Hospitality giant Accor has withdrawn its dividend against its 19 earnings and has furloughed around 75% of its staff, as it takes measures to counter the impact of the coronavirus outbreak.
The company said around half of its hotel portfolio has been temporarily closed – which will rise to around two thirds in the next two weeks.
As a result, it said it has initiated a travel ban, a hiring freeze , reduced schedules and /or furloughing for 75% of global head office teams for Q2, resulting in a minimum €60m (£52m) cost reduction.
The firm added that thanks to its recent “asset-light transformation” and cash “preservation strategy”, Accor currently has a “strong balance sheet”, with more than €2.5bn (£2.1bn) in cash on hand and an undrawn revolving credit facility of €1.2bn (£1bn).
However, in another measure it has announced it is to withdraw its proposal for a 2019
dividend payment of c. €280m (£245m). Instead, Accor revealed it has decided to allocate 25% of the planned dividend (£61m) to launch a special purpose Covid fund for staff.
The ‘All Heartist Fund’ will aim to assist Accor’s 300,000 employees who may be affected by the outbreak through measures including:
Pledging to pay for their COVID-19-related hospital expenses, for those who do not have social security or medical insurance
On a case by case basis, assist furloughed employees suffering great financial distress, – on a case by case basis, individual partners facing financial difficulty
Further deploy its solidarity initiatives to support front- line healthcare professionals and non-profit organizations
Sébastien Bazin, chairman and CEO of Accor, said: “Welcoming, protecting and taking care of others is at the very heart of what we do. In light of the urgency and the scale of the situation, we have decided to act in an immediate and meaningful way, in the spirit of our values and commitments.
“Through this impactful gesture, we wish to express our solidarity and gratitude to all those demonstrating courage and selflessness during this crisis. On behalf of the Board, I would like to thank the Group’s main shareholders. Without them, the “ALL Heartist Fund” would not have been possible.”
He added: “I also want to pay a special tribute to the Accor teams around the world. They are facing the current crisis with admirable courage, dedication and professionalism.
“As our industry is going through tough times, we have to make tough decisions, but Accor has a strong balance sheet which will enable it to withstand this crisis and emerge with strength during the recovery period. I am confident that Accor will soon rediscover the road to growth.”