Accor (Euronext:AC) Q1 2026 Earnings Call

0:00 Welcome to the Accor Q1 twenty twenty six Revenue Presentation. Today's conference will be hosted by Martin Giraud, Group CFO. For the first part of the conference, the participants will be on listen only mode. During the questions and answer session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to Mrs. Giraud. Please go ahead. Welcome to the Accor Q1 twenty twenty six Revenue Presentation. Today's conference will be hosted by Martin Giraud, Group CFO. For the first part of the conference Good evening, everyone, and thank you for joining Accor's first quarter trading call. And so I'll start with the highlights on Page three.

0:47 So we entered 2026, keeping pace with the fourth quarter of twenty twenty five with RevPAR in the mid to high single digits and all regions performing well through February, which demonstrates the attractiveness of our brands and the strength of our diverse portfolio. Despite the conflict in Iran, which impacted our business starting in mid March In some of the GCC countries, we delivered a strong RevPAR in the first quarter and we picked up the pace on net unit growth. Q1 RevPAR rose a solid 5.1%. March RevPAR remained positive at 1.6% despite the Iran conflict with all the regions, again, except some of the GTC performing above our expectations.

1:35 The performance in the quarter was mostly driven by price for about two third, with occupancy rate improving by one point. From a business versus leisure standpoint, individual business and group leisure were the most dynamic segments in the quarter. Net unit growth reached 3.8% on a last twelve month basis, that's up from 3.7% at the end of twenty twenty five. Pipeline continues to grow at a healthy double digit growth, plus 10% in the first quarter on an LTM basis. And that is consistent with our goal of accelerating NUG towards the higher end of our 3% to 5% midterm guidance. Turning to revenue, Management and Franchise revenue grew at 8.3% at constant currency, which is in line with the RevPAR plus growth algorithm.

2:29 Group revenue increased by 2.3% at constant currency and 3.8% at constant scope and constant currency. And as always, we remain laser focused on meeting our commitments in what is certainly a tougher macro and geopolitical backdrop. On April 1, we announced the signing of an MOU on the sale of our stake in SND for a consideration of up to $975,000,000 Euro with $675,000,000 Euro to be received upfront and up to 300,000,000 Euro in or not, in subsequent. Having cleared the insider information pursuant to that transaction, we launched on April 2, a first tranche of $225,000,000 of the $450,000,020 26 share buyback program.

3:18 The impact of the conflict in The Middle East is so far mostly felt in The UAE, which accounts for 3% of our network. Saudi and Egypt are holding up and demand in the other regions remains healthy. Nevertheless, we're closely monitoring the conflict and have already taken measures to both minimize the impact of our results, but also redirecting traffic towards the higher growth market. Let's now turn to Slide four and Q1 RevPAR by division. Started with PME, which posted a very resilient RevPAR growth of plus 4.5%, rate was up 3%, and occupancy rate was up one point at 62%. ENA posted a solid 2.7% RevPAR, that's an acceleration from the fourth quarter of twenty twenty five, And that was driven by occupancy and exceeded our expectations for the first quarter, with France and The UK posting growth in line with the fourth quarter.

4:18 In France, Paris grew RevPAR in the mid single digit, demonstrated the continued attractiveness of the destination, and the province was also solid. In The UK, demand remained solidly in the low single digit in both London and the region. In Germany, RevPAR turned slightly negative over the quarter, with demand highly correlated to events and fare activity with a calendar that was weaker in the first quarter. In May APAC, Q1 RevPAR rose 5.5%, nearly all driven by rates. The impact of the conflict was again concentrated in UAE in March. Southeast Asia accelerated in the first quarter with RevPAR in the high single digit as Thailand and Indonesia returned to positive territory, bouncing back from last year's demand softness.

5:10 Singapore and Japan also posted solid RevPAR growth. Mayotte posted a positive mid single digit RevPAR growth overall in the first quarter, with March RevPAR turning negative in the high single digit. UAE was down high single digit in the first quarter, while Saudi remained positive. Pacific maintained its strong momentum with a high single digit RevPAR growth in the first quarter. China continues to sequentially improve, posting a negative low single digit growth in the quarter as our portfolio in China is mostly Eco midscale. Americas posted another strong quarter with RevPAR up 9.1%. The area is mostly driven by Brazil, as you know, which continued to post low double digit RevPAR growth in the period.

