Letter to Shareholders Letter to Shareholders by ryandenney


									Letter to Shareholders                                                                                 Number 15
                                                                                                     October 2000

                                                                                      2000 first half results

                                                                                      Activity through August

                                                                                      2000 full year performance targets

                                                                                      Growth strategy

                                                                                      New technologies, Accor brand
                                                                                      positioning, accor.com/finance

                                                                                      Group news through August

                                                                                      The Accor share

                                                                                      “Carnet Evasion”


                                       Ibis and Novotel Homebush Bay, Sydney

                                          Sharp increase
                                       in first half 2000 results
                                       Accor recorded strong growth in results and profitability in the
Our first half 2000 performance        first half of 2000.
are outstanding – in terms of growth
                                       (€ million)                             H1 1999        H1 2000           % change
as well as in terms of quality.
                                       Sales                                      2,854           3,316           +16.2%

Once more, our results underscore      EBITDAR                                     683             851            +24.6%
the sustainability of our strategy –   Total income from operations                239             326            +36.1%
our positioning, particularly          Net income, Group share                     155             196            +26.9%
well-suited to the emerging
                                       Earnings per share (€)                      0.86            1.00           +16.7%
characteristics of international
travel and tourism, enables us to      Sales rose by 20.7% excluding disposals and currency impact,
overcome the traditional cyclicality   including 14.8% due to new business development (notably
                                       the acquisition of Red Roof Inns in the US in July 1999).
of the hospitality business.
                                       EBITDAR (earnings before interest, taxes, depreciation and
In Hotels and in Services, growth      amortization, and rents) rose by 24.6%.
in activity goes hand in hand
                                               Steady increase in profitability
with improving profitability.
                                               (as of June 30, 2000)                                      25.7%
We are proud to achieve such                                                              23.9%
a strong performance after                                      22.5%                             EBITDAR
                                                                                            (as a % of sales)
six years of uninterrupted
                                               20.2%                                                      9.8%
double-digit profit growth.
                                                                                             Total income
Jean-Marc Espalioux,                                            6.4%                      from operations
                                                                                            (as a % of sales)
of the Management Board                         3.2%

                                                 1996            1997      1998            1999            2000
                                                    European leader and worldwide group in the tra

Reflecting operating productivity gains, gross                 Favorable activity
operating margin (EBITDAR as a % of sales) rose             trend through August
by 1.8 percentage points to 25.7% in the first half
                                                            In the first eight months of the year, Accor’s hotel
of 2000.
                                                            portfolio grew by 220 new units, representing
Total income from operations rose by 36.1%.                 30,775 rooms. The increase in RevPAR (revenues
Pretax margin (total income from operations as              per available room) during the period was fueled
a % of sales) increased by 1.4 percentage points            by higher average room rates. The strongest rise
to 9.8%.                                                    was recorded in European economy hotels,
                                                            with RevPAR up 7.0%. In the US, economy hotel
Net income, Group share amounted to €196 million,           RevPAR increased by 2.8%. RevPAR in upscale and
up 26.9% over the prior year level. Reflecting              midscale hotels rose by a healthy 6.1%.
conversion of bonds issued in 1991, earnings per
share rose by 16.7%.                                                                           August YTD 00/99
                                                            Hotels (RevPAR)
Return on capital employed (ROCE) reached                   – upscale/midscale                                    +6.1%
11.3%, or 11.7% if hotels under construction are
                                                            – economy, Europe                                     +7.0%
excluded. This represents an increase of 0.3 percent-
                                                            – economy, US                                         +2.8%
age point over the year earlier level.
                                                            Services (issuance volume)                         +22.0%
Economic Value-Added (EVA) rose to €244 million
during the period despite higher weighted average           On a comparable structural and currency basis,
cost of capital (WACC).                                     revenues of Carlson Wagonlit Travel and Accor
                                                            Casinos rose by 8.5% and 15.5%, respectively.
The Group’s net debt-to-equity ratio improved
to 73.5% at June 30, 2000.

