Accor SA (AC) Earnings Call Transcript & Summary

Good morning. This is an unusual time for me and for Besma and Jean-Jacques at my side. I'm not sure this is a very pleasant time. We're going to make this as pleasant as possible. We're going to be giving you information. This is an important time for the group. It's our Annual Shareholders Meeting for Accor Group. We were to meet on April 30. We decided toward mid-April, we wouldn't be able to hold the AGM in the usual fashion. Therefore, the Board decided -- the Board of Directors decided we'd postpone slightly and get everything ready so that we could then organize this without meeting together physically. So we wanted to organize this event to be able to dialogue with their big and small shareholders. So we postponed this into 30 June, that's today. Unfortunately, which has also been the case for many other corporations, we have had to organize this AGM behind closed doors. So we do not have an audience here today. That's why I say it's not particularly pleasant. It's we -- usually have a human warmth here. We'll try to speak warmly though. We very much apologize that you couldn't attend, but for health reasons, that was a situation. It was impossible for us to actually meet physically. We wouldn't have want to have people attending here attending here and tend to wear masks and discussions wouldn't have been possible and so forth. So I do again, apologize. We certainly stand by this choice of ours. We very much hope. We'll be meeting with you very soon as of next year in a very much improved situation so we can actually get together beforehand and during and after and so forth. So I would like to call to order this AGM and hand the floor to Besma.

Thank you, Sebastien. And Ladies and gentlemen, shareholders, good morning. Welcome to this shareholders meeting, as Sebastian said is so unusual. Due to the health crisis that forced us to hold is behind closed doors without your being physically present. Therefore, you've only been able to vote remotely in advance of this AGM before 3:00 p.m. yesterday, we therefore, knew the outcome of the votes, and I will give you the outcome of the votes during the AGM before we move onto the question-and-answer session. So that we can maintain dialogue with our shareholders in current situation. We've set up the requisite equipment so that you can take part. First of all, we're broadcasting this AGM live. Furthermore, we've opened a dedicated hub, through which the shareholders can ask their questions in writing live. The Bureau will spend the last 30 minutes of this AGM fielding questions that have been sent in before the AGM or that are asked live. Mr. Sebastien Bazin will chair the AGM. I, myself, will serve as Secretary to this AGM. Considering the way we've organized this shareholders' meeting and in compliance with the decree published in 10 April, 2020. Along with Jean-Jacques Morin, I will also act as teller. We will be tellers ordinarily. It's shareholders that are in attendance that serve as tellers that have a large number of shares. We upstream got the quorum. I can say the final quorum is 73.6%. Therefore, we can deliberate both the new ordinary and the extraordinary session. I'd like to very quickly and go through some of the legal formalities. This AGM was convened and duly published in the legal gazette, published on 8 May and 12 June, 2020. And invitation was also published in the [ La Loire ] gazette on 12 June 2020. All of the documents and reports, which are submitted to the AGM, which must be made available to the shareholders have indeed been made available to the shareholders on the company's website. We would suggest, therefore, that we not read these out in verbatim. The documents which the shareholders are allowed to communicate on have been held available to you at the corporate head office during the previous 2 weeks before this AGM. These were also sent out to any shareholders that requested to receive these. I finished this, recalling the agenda for AGM. Items under the ordinary session are as follows: Approval of the parent company and consolidated financial statements for the year ending 2019. Appropriation of profits for 2019. Renewal of terms in office, Mr. Bazin; and Madam Knobloch and appointment of Mr. Bruno Pavlovsky as Directors. Approval of a related party agreement. Ratification, if need be, of reappointment of the statutory auditors. Approval of the report on compensation for all the company officers for the year ending 2019. Voting on compensation elements paid during or granted by virtue of the year ending 2019 to the Chairman and Chief Executive Officer. Vote on the Chairman and CEO's compensation policy for 2020. Vote on compensation policy for the directors for year ending 2020. Authorization for the Board of Directors to trade in company shares. Authorization to the Board of Directors to issue free share warrants to be given to shareholders in the event of a public takeover bid for the company. And lastly, powers to carry out formalities. Items under the extraordinary AGM now. Authorization to the Board of Directors do to share capital increases without preemptive subscription rights with no preemptive subscription rights for members of a company savings plan. And lastly, changes in the limits in the bylaws. Thank you.