6:02 Turning to Luxury and Lifestyle. RevPAR growth was a solid plus 6% with rate up 4% in the first quarter and occupancy up one point at 61%. Luxury continued to outperform as a segment with first quarter RevPAR at plus 6.8 with rates up 5% and occupancy up one point, with all brands exceeded our expectation in the first quarter despite the slowdown in March. Demand was particularly strong in The Americas and Europe. Lifestyle grew RevPAR by 4.2%, with rates up 4% and occupancy flat. This segment was more impacted by the conflict given the geographic mix, although we're started seeing some demand being redirected to Egypt and Turkey in late March and early April.

6:51 Lifestyle collective hotels posted a high single digit RevPAR growth, in line with the fourth quarter of twenty twenty five. Turning to Slide five, which breaks down our hotel portfolio and pipeline by division. PME sustained its 3% network growth on an LTM basis in the first quarter and continued its move to franchise with 53% of its portfolio franchise in the first quarter, which is up two points from the first quarter of twenty twenty five. As usual, for our first quarter, Q1 twenty twenty six pace of opening was moderate, but included two notable large openings in Saudi Arabia in March. Pipeline continued to pick up pace, up 12.4% on an LTM basis, mostly driven by the Merapak region. Notable signings included the Grand Mercur in Phu Quoc in Vietnam and Ibis Brightfield City Hotel in Australia.

7:47 The M and F revenue per room was stable in the quarter at 1,200 per room. Luxury and Lifestyle accelerated its network growth at 8.8% on an LTM basis, with both segments picking up pace from last year, benefiting in particular from the lower churn as we expected. To note that Lifestyle Network growth approached 20% on an LTM basis in the quarter. Pipeline for Luxury and Lifestyle grew 3.7% and stands at 44% of the network, which is up one point from December 2025. And the M and A revenue is also stable at €4,000 per room. At group level, therefore, Nag reached 3.8 on an LTM basis, which is again slightly above where we finished the year.

8:38 Conversions represented 67% of opening in the first quarter, again demonstrating the strength of our brands and geographies. And for the group again, the pipeline was up double digit at 10.3 in volume with again a record level of signings in value in the quarter. Now let's turn to Slide six with revenue by segments. As always, you will find the details of the revenue by segment and by division in the appendix as well as the press release. The group's revenue reached $1,313,000,000 in the first quarter, up 2.3% at constant currency versus prior year. The reported decrease at minus 2.7% is negatively impacted by FX, notably the U. S. Dollar, which represents about 50% of the FX impact in the quarter.

9:27 But we also had a negative scope effect of 1.4% from the disposal of our Paris society, festive and events businesses. And so on a like for like basis, revenue in the quarter was up 3.8%. Management and franchise revenue grew by 8.3% at constant currency, again, in line with the expected algorithm from RevPAR and Nug. Revenue in hotel assets and other was down 4.4% at constant currency. The solid trading activity in Australia and Brazil within PME was more than offset by the disposal that I just referred to, as well as the lower activity in our recast restaurant portfolio in Dubai, obviously, highly impacted since the beginning of the conflict.

10:13 If we exclude the disposal, hotel assets and other revenue on a like for like basis of constant scope and constant currency was up 3.3%. SMDL, which stands for Sales, Marketing, Distribution and Loyalty revenue was up 6.2% at constant currency and to note that we had an exceptionally strong first quarter last year. Reimbursed costs are flat. And as a reminder, this is absolutely a pure pass through with no impact on EBITDA. Turning to Management and Franchise on Slide seven. Again, plus 8.3% in the first quarter. Thanks to a strong performance in Luxury and Lifestyle, as you see here at plus 15%, we were able to absorb in the first quarter the impact of the flip to franchise in PME as well as a more prudent approach to incentives.

11:03 As for M and F fees, incentives accounted for 31% of our fees in the quarter. PME Management and Franchise Revenue was up 4.3 at constant currency. The distortion is mainly related to the switch from management to franchise contract, which impacted the first quarter by about one point. Now that is half of what we had experienced in 2025, where the impact was two point and in line with what we had shared with you, but also a more prudent approach to incentives given the uncertainty around The Middle East. Luxury and Lifestyle M and F revenue grew at 15% at constant currency, that's in line with the growth algorithm from RevPAR and NOG. And the cautiousness or prudence regarding the development of the conflict and therefore incentives was offset in the quarter by some termination fees.