                                    The Supervisory
                                    Board approved
                                    the first half 2000
                                    financial statements,
                                    following the recom-                           Novotel Atlantis Shanghai
mendation of the Board’s Audit Committee, which noted
the high quality of the Group’s internal audit function.
                                                                                   Sofitel New York City,
Paul Dubrule and Gérard Pélisson, Founding                                       45 West 44th Street, Manhattan
Co-Chairmen of Accor, noted that “once again in the
first half of this year, Accor has achieved a strong
performance across the board, and is outperforming
its major international competitors. Accor’s well-
                                                               2000 performance targets
balanced growth strategy is yielding steady, sustained      In each of the past six years, Accor has achieved
increases in performance and profitability. With a          double-digit growth in earnings. For full year 2000,
successful long-term track record and a forward-            Jean-Marc Espalioux, Chairman of the Management
looking strategy, Accor is increasingly recognized as       Board, targets increases in total income from
the benchmark in the hospitality sector”.                   operations and net income of at least 20%.
avel, tourism and business services

        Accor pursues a strategy of                                                                  Motel 6 Thousand Oaks,
      sustained, well-balanced growth                                                              California

      In the high-growth potential hotel sector, Accor
      enjoys a unique positioning. As of August 31,
      2000, the Group’s hotel portfolio comprised nearly
      3,500 hotels (385,000 rooms) around the globe
      and across all market segments.                                New Sofitel Bercy
                                                                   in Paris
                                                                                                     Novotel Benoa Bali Coralia,
      With an annual 10% increase in the number of rooms                                           Indonesia
      it offers, Accor strengthens its European leadership,
      continues to expand its economy hotel activities
      on an international scope, develops Sofitel in major             3,454 hotels (385,427 rooms)
      metropolitan gateways around the world, and selec-           in 90 countries as of August 31, 2000
      tively broadens its footprint in emerging markets
      and leisure hotels.
                                                                   Unique positioning
      This strategy is underpinned by a balanced, diver-
      sified funding policy, which does not require further           Global presence and European leadership*
      capital dilution. Accor is therefore able to achieve
      sustainable profit growth and reduce the cyclicality              North                     49%
      of its activities.                                               America
      As of the end of August, Accor had 474 hotel under                                                             Pacific
      construction or in project stage, representing an
                                                                          Latin                Africa-
      additional 58,736 rooms.                                           America             Middle East
                                                                           4%                    5%
      Services are a high-potential activity conducted in
      fast-growing markets and enjoying steady sustained
                                                                      Presence in all market segments*
      growth. The development of Accor services is boost-
      ed by penetration into new countries – China and                                     Upscale 7%

      Lebanon in the first half of 2000 – as well as by
      diversification of products and technologies.                        36%

                                                                                                Economy hotel 57%
                              Clean Way smartcard –
                            dry cleaning of work apparel
                                                                      Focus on owned and leased properties*

                                                                                Owned                          Leased
                                                                                 31%                            36%

                                                                              Franchised                 Managed
                                                                                 15%                       18%

                               Services – 11 million daily users
                            in 31 countries                        * As of % of rooms
   New technologies and
international brand recognition
The Internet will energize the image, activity and        accorhotel.com
profitability of the Accor Group. With 3,500 hotels
                                                          3,500 hotels in 90 countries
online, the accorhotel.com website (including
Motel 6 and Red Roof sites in the US) is visited
by 35,000 websurfers each day, establishing itself
as a new sales powerhouse.

Reinforcing the international recognition of Accor
and its brands, and making its products accessible
on a global scale, the Internet already accounts for
reservations in the equivalent of several dozen
hotels each day.

In the medium term, Accor expects a significant
impact from the Internet in Europe as well as in
economy hotel, a segment which is not sold through
traditional distribution channels. As of late August,
online reservations already accounted for 3% of all         Worldwide Internet presence and umbrella
                                                          branding throughout the network will strengthen
Motel 6 sales.                                            Accor’s federating power.