Thank you very much, Besma. Now I'd like to give the floor to Jean-Jacques Morin, the Deputy CEO and CFO, to talk us through the financials of 2019.

Good morning, everybody. I have a great pleasure of doing the Group's results, even though as Sebastien has told you, these are very particular circumstances, but we'll do better next year. Let me give you the key figures to begin with. This chart really sums up 2019. First of all, the main trends. RevPAR was up 1.7%, which is a good performance given the complex geopolitical environment in 2019, not that this year will get any simpler, but in actual fact, in all regions, we expanded, except in Asia. The other remarkable point is that we set ourselves a target of having a hotel portfolio, up 5% over the year. But at the end of 2019, our growth was 5.1%. This is important in our business to be constantly able to add hotels to our portfolio. So we delivered on that particular objective in 2019. Now when you translate this into financial performance. First of all, what we see is that revenue exceeded the EUR 4 billion mark at EUR 4.049 billion. On a like-for-like basis, it was up 3.8%. EBITDA, which is how this revenue actually converts into profits, was up to EUR 825 million, up 5.9%, again, on a like-for-like basis. The final key performance indicator is how this EBITDA converts into cash. Well, the cash conversion rate between EBITDA and the free cash flow, as recurring free cash flow, was 77%. You may recall that the goal we set ourselves was a 70% conversion rate. So all our main KPIs were better than what we had targeted. So, how does all this lead to a return to shareholders? Last year, we returned EUR 783 million to shareholders, that's dividends and share buybacks. By comparison, 2018, it was EUR 650 million. So in the 2 years following the Booster project, which was the transformation of our business model and road map in order to become what we refer to as asset-light, well, over those 2 periods, the return to shareholders were very substantial. 2020 will be a different animal. Given what we know about COVID-19, we are managing very carefully. In fact, the Board of Directors has decided to keep the group's liquidity by withdrawing the proposed dividend in respect of 2019 and by suspending the additional share buybacks planned in 2019. That was a EUR 700 million project. That's what happened in the key figures for 2019. Let me now give you more details. One of the key points, one of the cornerstones of our performance is expansion. In other words, we used the attractiveness of our brand to expand the portfolio of hotels. We've actually exceeded 5,000 hotels under management. That's 740,000 rooms. In the second column, what you'll see is that in 2019, we almost opened a hotel every day. We opened 400 -- I'm sorry, 45,000 new rooms. As for the hotels we signed, well, we signed a new hotel every 16 hours, which means that we have signed up 510 hotels in 2019. That's the equivalent of 76,000 hotels. This means that we now have a pipeline as the hotels and rooms will be opening for the next 5 years, which is 30% of our existing portfolio. Now, that in our business, is a very, very good proportion, a very good ratio. So again, these were records that we achieved in 2019, record expansion. Let's take a close look at the figures, how does this convert into revenue? I told you about EUR 4.049 billion, which is up 4.8% on a like-for-like basis. The difference been 3.8% and 16% was the acquisitions made in 2018, following on the Booster project. That's how we reuse the Group's liquidity after the proceeds of the Booster project. This had a significant impact to our scope of consolidation when it's the difference between the 2 figures. Now here, we have an analysis of revenue by segment, our main businesses, most of our portfolio, 96%, in fact, is not owned by us. We don't own the hotels themselves. It's what we call HotelServices in which what we do is that we act as franchisees and managers of hotels. This is our core business. And of course, the goal of the Booster project. The second line of business is hotel assets. That's the remaining 4%, which we continue to own or lease, as the case may be. This is mainly a business in Australia, known as Mantra. And of course, another line of business called new activities. These are activities relating to hospitality. And this includes business such as renting residences, concierge or digital services that we provide to hotels. Let me now put figures on that for you. I described the segments, but what you'll see is HotelServices was up 4.6% on a like-for-like basis. Very good performance, given RevPAR was only up 1.7%. Hotel assets were up 2.9%, and new activities were up 3.8%. I think the more interesting slide is the next one, which will show you how this revenue converts into