11:57 And to conclude this presentation and before we move to Q and A, on Slide eight, our business weathered the storm in the first quarter, thanks to the resilience of our portfolio and an excellent start of the year. Outside of The UAE, the demand was solid in March and trending in line with actually January and February. Clearly, the situation is very fluid, but the demand remains structurally healthy. And just to note that, more recently, schools have reopened in The UAE, and air traffic is also increasing in the GCC. In light of the situation, nevertheless, we have reacted very quickly, both redirecting our investments towards more supportive markets and activating in March a group wide profit protection plan to protect margin and to mitigate the impact of lower trading on our EBITDA.

12:48 We accelerate development in growth markets, notably in India, which you know is a priority market for Accor. And just to share with you that the pipeline in India has gained significant momentum in the last six months, with 46 hotels that we have signed or under MOU across the PME and the Luxury portfolio in the last six months, which is 63% of the existing network in India. So clearly, accelerating the pace of development in a very strategic market. And finally, as a reminder, we launched the first tranche of the 2026 share buyback on April 2, as I said in my introduction. And I will now turn the floor over to you for the Q and A session. The next question comes from Jared Castle from UBS. Maybe three from me.

13:55 Can you say anything in terms of your kind of medium term EBITDA guidance of 9% to 12%, if you're still happy with that and what you're seeing at the moment? Secondly, obviously the pipeline's up, but the portfolio that was actually down versus the year end. Is this just kind of Q1 seasonality where there's a lot of churn or is there anything else going on? It was only very slightly down but if you can just kind of give a bit of color why it was slightly down broadly flat. And then just lastly, obviously launched the buyback. Can you just give a quick update how much you've done? And you know, should we expect a follow on sometime in July with the half year results? Thanks. Thanks, Jarrod, for your question. So as you know, we do not communicate annual guidance until the July when we release our first half results.

14:53 So with respect to the midterm, you know, guidance for 2023, 2027, that guidance is still there, and we'll give you more precisions in July. What I will say, though, is that, you know, at this point in time, I'm comfortable with where the consensus is on RevPAR and EBITDA. With respect to the pipeline, I mean, Q1 is always very soft, right, because we have very you know, as you know, our openings are mostly in the second half and actually a lot of them are in the fourth quarter. So you always have a, you know, very low, if not flattish, growth in the first quarter. Actually, last year, in the first quarter of twenty twenty five, we were negative. And with respect to buyback, yes, we have started the buyback. And as of so far, we have bought EUR 41,000,000, which is about EUR 900,000 share at about EUR 44 price.

15:48 And yes, we have committed to a $450,000,000 share buyback program. And so, as we usually do, we tend to do, you know, the first half in the first semester and second half in the second semester. Alright, thanks very much. The next question comes from Jayna Mystery from Barclays. Please go ahead. Hi, Martine. Good evening. Three questions from me, if I may. The first question is around RevPAR. Tuohy reported kind of softer summer bookings when they reported yesterday. And I know you said other markets were holding up outside The Middle East, but have you seen any cracks in bookings or in RevPAR in Europe or Asia from your on the books?

16:37 And then the second question is around EBITDA. Just in light of the significant RevPAR downgrade RevPAR declines in The Middle East, your restaurants are shut, do you expect EBITDA in H1 to grow? And then for full year EBITDA consensus, I know you mentioned you're comfortable with consensus. Now I was quite surprised by that. Could you maybe walk us through why you're happy with consensus, where you see consensus and just the drivers of operating leverage, quantify the cost savings. Just help us understand the moving parts here because there are some very big moving parts given geopolitics. You. Gina. So with respect to your first question, do we see any cracks in demand?

17:24 We don't see any cracks in independent. When we look at the as you know, obviously, there's not a ton of visibility with respect you know, given the booking windows. However, when we look at the room on the books, we don't see, you know, we don't see any crack in demand outside of, again, The Middle East and in particular The UAE. So the actually, if anything, so, you know, ENA, I mean, Europe is holding up. Actually, within Europe, we see a pickup in The Med. So Spain, Italy, Portugal, Greece. Morocco is another country where we're seeing where we're seeing a pickup. Similar, you know, similar to Tuohy, we do see a lower pickup in Cyprus, Turkey mainly, but that's, you know, a very slight.

