Accor, Europe's largest hotel group by sales, warned operating profit could fall this year due to the weak economy in its main market and investment in an online booking service to compete with rivals like Expedia.
The French company – which appointed private equity specialist Sebastien Bazin (right) as chairman and chief executive yesterday – gave no clues about his strategy plans, disappointing investors.
Analysts have said they expect Bazin to speed Accor’s shift towards franchising or managing hotels for others rather than owning them, to boost profit margins and cut net debt of €581 million at the end of June.
Accor, which competes with InterContinental, Marriott and Starwood, is in the first year of a three-year plan to lift its operating margin to more than 15 per cent of sales in 2016 from 9.3 per cent in 2012.
Chief financial officer Sophie Stabile, who stood in for Bazin on a conference call with analysts yesterday, said it was too early to say whether the plan, which includes asset sales and cost cuts, will be reviewed.
Accor shares were down 4.8 per cent, leading decliners on the CAC-40 index of French blue-chip stocks .
Europe’s largest hotel group makes more than 70 per cent of its sales in the region, which is just emerging from recession, and is more exposed to the weak economy than rivals.
In response, it is cutting costs and accelerating its expansion in faster-growing emerging markets.
Bazin, who ran European operations for Accor's largest shareholder Colony Capital, became vice-chairman in April after the company ousted chairman and chief executive Denis Hennequin.
Accor forecast 2013 operating profit of €510 million to €530 million yesterday against the €526 million made in 2012.
Stabile said summer business was robust and the trend should continue in the second half.– (Reuters)