Upscale Hotels Asset Management Strategy
Upscale Hotels Asset Management Strategy
Upscale Hotels Asset Management Strategy
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� Fixed leases<br />
� 100% owned<br />
� Reduce earnings<br />
volatility<br />
� Reduce capital intensity<br />
<strong>Upscale</strong> <strong>Hotels</strong><br />
<strong>Asset</strong> <strong>Management</strong> <strong>Strategy</strong><br />
� <strong>Management</strong> contracts<br />
with minority stake<br />
� 10 Sofitel<br />
� Cash impact: €100M to €150M<br />
� Schedule: 2005/2006<br />
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An initial major transaction in March 2005<br />
with Foncière des Régions<br />
�Long term partnership with a consortium led by "Foncière des<br />
Régions" which includes Assurances du Crédit Mutuel, Generali,<br />
Predica (Groupe Crédit Agricole)<br />
�128 hotels in France (16,714 rooms): Novotel, Mercure and Ibis<br />
�Value: €1,025 million<br />
�Variable rents set at 15.5 % of revenues with no minimum<br />
guaranteed<br />
�Duration: 12 years, renewable 4 times per hotel at Accor’s discretion<br />
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�Impact on profit before tax: + €10m<br />
�Renovation program financed by the investor: €100m<br />
�Capital gain: €120m<br />
�Cash: €140m<br />
An initial transaction in March 2005<br />
with Foncière des Régions<br />
Good financial conditions<br />
43
� Owned<br />
� Leased<br />
�Optimize ROCE<br />
<strong>Hotels</strong> disposals in non-priority locations<br />
� Franchise<br />
� Sale<br />
� 30 hotels in Europe<br />
� Impact:<br />
€130m to €150m in cash<br />
� Schedule: 2005/2006<br />
44
� 2004 Results<br />
� 2005 Q1 sales<br />
� Strategic Vision<br />
� An international strategic investor for<br />
Accor<br />
� A new asset management policy<br />
� Accelerated expansion<br />
Outline<br />
45
� A more favorable business environment<br />
� New financial leeway<br />
Accor is is stepping up up<br />
its its growth strategy<br />
Growth strategy<br />
46
Economy hotels in Europe:<br />
� Weak penetration of hotel<br />
chains in a growth market<br />
� Competition still limited<br />
(except in UK and France)<br />
� Accor’s expertise in this<br />
segment<br />
� High return<br />
Strengthening leadership positions in<br />
Economy hotels in Europe<br />
Target markets:<br />
� Expansion focused on<br />
major cities in Spain, the<br />
United Kingdom, Central<br />
Europe and Italy<br />
� Opportunistic expansion<br />
in Germany, France and<br />
the Benelux countries<br />
Initial three-year budget: €300m<br />
Stepped up up expansion: an an additional €150m<br />
47
Growth drivers:<br />
� Large populations<br />
� Exponential growth in<br />
demand<br />
� No economy hotels and<br />
fragmented supply in<br />
other segments<br />
Growth drivers in emerging markets<br />
Target markets:<br />
� China, India, Russia,<br />
Latin America, Middle<br />
East<br />
� Using joint ventures/<br />
management contracts /<br />
variable-rent contracts<br />
Initial 3-year budget: €100 million<br />
Faster expansion: + €200 million<br />
48
� Economy hotels:<br />
� 1et Ibis Tianjin opened in 2004<br />
Average occupancy rate: 94%<br />
ROCE: 13% from the first year<br />
� 10 projects already underway<br />
� Objective: 50 Ibis units in 2010<br />
� <strong>Upscale</strong> and midscale hotels:<br />
� Sofitel and Novotel: 50 hotels under<br />
management contract in 2010<br />
The breakthrough in China<br />
Average investment over three years: €100 million<br />
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Vast VastMarket Market<br />
Basic<br />
Sophisticated<br />
40%<br />
2004<br />
Services growth strategy<br />
Strong Stronggrowing growing market<br />
market<br />
2025<br />
70%<br />
% of the world’s population living in cities<br />
(target population)<br />
50
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