18:14 And again, you know, this is not a and this is a very small part of our portfolio. But it's minor. It's, you know, it's really, you know, flattish to low single digit. But the rest of NA, and actually NA overall, is a positive in terms of, you know, in terms of pickup with room on the books. Asia is still performing quite well. America is performing quite well. Canada is really performing very well when we look at the, you know, room on the books. And The US is also performing well. So no really no cracks in demand. You know, respect to the, you know, to the consensus, I think the consensus on RevPAR is 2.3%, right? So if you take consensus plus, you know, the consensus on NURG, which is around, I think, 3.9%, you know, that gives you basically, you know, a 6% plus total, which, you know, should translate into M and F revenue growth. And therefore, you know, given our perfect protection plan, which we have, again, initiated in March, so you take a bit lower RevPAR, which is about one point, right, if you look at consensus versus the low end of the guidance, and you take the profit protection plan, basically, that means that we'll be able to reach that consensus, which is about on a reported basis, I think that's about

19:44 a 6% growth in EBITDA at current rates. And then on the question around H1 EBITDA, do you expect that to grow? We don't guide on H1 EBITDA, but it will be up. Okay. Would you mind quantifying the cost protection plan? No, I'm not gonna I'll just say that given I'll tell you that. You may recall last year that we had a profit protection plan, right, that we initiated in the second half. The profit protection plan, we are activating or have activated, you know, we started obviously earlier. So that gives you a sense for, you know, what that could be.

20:37 Okay. Very clear. Thank you. The next question comes from Muniba Kayani from BOFA. Please go ahead. Hi. Thanks, Martine, for taking my questions. Just on The Middle East, so thank you for pointing out March RevPAR. Would it be possible for you to indicate to us what you're seeing in April and May based on your bookings and so far? Then secondly, also on The Middle East, in terms of development activity, what are you seeing right now on the ground? And then just on the kind of the report that was on the hotel network, and you'd announced that you'd started internal and external investigations.

21:30 Is it possible to give a little bit more color on what you've learned so far? Thank you. Hi, Juanita. I'll actually start with that last question. So we're still conducting the internal and external investigations. And here, we expect to be completed with those investigations sometime in May. And as we communicated, we'll share the conclusions of those not just those investigations, but also you know, any actions that we feel we would need to take going forward to reinforce this. With respect to the Middle East, so what we see in April, frankly, is a greater impact in The UAE because The UAE in March, you know, because basically tourists couldn't come home, you know, the impact was not 100% felt, you know, in March. But what we see is we see Egypt and Saudi really, holding up to where we had expected them.

22:32 So it's just really The UAE. And The UAE is obviously with lower occupancy rate in the, let's call it, 20% to 30% in April. Now, the good thing is or, you know, the encouraging thing is that UAE has The Emirates have decided to reopen the school. And we're seeing seeing also a reopening of the airspace, which should encourage traffic through the, you know, through to the region and hopefully through the region as well. And with respect to NUG, I think it's, you know, way too early to tell whether that, you know, will have an impact or not. You you should keep in mind that with respect to our openings, they're mostly in Saudi and in Egypt. So we actually have very, very few openings in The Emirates this year. And most of our openings, actually, most of our openings, two third of our opening are usually in the fourth quarter, and 2026 is no different.

23:36 And one thing I also would like to, you know, maybe would like to point out back to Jenna's question, you have to keep in mind that the activity in The Middle East is the strongest. Big quarters are the first quarter and the fourth quarter, right? So, we essentially run through the first quarter. And I think, you know, if we assume that the tensions are going to ease, you know, sometimes around the summer, then that should, you know, protect the fourth quarter in that region. Thank you. The next question comes from Estelle Weingrad from JPM. Please go ahead. Hi, good evening. I've got two questions.