EBITDA. In HotelServices, you see that our EBITDA, earnings before interest, taxes, depreciation and amortization, rose 5.8%. And on a like-for-like basis. Again, good performance by comparison with the RevPAR growth of 1.7% I mentioned earlier. Hotel assets disappointed slightly because our profitability decreased, it decreased by 7.3%. This was mainly due to Mantra and Australia. So far as the Australian market wasn't very supportive if I can put it that way. In fact, it disimproved the overall situation. There's also a very deep banking crisis that had an impact on the Australian economy. Just I think adding to the trade wars between America and China. And of course, the bushfires at the end of the year didn't help. Difficult year for Australia, and that's clearly reflected in these figures. Even though, as you can see, the reported growth is impressive at plus 40%, that is due to the change in scope of consolidation, subsequent to the acquisition of Mantra and Movenpick. This -- new businesses was almost balance of minus EUR 2 million and almost broke even at minus EUR 2 million in 2019. We see -- on Q4, we were -- we broke even. This is why profitability over the year is very close to 0. A lot of work on [indiscernible] and Paul and a number of other new businesses. Profitability and growth should be in double digits. This is the -- how we get from EBITDA to net income. Just a few words. First of all, operating income, depreciation, amortization and provisions, which increased from a little over EUR 200 million to EUR 328 million due to two factors. It was a change in accounting rules, I'm sure you'll have heard of the IFRS 16, which is how we carry lease commitments on the balance sheet. And because of this, we carry more depreciation because you have an asset and a debt on the balance sheet as the asset depreciates, you have to impair -- carry an impairment charge, which gets higher. Also the Mantra effect [indiscernible], which were the owned assets and leases. Second important point is when you look at EBIT, two impacts. The performance of Huazhu, first of all, our hospitality partner in China. We had a 10% stake at the start of 2019 in Huazhu. And last year, in China, RevPAR was negative. It wasn't good because of the trade war between China and the USA. This is carried on our accounts and our partners accounts by the form of this equity method. AccorInvest is the resulting company from our asset-light road map. This is where the assets are housed or carried. And in 2018, we sold the bulk of the 65% of these assets. This is now an independent company that we consolidate the forward -- using the equity method. The 55% stake remaining is carried by the equity method and of course, much more expensive to fund them when it was part of AccorHotels. So far as AccorHotels has a much greater ability to fund its own operations. So -- and of course, less interest expense. Finally, we have a number of capital gains. We disposed our 5% stake in Huazhu and we carried an impairment charge on Australia for Mantra, the result of which we have a number of nonrecurring items, a substantial variation from less -- from negative EUR 400 million to almost plus EUR 200 million. Net income from EUR 2.2 billion were down to EUR 464 million. The EUR 2.2 billion, remember, this was due to the disposal last year of a large stake in AccorInvest, which generated almost EUR 2.5 billion nonrecurring. One slide of cash, where you see the EUR 430 million in free cash flow. EUR 134 million, the dividends. You'll also find the impact of IFRS 16. This is lease commitments and EUR 978 million on the balance sheet. This is probably the biggest single item and the one I wanted to underscore on this slide. A quick update on our business in Q1. Q1 was a good quarter. As you can imagine. Our RevPAR was down 25% -- in fact, down 62% in March. You'll see that in the industry on the whole, figures were much more severe in Q1 and in April and May. This is led to a drop in revenue of almost 17%. And of course, in times of crisis to really -- it's all about how you manage the crisis. This is where you see our savings schemes, what we've done to improve at this unprecedented situation, not just by reducing central costs and our efforts in terms of marketing, distribution, IT, and of course, the downsizing of CapEx over the period. The point I'd like to single out to finish. It's a very positive one but we manage the financial situation very well. Our balance sheet is very strong. In May, we had EUR 4 billion in liquidities, which will enable us to hold out for 40 months, all things being equal. We even reinforced the situation by taking out an additional EUR 550 million -- EUR 560 million revolving credit facility. So we have a very strong balance sheet and should be able to weather the storm. Thank you.

