of 15-20 percent compared with 2022 and has unveiled an EBITDA target of between €920 million and €960 million based on the business prospects for the current year detailed hereafter.

Medium-term, Accor is targeting sustainable growth and cash generation, notably in the service of shareholder returns. Based on the medium-term prospects described below, the group is targeting 9-12 percent annualized growth in EBITDA between 2023 and 2027.

Conversion of EBITDA into recurring Free Cash-Flow is expected to exceed 55 percent over the period. The combination of robust performance and a solid balance sheet should enable the group to return around €3 billion to its shareholders over the 2023-2027 period in line with Investment Grade requirements.

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