24:25 The first one, there are some concerns on potential jet fuel shortages and potential flight cancellations and so on into the summer. I'd like to know what's your take on this. If we get there, is Europe perhaps more sustained or resilient versus other regions like Southeast Asia? And my second question is on branded residential. Given the ongoing events in The Middle East, How likely is it to see some of these projects being postponed? Thank you. Hi, Estelle. So, you know, with respect to the jet fuel shortages, you you have to recall that when it comes to source of travel or source of traffic, if you look at the Europe region, over 80% is, you know, within Europe region. And if you look at Southeast Asia, over 70% is again within the region.

25:17 So, to some extent, that protects us, you know, from, let's say, what could happen to fuel shortages or airline prices, you know, for that matter. And again, when we look at, you know, room on the books in the summer, we're really not seeing any signs of lower demand in any region, frankly, obviously, the, you know, some of the GCC markets. With respect to the branded residencies, you know, again, probably too early to tell. You know, could there be some of those openings that move into the 2027? Frankly, it's too early to tell at this point. And again, lot of those are in the fourth quarter I mean, sorry, in the second half.

26:05 The next question comes from Alex Brignoll from Rothschild and Co. Redburn. Good afternoon. Thank you so much for taking the question. I just have one really on Ascendi. Could you just go into a little bit of detail as to where we are sort of contractually with that transaction? I know at the time, was sort of not specifically binding, but if you could talk about where you are, what the things that need to be completed before we'll get the sort of completed announcement and what the, you said, Q3 for time frame, but whether we would hear anything else before then? Thank you so much. Hey, Alex. Well, look, we're still in the same place that we were when we released the, you know, our press release. Obviously, you know, the fact that we released a press release on an MOU, you know, was a sign of our confidence in getting that transaction across the line, which we hope to do, sometimes with a signed MOU in the sometime in the second quarter.

27:12 And then we'll have to go through regulatory approvals that should take us in the third quarter. Thank you so much. The next question comes from Sabrina Blanc from Bernstein. Please go ahead. Yes. Good evening, Martin. Two questions from my part. The first one is regarding the measures that you have taken. Can you provide more clarity to provide example? And just to understand what you have put in place since the beginning of the year compared to what has been done in the second part of 2025? Because I understood that about of the cost had been postponed at the time in 2025.

28:03 And the second question is regarding the switch of hotels from managed to franchise. You have mentioned 1% impact this quarter. Could you go more in detail for the remaining part of the year, excluding S and D? And after that, we might have seen that for S and D. Evening, Sabrina. Sure. So in terms of the measures, I mean, there's really two, you know, two broad categories, right? One, obviously, measures in the impacted, you know, market. So I would say that, you know, about half of the plan is in those impacted markets and half of the plan is, frankly, in, you know, other parts of the group.

28:50 And, you know, the measures are very, I would say, you know, similar to what we did in the second half of twenty twenty five, you know, so essentially constraining the cost and constraining the, you know, the investments. But we are also very careful of still maintaining investments in the markets where we have good demand. And actually, we have redirected some of the investments away from The Middle East into other markets. With respect to the flip to franchise, we expect about one point of distortion in 2026, which is again half of what we experienced in 2025. You know, SND will not impact 2026, given the timing of the transaction. And as we indicated in the I think in the press release, the impact of the move to franchise of the SND portfolio is going to be gradual over several years.

29:51 And again, as we indicated in, you know, when we announced that MOU, it does not in any way impact our ability to meet our, you know, midterm algorithm, as it was, you know, factored in that algorithm. The next question comes from Jaafar Mestari from BNP Paribas. Two questions, please. The first one on Middle East. If you could please recap the current trends. Obviously, March was impacted gradually. Then in April, there's also a positive Ramadan calendar shift, if I'm correct.

30:40 So for as long as this continues in the current state, what revenue impact should we assume for DUAE, please? I heard you say a minus 20% number. I'm not quite sure, minus 20%, minus 30%, what you were referencing. And then Turkey and Saudi, is it flattish right now? And then second question, once we have that, your published EBITDA sensitivity, if I'm correct, is 7 to €8,000,000 for each point of group RevPAR. But obviously, it's a lot more difficult to offset these big numbers and The Middle East has a skew to higher ADRs and to management contracts as well, wouldn't it? Can we still more or less use the 7,000,000 to €8,000,000 or can we not use it, but thanks to the profit protection plan we can? What's the logic there? Thank you.