Thank you Jean-Jacques. Thank you. Now to step back for a moment. Back from the figures as such. Here, you can see a slide as of end of April. The red portions, you see here, red bubbles are areas where the coronavirus had begun in all likelihood. I don't know, in Jan, February in China and very quickly, it's spread from China, westward. And unfortunately, then spread out throughout the European continent and then the North American continent and it went from North to South, North to the U.S. and Canada towards, unfortunately, a great presence in Brazil currently. Why are we showing you this map? Because we focus on it every single week, it's been the case since the beginning of March until today. Unfortunately, these red bubbles -- well, the first thing, we're going to disappearing in Europe, but up hearing in other countries and other locations worldwide. And the population is obviously getting bigger in other areas of the world. As of the end of March, beginning of April, we were at a loss, at a loss. It happened so suddenly, so abruptly, it was quite violent. Major impacts. So we had to ascertain the impact we have on our sector, number of international travelers. If we look at the 7-year period here, the hotel tourism industry has been blessed. I would still say, today, it's been blessed, this sector, hospitality. But for the first time, you can see this on the chart, look at the last 20-year period, starting in 2000, this range is up to 2020 on the screen. And you can notice two things from this. Some of you remember quite well, the 2003 crisis due to the SARS epidemic -- pandemic that had happened at that time and had impact in U.S. and Europe. And we see -- they actually had a low impact on our sector, and it was quite a considerable rebound the next year, 2004, we went well above the 2002 figures, the following year. The second crisis was an enormous one, very broad. The euro, as the currency, almost disappeared. This was 2008, 2009. It was a systemic liquidity crunch, global banking crisis. This was also quite violent. Many people had savings, wanted to withdraw the liquidity from their banks. We tend to forget what happened back then. And look what happened in our sector, tourism and hospitality. Yes, there was an impact, but the impact on international travel was only 4% downturn. Then as you can see, right -- as of the next year, 2010, and then subsequently, things went back up. There was a real rebound. So we can see [indiscernible] recoveries, where there's a quick downturn and an equally quick upturn. Look at today, though, look at 2020. This isn't a systemic crisis. It's a completely different crisis. It's a health crisis. And look at this absolute plummet, this collapse, and we don't know if the EUR 440 million will be reached. But we're not just talking about a 2 percentage point drop like in 2003 or a drop by 4% in 2009, we're talking about a 65% drop today, for a simple reason. Some 90 countries organized lockdowns, shut their borders. And in our industry, you need three things to operate: You need freedom of movement of persons. You need booming tourism and you need lots of business travelers. We can say, since about mid-March, up until about 2 weeks ago, those three things weren't happening that are prerequisites for our industry. They're coming back gradually. I would never have thought in just 12 months' time we could lose over EUR 1 billion in international travelers. And we don't know what this is going to look in 2021. It's fairly unlikely the curve will go back up to where it was in the last couple of years. We just have to accept this fact. It's been abrupt. Accor, as Jean-Jacques said, is perfectly in a position to cope with this plummet in this time of difficulty. But we must be cautious. We must look at things clearly and not only be able to contend with this, but also adapt and adjust to the time of crisis. Therefore, various decisions were made by the Board of Directors of your company. The first one, and this was a fairly infrequent time over the past -- last 10 days of March, between 20 March and March 30. And at that time, we realized the crisis was a major one. The pandemic was a major one in Southern Europe. It hadn't hit France quite as hard at the time, but it certainly was hitting Italy and Spain at that time. So toward the end of March, the Board of Directors with your company's management decided -- to make a decision that was also fairly abrupt when maybe unfair to those who were affected by, decided 220,000 employees were furloughed from our company out of 307,000. We are flanking measures by local governments, but they weren't the same in all countries as they were in many European countries and North America. So when you ask someone to stop working,, to not come back to work at a hotel that's been shut as of April. A lot of employees ended up hard hit financially. And in human respect as well, often at a loss to deal with the problems, health-related and even food-related and caring for their children. When the decisions were made end of March, your Board of Directors decided to suspend the dividend, which had been confirmed just 2 months previously, end of January 2019, not just to suspend the dividend because we had to be extremely cautious. At that time, all we were seeing was the very beginning of the pandemic, and nobody knew how serious it would become. At the same time, we didn't want to just not assist those 220,000 employees. The decision was 25% of the dividend. Which wasn't being paid out, around EUR 70 million would be earmarked for a dedicated fund, a separate fund. If need be, the fund will be made available, money is made available to all of these employees who are in a difficult situation or might not have access to health care. This will be funding to help make up for any loss of medical coverage and provide assistance to people who are in extreme need, give them the financial resources to feed their families. We're not talking about an additional, some sort of bonus or additional pay packet. You'll see [indiscernible] predecessor speaking about this remarkable gentleman who's just in 3 weeks' time, was able to take on this task. And I would say, it's both. It's distress and relief, I mean, distressed because we have had to set all of this up under great pressure. And we see the scale of the duress, and we realized we had to act, but we see a relief at the same time because it's been a wonderful initiative. There was this time of distress and we've been able to assist. I hope Accor has been able to make its contribution. We'll hear from Mr. François Pinon, who will be explaining this Heartist Fund to you now.

