Sébastien Bazin, CEO, Accor Hotels, is a man holding strong, despite the global lockdown due to COVID-19 pandemic and the mammoth losses it has caused to the hospitality and travel industries, which are still exploring how the business will change for them in the future.
Accor, under Bazin’s leadership, added 8,000 hotel rooms to its global portfolio in the first quarter of 2020 and continues to hold on to its plan to roll-out its 208,000-rooms strong pipeline once the business gets back to normal.
Accor Hotels is slowly reopening its properties in China, learning tough lessons about technology and hygiene practices it will have to implement. The group has reported that Accor’s upscale Chinese properties have shown upwards of 20% occupancy in the last month. The company expects 3% global net-supply growth in 2020.
The group has also announced that it has signed an agreement with a consortium of five banks for a new €560m Revolving Credit Facility (RCF), which will complement the undrawn €1.2bn RCF signed in July 2018. It reinforces Accor’s liquidity position, which today exceeds €4bn.
This is what Bazin has to say about holding on to hope in the face of such adversity.
“Although the next few months are shaping up to be the most difficult of the year, we can rely on a robust balance sheet thanks to its transformation, with more than €2.5bn in cash on hand and an undrawn revolving credit facility of €1.2bn, with no covenant testing before June 2021.
While much uncertainty remains on the duration of this crisis, we remain bullish on the long-term perspective of the hospitality industry. In these unchartered territories, Accor’s Board of Directors has decided to complement the actions outlined above, by withdrawing its proposal for a 2019 dividend payment of €280m.
The crisis may result in Accor increasing its market penetration as other less-capitalised operators struggle to survive. Tens of thousands of existing suppliers and hoteliers may not be able to respond well and may not be able to survive. The cards are entirely reshuffled in the travel and tourism industries. Accor has the size, the scale, [and] the talent to navigate in these troubled waters.
While I am bullish, I am also a glass-half-full optimist. I hope the situation turns out better than expected. But no management should be preparing for blue skies when you simply don’t know how to spell it, so we have to be careful.
Regional initiatives are multiplying to fight the epidemic and support employees in need, owners, government authorities, healthcare professionals and local communities. Accor will never be a spectator of its world. Accor is an actor, more so than ever, in 110 countries.
It is with humility, strength and trust that we will weather this storm. I want to make sure we continue being who we are: we are open, we are very welcoming, and we are extraordinarily caring towards each other.
India continues to be a land of opportunity for us. It is an extraordinary market for all of us, but it is still a very tough country to penetrate. We have a strong pipeline: 5,000 rooms on top of the existing 10,000 rooms. We will continue striving hard to penetrate this market.”
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