31:39 Sure. Hi, Jaafar. So the minus so the 20 you know, the 20 to 30s that I was referring to is the occupancy rate in The UAE, so in Dubai essentially, With in respect to the The occupancy and so Yes, the occupancy. RevPAR, please, would be three years old. Yes, yes. Total RevPAR is down much more than that in The UAE. It's actually you're right. I mean, KSA, you know, it very much depends on when the Ramadan is. What I will say on KSA So Saudi is that, you know, the Ramadan activity was as we expected it, and we see the drop off from Ramadan, frankly, as per seasonality. So no change there. Egypt, actually, we see, you know, we see occupancy again as we expected. There's some redirecting of traffic actually from the lifestyle resorts into Egypt.

32:36 And Turkey, we haven't talked about Turkey, but actually Turkey, we're starting to pick up from seasonality again, you know, as we expect. So it's really The UAE that keeps let's say, that stays impacted. And obviously, will be more in April than it was in March, given the timing of conflict. And with respect to the algorithm, you know, that algorithm is you're right, it's an average algorithm, but given the, you know, profit protection plan that we have in place, that algorithm stands. Super. So just we don't need to use something different, but equally, we shouldn't double count? Correct. The next question comes from Simon Lechepre from Jefferies.

33:55 The next question comes from Jamie Rollo from Morgan Stanley. Please go ahead. Thanks for taking my question. Two, please. First of all, can I just double check-in the context of your full year EBITDA commentary that you're still expecting SMDL margins of around 6%? I know they were a bit higher last year, but you're not factoring in a big upward surprise on that line, are you? And then secondly, and I may have missed it, apologies, are you still expecting net unit growth to begin with a 4% at the full year this year? Thank you. Hi, Jamie. Yes. On SMDL, I confirm that we hold to the 6% plus margin. And with respect to NOG, as I've said, it's really too early to say whether because, again, you know, two thirds of our opening are in the fourth quarter, which is, you know, good news because, hopefully, by then, the tensions will have eased considerably.

35:04 Okay. Thank you. Simon Lecupre, your line is now unmuted. Please go ahead. Yes. Good afternoon, three goodies. Firstly, the pricing strategy with the rise in oil price and FX going up. Do you expect the industry to react with some pricing cut to sort of stimulate demand into the summer?

35:58 Secondly, on The Middle East, I think a meaningful part of your hotel asset and other division is exposed to your region with your restaurant business. So can you remind us how much of the division is exposed to Middle East? And my understanding is that the restaurants are still open, but I assume there's probably not much activity. So what sort of drop through from the road mirrors should we expect? And in the second, you're able to reduce your cost base and do you get any support from the elements? And last one, if you can update us on the FX impact that you expect for the full year. Thank you. Simon, so with respect to rates, the only, frankly, rate pressure we see really in The UAE, where rates are clearly down.

36:52 We're not seeing that pressure elsewhere, frankly, and we're not seeing that as we go into the, you know, when we look at the, you know, at the summer bookings, you know, thus far. In terms of the terms of The Middle East, the our restaurant business in The Middle East, which is, you know, really gas is about, you know, 10% of the hotel assets and other revenue for the group total, right? So 10% of the group hotel assets and other revenue. And with and obviously, you know, this is a business actually that is, you know, because of where it's located, which is in Dubai, you can actually take the cost down very, you know, very quickly because essentially, you know, you can dismiss staff quite, you know, quite quite quickly as well. Our restaurant are open. Interestingly enough, our restaurant actually doing fairly well during the weekends. You know, it's a bit it's a bit slower, you know, during the week, but since the, you know, in the last week or so, you know, traffic has actually picked up in those restaurants because, you know, people in Dubai are actually starting to go back into the malls and on the streets. And with respect to FX, FX seems to be a bit more of our friend this year than it was last year, mainly because of the AUD, Australian dollar, which actually

38:22 is a bit stronger. And therefore, we expect the FX impact to be less than the 30,000,000 that we had shared with you in February. That's assuming that, of course, rates stay at the current level. There are no more questions at this time. So I hand the conference back to Mrs. Giraud for any closing remarks. Thank you. Well, you know, again, thank you for attending the call, and I wish everyone thank you for your questions, and I wish everyone, you know, a good evening.