[Foreign Language]

You may have seen in François eyes the pride he felt, and I can repeat it here. You can't imagine. You can't imagine what this fund has really triggered off in Accor. Amongst everyone, all the people throughout Accor, there's a real feeling belonging of having served a purpose being useful, having helped out. We've all brought this forward. I've just shown you a small portion of this video. We're talking about hundreds of letters we've gotten from people. I didn't know their names or faces, and they're writing us these letters, really powerful messages so I don't know what we'll do with all those letters. We're not going to be disclosing them certainly. But it just is an extra bit. It gives us more energy, more excitement for this industry, something we've loved so much for the 70 years in this industry. It's great to have these examples to show how we are really taking care of others and paying attention to others. It's our sense of value in this group. It's an initiative that came very naturally. Therefore, it was very easy to set up. We've worked with health care providers. We've worked with battered women. We've assisted various people during these tough times. We're very genuine here. There's no doubt about it. This has helped us get through the crisis, weather this time of crisis, send out positive signals. It's been a special time. We needed this extra energy to weather the period time where we could have felt very alone. Let's continue. We haven't finished yet. Now is June 30. And here, we can see the REVPAR. You may have forgotten about the REVPAR, it's just a multiplication of 2 indexes, by far the most important ones for us. One index is the average price per room and day that you charge. And the second indicator is the occupancy rate of the hotel. You won't supply the average price of the room by the occupation rate, you get the REVPAR. On the left-hand side, you can glean a lot of information. That was not the information I'd like to see. Firstly, you can see decline in our activity from February through March, everything falls apart, collapses. You're going to see China, which had suffered before us in February, March was the first to start rebound. Bottom line, minus 90%. That means you've lost 90% of your activity. You can see China actually started ticking upward quite quickly since mid-March to reach around minus 50%, though in the past 10 days, this is shifted, slightly declined somewhat. So it's not going -- ticking up what is we have been in the past 6 weeks. Then in the U.S., surprisingly enough, although they've been hit -- hard hit by this pandemic, which is becoming more and more virulent in North America. Nevertheless, they've shown resilience to the epidemic, at least in the hospitality sector. There was the low point, which was lower than in Europe. And for a few weeks, they've started to seeing a turnaround. It's not wonderful, but they went from minus 80% to minus 60%. Then you can see Europe, wonderful Europe, which reached a trough minus 90% which means it was basically no one in our hotels, most of them were shut. While it is tough for us to get things back on track now after the end of lock down since the last, what, 3, 4 week period. The main thing, travelers right now, today, are looking, first and foremost, for seasonal rentals, in-houses or apartments so that they can come in contact with as few people as possible for health purposes. Next, we see people interested in outdoor camping, being out of doors. On the right-hand side here, we can see more specifics on Europe, looking specifically at the U.K., Germany and France. Now here, Germany. Is this a lesson to be drawn? I hope so. In blue, we can see that Germany, since the end of the lockdown, has seen an upturn, much more than in France, where we're still flatlining, minus 90%. Things will get better. We have every reason to hope positive signs for this summertime, July, August. We can't draw a hasty conclusions yet, but I just want to share this info with you. For those who think that we've overcome at all? Well, yes, certainly, we've gone through the lowest point, but we have no idea how long it will take for us to really get back on track. We've set up all the necessary resources to get a rebound as fast and strong as possible. The various stages in the process when you want to get people to want to stay in your hotels. First stage in the process, we spent a lot of time on this Accor as many other in the hospitality industry. Many other peers. We work with local governments and authorities to set up a timetable for reopening a health protocol, has also assistance provided and so forth, by all governments, all the main governments in developed countries. So together, you rebuild a code of procedures, a timeline, to make sure you're in sync and you do what's necessary. This