Accor launches £180m cost-saving initiative as H1 revenue halves

Accor has reported that revenues fell by 52.4% to €917m (£828m) in the first half of the year, while EBITA swung to a loss of €227m (£205m). In light of its impacted sales, the group has now launched a €200m (£180m) cost-saving initiative, which will see the group take "immediate drastic measures" to mitigate the impact on its earnings. The programme includes a "simplification and realignment" of its operating structures across different regions, as well as the automation of tasks for repetitive processes. On an annualised basis, two thirds of these cost savings will be generated by the end of 2021, and 100% by the end of 2022, Accor has said. It comes as RevPAR was down by 59.3% in the same period, a reflection of the “dramatic deterioration”of the industry in the wake of the pandemic, as well as the lockdown measures and border closures implemented by governments across the world. HotelServices, which includes fees from management and franchise, saw like-for-like revenue fall by 52.8% to €650m (£587m), reflecting the decline in RevPAR. Hotel assets and other revenue saw a “more moderate” decline, with like-for-like revenue down by 40.2% to €237m (£214m). Nonetheless, the group said it was “observing signs of recovery” across all regions, after a “particularly hard-hit” April and May, which began in Asia-Pacific, where RevPAR was down by 77.4% in the second quarter, before spreading to other regions such as Europe, where RevPAR plummeted by 90.6% in the second quarter. Despite the crisis, Accor opened 86 hotels, or 12,000 rooms, in the half-year period, “illustrating the appeal” of the group to hotel owners. At the end of June, the group was operating a portfolio of 747,805 rooms across 5,099 hotels, with a pipeline of 206,000 rooms across 1,197 hotels in the future. Sébastien Bazin, chairman and CEO of Accor, said: “The shock that our industry is experiencing is both violent and unprecedented. “Against this backdrop, we have managed to limit the impact of the crisis: on our performance by taking immediate steps to protect our resources and, thanks to the group's recent years transformation and our sound financial structure; on our employees by implementing concrete and immediate support measures.” He added: “The peak of the crisis is undoubtedly behind us, but the recovery will be gradual. Having taken these emergency steps, we must now finish the job from an asset-light model to a full asset-light company. Beyond Covid-19, this is essential. “Accor must become simpler, leaner, more agile and even closer to the field. These initiatives will enable us to extend our leadership, make our decision process more efficient and boost our recovery. They will be implemented with transparency and candor and, in a spirit true to our values of solidarity and commitment.”