Access up-to-the-minute financial
information or real-time share prices,
retrieve recent messages from the
Chairman, watch the video of the half-
year results analyst meeting, download
consolidated statements – all of this
and much more can be done through
the www.accor.com/finance site of the
Accor Group.

www.accor.com/finance is your site.
Through the Shareholder Pages, you
will be able to contact us directly,
to ask questions, to give us your
opinion on recent Group developments          With a single click on, you can also penetrate the Accor uni-
and to rate the features of the Accor         verse, its profile, its brands and activities, its environmental
website.                                      policies, human resources, press releases – and of course you
                                              are also able to make hotel reservations directly from the site.
  Group news through
August 2000
In upscale and midscale hotels, the key develop-                                              Sofitel Tokyo
ments of the first half of 2000 were the opening
of the New York and Philadelphia Sofitel hotels and
of the Sofitel Bercy in Paris, as well as the extensive
renovation of the “pagoda tower” of the Tokyo Sofitel.          In economy hotels, Accor increased its presence in
                                                                the UK market with the opening of the London
In Asia-Pacific, Accor also expanded its presence in            Gatwick Airport Ibis hotel and the addition of eight
China with the June 1 opening of the Novotel Atlantis           new hotels to the Ibis network.
Shanghai, and the addition of 27 hotels in Australia
previously operated by the All Seasons group.                   In the US, 20 additional hotels joined the Motel 6
                                                                and Red Roof Inns network, chiefly through fran-
In Europe, the Group took a 20% interest in the                 chising.
Polish hotel and tourism group Orbis. Through
this strategic investment, amounting to €81 million,            Services pursued their worldwide expansion.
Accor strengthens its leadership in the Polish market,          In China, local authorities have authorized the
with the addition of 55 three- and four-star hotels             launch of a restaurant card in Shanghai and Beijing,
(10,439 rooms) located in the country’s 25 largest              in association with the Beijing Tourism Group.
cities and seaside resorts.                                     In Ireland, Accor Services acquired Irish Luncheon
                                                                Voucher which, with 7,000 daily users and €6 million
Accor also boosted its European leadership position,            in annual issuance volume, provides a unique
notably in London, where the Group opened the                   springboard for Ticket Restaurant and Childcare
Novotel Tower Hill and London Mercure.                          Voucher.

    The Accor share

The Accor share continues to significantly out-
perform its major competitors over the long term.                The Accor share,
                                                                 January 1, 1997 through October 24, 2000
From January 1, 1997 through December 31, 1999,
                                                                 (Base 100)
the Accor share price rose by 139%, from €20.04
to €47.97.
                                                                                             ACCOR: +123%
In 2000, the Accor share recovered from its lows          250
in the first quarter, when investors were focusing
on TMT (telecom, media, technology) stocks. From          200

January 1 to October 24, however, the Accor
share recorded a 6.4% drop, reflecting rumors             150                                 UK peer group: – 6%

regarding the potential acquisition of the hotel
activities of Granada Compass plc. On this                100

occasion, Jean-Marc Espalioux noted that “Accor                       US peer group: –33%

would carry out such a transaction only if it is
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financially balanced, well priced, and earnings



















Do not forget…
Accor offers you happiness and evasion while
saving up to 4,000 FRF in its hotels, restaurants
and other tourism destinations and services, with
the “Carnet Evasion”.
With its 18 coupons, you will get discounted prices
valid until March 31, 2001.

                   Order your
                “Carnet Evasion”*
    now by phone ( or e-mail                                     The new “Carnet Evasion”, up to 4,000 francs discount on
                                                                                your travel accomodations and activities. Offer valid until
               comfi@accor.com                                                  March 31, 2001, upon request, limited stock available.
            without forgetting to give
             your postmail address.

* Upon available stock


November 17-18, 2000: Salon Actionaria, Palais des Congrès, Paris

Building on the success of the two previous editions, Accor will once again meet its individual shareholders,
potential investors, and the interested public at the Salon Actionaria investor fair organized in Paris for the
third consecutive year. Accor shareholder relation representatives will be on hand to welcome you and
answer any questions you may have about the Group and your investment.

                         For any information, call Accor Shareholder Relations at +331.

                                                          PARTENAIRE OFFICIEL

                      ‘Letter to Shareholders’ is published by the Financial Communications department of Accor
      Tour Maine Montparnasse, 33, avenue du Maine, 75755 Paris Cedex 15 - Tel: - Fax:
Editor-in-chief: Eliane Rouyer - Production: Bruno Giordano - English-language consulting: Taylor Rafferty & Ass. - Euro RSCG Omnium

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