was done in April and May. Very transparent, great communication at every level. Second stage, you've got to provide evidence. It's great to have a timetable. It's great to have a protocol. It's great to have all the people at cafés, restaurants and hotels working together in the whole industry. But you've also got up people who check that the protocol is adhered enforced have got to be stickers for instance in the rooms explaining before you go into your room. You open the door and the door has a sticker on it that shows the door has been opened and that it was sealed before it was opened. I was cleaned and sealed beforehand. So we've got customer passage that's now been specified. So people can know that they're in clean premises. We're calling all safe, they all save label. Not all is the name of our loyalty program and all safe is the label for this health safety program we've rolled out. We want to go even further, this initiative haven't started well ahead of COVID. This didn't happen because of the pandemic. But together with a partner, the AXA Group, and we're proud to be working together with them on this with AXA. Will also provide further evidence and assistance for all of our global customers worldwide regardless of where they may be. So that within 2 hours time, they can receive medical assistance, it need be through the whole network of AXA doctors worldwide. So if you have a small problem or before a small medical problem becomes bigger, you can get an answer from a doctor. This has been, being rolled out, and this has been very well received. Is there enough? I hope it is. You'll be amazed to see this ongoing process. This will help continue to make people want to come to our hotels, want to travel and don't feel nervous about traveling. We're wanting them to travel to us. And get them out on the road. Last slide I'd like to show you. It's pretty tough when you read it carefully. This is the result of two very different times. Because the first time I mentioned it to you, that was in time to end of February and May 11, when we had lockdowns in France and throughout Europe, it was a time of urgency, emergency, it was a time we had to adapt, we had to accept a tough reality, but we had to make decisions very often during the 2.5 month period. There were decisions that were like rituals. Boards of Directors met every week for over 2.5 months because we needed to communicate between management and the Board of Directors, wanted to discuss what we were experiencing. This enabled us to make many different decisions correctly, appropriately, adapting to the crisis as need be and very naturally with the results, which I believe have been positive. Then there's a second time, which is now. It's been since the end of lockdown, it's not a time of urgency but a time for reflection for thinking things through, for wondering about these questions, to ask ourselves, what has the crisis taught us? How should we reinvent the group? If there were to be another crisis, what lessons could we use from this one during the new crisis? Do we have the right methods, the right teams, the right customers, the right tools, do we innovate enough and so forth? Lots of questions we've been asking. These, of course, were questions we were looking to previously the executive being on the Board of Directors in January talked this through before the crisis. And we're already thinking through these points, though. One sentence sums everything up. We transformed this group in its economic its business model. The business model is now asset-light. We're not yet a fully asset-light company. There's a big difference between have a model -- business model and an organization. We're now to quickly organize our organization, make sure it's completely in line with the model we established 3 years ago. These three elements here. Yes, our organizational costs are too stiff. They are too fixed. Set cost, they vary as revenue varies to address the cost structure and adapt it to the market ups and downs. Yes, we learned a lot about ourselves and the cost cutting plan, extraordinarily drastic cost cutting plan. Yes, we have to keep some sort of portion of savings. We'll need this in future years. We've got to increase our margins, profitability of the Group benefits everybody, benefits employees and our customers and our shareholders. And then lastly, you always learn during times of crisis. And the last point here, Bertrand Piccard, European astronaut, who said something quite wonderful i thought, saying "The crisis you accept becomes an adventure." And that's what we're now shifting over into. An adventure, we're living -- experiencing an adventure like any adventure, you're better off afterwards. And we will be a stronger group after this, strengthened. I believe now, I'd like to hand over to Besma. Yes, over to you.

