EDITED BY AMANDA METCALF Procurement
IHG & AccorHotels Report
Positive 2016 Results Despite
Terror & Geopolitics
InterContinental Hotels Group and AccorHotels
both reported positive 2016 full-year earnings de-
spite the challenging climate created by terror, eco-
nomic uncertainty and geopolitical tension.
“We saw multiple terrorist incidents impact trav-
el in Europe,” IHG CEO Richard Solomons said to
begin the company’s earnings call, “as well as two
major political events in the U.K. and U.S., the full
implications of which are unclear.”
During Accor’s earnings presentation, chairman
and CEO Sebastien Bazin similarly spoke of “things
that hadn’t been foreseen” when he delivered 2015
results a year ago. He cited a U.K. referendum to
leave the EU, President Donald Trump’s victory in
the U.S. presidential election, turmoil in the Mid-
dle East, Brazil’s economic crisis and terror attacks
in France and Belgium. “The macroeconomic and
geopolitical environment [in 2016] was a difficult
one to guide the boat through,” Bazin said.
Solomons attributed IHG’s ability to weather the
storm chiefly to the company’s “resilient,” asset-light model; 2016 marks IHG’s first year as a fully
asset-light company following IHG’s sale of its last
owned hotel, the InterContinental Hong Kong.
Bazin, meanwhile, chalked Accor’s success up to
several deals last year, including its acquisition of
FRHI, which added 117 rooms to Accor’s system;
its buy of Onefinestay; and its investments into
other luxury home rental providers.
Revenue per available room at IHG hotels increased 1. 7 percent year over year during the fourth
quarter, driven by a 1 percent rise in average daily
rate to $113.74 and a 0.5 percentage-point increase
in occupancy to 66.7 percent. For the full year, ADR
rose 1. 2 percent to $115.16, while occupancy increased 0.4 percentage points to 69.7 percent.
Accor’s systemwide RevPAR climbed 1. 3 percent
year over year during the fourth quarter, fueled
mostly by occupancy, which increased 1 percentage point to 65.6 percent. ADR fell 0.2 percent to
€90. For the full year, ADR rose 0.9 percent to €85
and occupancy increased 0.2 percentage points to
More on IHG’s 2016
IHG’s strong presence in oil and gas markets, which
underperformed across the hotel industry throughout
2016, continues to have an impact. In the U.S., 14 percent of IHG’s room volume is located in such markets,
which is higher than the 11 percent for all U.S. hotels,
according to CFO Paul Edgecliffe-Johnson. RevPAR
for those U.S. markets declined 6. 1 percent during the
fourth quarter and 7. 5 percent for the full year.
Comparatively, fourth-quarter U.S. RevPAR grew
1. 3 percent year over year and full-year RevPAR
increased 1. 8 percent. “In 2017, we expect on-
going elevated levels of new supply in these oil
markets to continue to hold back their RevPAR
growth,” Edgecliffe-Johnson said.
Oil markets also weighed down performance in
Asia, the Middle East and Africa. Across that re-
gion, RevPAR declined 0.2 percent for the full year.
If you remove the outlier—the Middle East, where
RevPAR declined 7 percent—the region’s RevPAR
rose 3. 7 percent, according to Edgecliffe-Johnson.
In Europe, RevPAR grew 3. 1 percent during the
fourth quarter and 1. 8 percent for the full year. “Our
performance in France, Belgium and Turkey contin-
ued to be impacted by security concerns,” Edgecliffe-
Johnson said. “Excluding those markets, RevPAR in
Europe grew 4 percent” for the full year.
IHG added 40,000 rooms to its system in 2016.
At the same time, the company followed through
on a longer-term commitment to remove lower-
quality and underperforming hotels, booting
17,000 rooms from its portfolio last year. The
company also signed 76,000 rooms into its pipe-
line, the most deals in a single year for IHG since
2008. IHG’s full-year operating profit grew from
$680 million in 2015 to $707 million in 2016.
More on Accor’s 2016
While Accor recorded a healthy bump in revenue
during the third quarter of 2016, following its
acquisition of FRHI, it had only just begun integrating the luxury hotel company into its system.
With a few more months passed, Bazin said the
integration is going well, “exactly the opposite” of
what skeptics had suggested might happen with a
merger of such different companies. “We haven’t
lost a single contract, the talent drain has been
nominal and we have signed 20 new management
contracts,” Bazin said, “more than the company
had signed in the last two years, in fact.” Between
the July transaction close and the end of Accor’s
fiscal year on Dec. 31, FRHI contributed €310
million in additional revenue.
RevPAR in the Americas declined 2. 8 percent
year over year during the fourth quarter, driven by
a 3. 6 percentage-point drop in occupancy. For the
full year, however, Americas RevPAR increased
2. 4 percent, helped by a 7. 2 percentage-point
increase in ADR to €108. The company’s strong
development in the Asia/Pacific region in recent
years, driven by a partnership with Huazhu Hotels
Group, fueled a 2. 7 percent RevPAR increase during the fourth quarter and 4. 9 percent RevPAR
growth for the full year.
Strength in Eastern Europe, the U.K. and Germany bolstered performance across Northern,
Central and Eastern Europe. RevPAR in that combined region increased 3. 5 percent year over year
during the fourth quarter, driven by both occupancy and rate increases. Full-year RevPAR rose
3. 2 percent, fueled mainly by rate gro wth. In France,
fourth-quarter occupancy increased 1. 5 percentage points to 61.5 percent, but ADR declined
2. 6 percent to €78. For the full year, ADR fell
1 percentage point to €80 and occupancy decreased 1. 2 percentage points to 64.3 percent.
In 2016, Accor added 81,000 new rooms across
347 hotels, including those affiliated with the
FRHI acquisition. The company’s full-year net
profit increased 8. 1 percent to €266 million.
BY JULIE SICKEL