Accor’s Strong Performance: A Closer Look
Since my last update on Accor, the French lodging firm has shown steady growth, with shares returning approximately 11% over the past year. This performance can be attributed to a solid 2024, which saw net unit count growth, RevPAR (Revenue Per Available Room) growth, fee growth, and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) growth, all of which aligned with the company’s medium-term guidance.
Financial Highlights
The net unit count growth was driven by both new hotel openings and the acquisition of Mövenpick Hotels & Resorts, which expanded Accor’s presence in Europe and Africa. The RevPAR growth can be attributed to a combination of higher average daily rates and increased occupancy. Fee growth was primarily due to the company’s managed and franchised segments, which accounted for a larger portion of its overall revenue.
Valuation and Comparison to Peers
Accor’s shares currently trade at around 20x earnings per share (EPS), representing a discount to its peers in the lodging industry. Marriott International and Hilton Worldwide, for example, trade at around 25x and 23x EPS, respectively. This discount can be explained by Accor’s lower revenue growth and lower profitability compared to its peers. However, Accor’s growth prospects and capital return potential suggest that the discount may be unwarranted.
Growth Prospects
Accor’s growth prospects are promising, with the company aiming to increase its global footprint by adding 100,000 rooms by 2025. This expansion will be driven by both organic growth and acquisitions, with a focus on emerging markets. Accor’s brand portfolio, which includes well-known brands like Novotel, Ibis, and Sofitel, is also expected to contribute to growth.
Capital Return Potential
Accor has a strong capital return policy, which includes a share buyback program and dividend payments. In 2024, the company returned €1.2 billion to shareholders through buybacks and dividends, representing a yield of around 2%. Accor’s commitment to capital returns is expected to continue, making the stock an attractive option for income-focused investors.
Impact on Individuals
For individual investors, Accor’s strong performance and growth prospects make it an attractive option for those looking to add a stable, dividend-paying stock to their portfolio. The discount to peers also presents an opportunity for value investors. However, it’s important to note that the lodging industry is cyclical, and Accor’s performance may be impacted by economic downturns or global events like the COVID-19 pandemic.
Impact on the World
Accor’s growth and expansion plans have the potential to create jobs and stimulate economic growth in the countries where it operates. The company’s focus on emerging markets, in particular, can help to increase tourism and promote cultural exchange. Additionally, Accor’s commitment to sustainability, which includes the use of renewable energy and the implementation of water-saving technologies, can contribute to a more sustainable tourism industry.
Conclusion
Accor’s strong performance in 2024, with solid growth in net unit count, RevPAR, fee growth, and EBITDA, has kept the company on track with its medium-term guidance. The discount to peers, combined with Accor’s growth prospects and capital return potential, make the stock an attractive option for both value and income-focused investors. However, it’s important to keep in mind the cyclical nature of the lodging industry and the potential impact of global events on Accor’s performance.
- Accor’s shares have returned around 11% over the past year
- Net unit count growth, RevPAR growth, fee growth, and EBITDA growth all aligned with medium-term guidance
- Shares trade at a discount to peers, with a lower P/E ratio
- Accor aims to add 100,000 rooms by 2025
- Commitment to capital returns, with a share buyback program and dividend payments
- Impact on individuals: attractive option for value and income-focused investors
- Impact on the world: creates jobs, stimulates economic growth, promotes sustainability
