Accor, a French hospitality giant, saw growth in its luxury hotels and an increase in revenue thanks to the Paris Olympics. Despite challenges in the Chinese domestic market, the company’s strategy of diversifying geographically and across various price points seemed to be paying off. The company raised its profit outlook after experiencing success in its Luxury & Lifestyle division, with revenue increasing by 18% year-over-year.
The Paris Olympics provided a boost for Accor’s hotels, with room rates doubling on average and a significant increase in occupancy. The company’s expectations for revenue per available room uplift in France were met due to the event. However, France’s provincial hotels experienced a slowdown after the boost from the 2023 Rugby World Cup. In Asia, Chinese tourists were driving growth in international destinations, but the domestic market in China remained challenging with declines in revenue per available room.
Accor maintained pricing power with projected growth in revenue per available room at 4-5% for the year. The company’s conversion strategy, where new rooms came from converting existing hotels from other brands or independent operators, accounted for 62% of new rooms. Despite speculation of selling its luxury and lifestyle division, Accor stated that there were no plans for such transactions. Business and group travel demand was growing faster than leisure travel, with an increase in event attendance in top cities in the fourth quarter.
Accor’s net room growth of 3.2% year-over-year indicated a successful expansion strategy, with a cleanup of properties not meeting quality standards expected to slow down by year-end. The company’s two-track strategy was reflected in the numbers, with revenue per available room in the luxury and lifestyle division outpacing other divisions. Management forecasted long-term revenue per available room growth to normalize towards 3-4%, and the company was focusing on growth markets in the Middle East and Southeast Asia to defend against competition from other hotel groups.
The overall performance of hotels and short-term rental sector stocks within the Skift Travel 200 index, which includes nearly 200 travel companies globally, showed a positive trend. Accor’s success in its luxury hotels, revenue growth, and strategic expansion plans indicated a positive outlook for the company. Despite challenges in certain markets, the company’s diversified strategy and focus on growth markets were contributing to its growth and profitability. Moving forward, Accor’s ability to defend against competition and continue its expansion in key markets will be crucial for sustained growth worldwide.