Thank you. I'm going to talk to you about governance. After today's AGM, the Board of Directors will comprise 12 directors, including 2 directors represented employees, and 6 women and 5 independent directors. As you know, this year, in terms of office, Sebastien Bazin and Madame Knobloch will expire at the end of today's AGM, but they will -- you will be asked to renew them, well, for asking to co op the new independent director Bruno Pavlovsky, who is the Head of Fashion at Chanel, who has a short video to introduce himself.

[Foreign Language]

If I could just take over 2 seconds here, I know it wasn't planned. And I hope he's listening, and even if he's not, I'll see him over lunch. So concerning Bruno Pavlovsky, whom I didn't know only 9 months ago. As you know, the Accor Group has a little over 40% of its business in the world of upscale and luxury hotels, which wasn't the case 10 years ago. It was closer to 10%. So there've been a quantum leap in the meantime. And now we are largely dependent on a number of lifestyle and luxury brands. So through its Nominations committee, the Board of Directors realized that we needed this. When we diagnosed our own skills, we realized that we needed somebody with different insight, with experience in this segment. So Bruno not only fitted the bill and agreed, some of you may or may not know, he will be talking to you next year. The Chanel brand, I think if you were to take just the 2 or 3 luxury brands in the world with the strongest growth while protecting a brand like a jewel, accompanying it financially, industrially, accompanying all the craftsmen behind the brand, you see that in terms of corporate social responsibility. Bruno will help us make another quantum leap not just in terms of brands, but the sustainability of brands and our presence in the whole world of luxury hospitality. So I'd like to thank Bruno and say just how happy I am that he's joining us. I apologize for this brief integration. It was just a short commercial spot for Bruno. Besma?

Now to continue with the Board of Directors work during the year. In 2019, the Board met 9 times with an average attendance rate of 90%. During the year, the Board reviewed the group's strategy. And adopted decisions concerning the normal course of our business. In particular, the Board authorized the disposal of an 85.8% stake in August to AccorInvest and [indiscernible] Huazhu and a deal with Paris Saint-German. In 2019. The Board also reviewed the financial structure of the company and authorized the pursuit of the share buyback program. The Board of Directors works with the 4 committees. First of all, the Audit, Compliance and Risk Committee, which met 4 times with an average attendance rate of 92%. This committee, in particular, worked on the Board of Directors' deliberations, concerning the annual interim accounts and following up the implementation of the group's compliance plan. The Commitments Committee, whose meetings are opened to all directors, well, it reviewed and recommended in the course of its 5 meetings, the various proposed acquisitions and disposals, particularly the disposal of August and the average attendance rate of its members was 86%. The International Strategy Committee met twice with an attendance rate of 100%. At these 2 meetings, International Strategy Committee dealt with international topical affairs, geopolitical changes that had taken place in various parts of the world and the impact they have on the group's activities. Finally, the Nominations, Compensation and CSO Committee met 5 times in 2019 with an average attendance rate of 88%. This committee is chaired by Sophie Gasperment who has recorded a video to tell you about how committees work in the field of compensation, in particular.

[Foreign Language]

Now let's hear the video from Mr. Cedric Haaser, who was speaking on behalf of the statutory auditors. He'll be talking to you about all of the reports to be submitted to the AGM, hard act to follow.

[Foreign Language]

I'm now going to present the resolutions put before you for approval and the results of the voting that took place yesterday, up to 3:00 p.m. We will then move on to questions and answers. Before that, let me recall how many -- [ 18,015 ] took place with a total of almost EUR 9 million out of the 260 million or over 260 million shares with voting rights. The final quorum was, therefore, 73.604% in terms of the number of shares. As you know, registered shares that were registered over 2 years have double voting rights. I'd also like to remind that since the law simplifying and clarifying and updating corporate law in July 2019, the majority required to approve decisions by the ordinary and extraordinary general shareholders meeting is calculated on the basis of shares expressed by shareholders present or represented. Extensions and canceled votes are no longer accounted as negative and do not figure in the calculation. Finally, we propose that the bureau will be dispensed with reading the extensive text for each resolution, given the amount of time we have available on Internet and the fact that you have all this information available via Internet and annual reports. First resolution concerns approval of the statutory accounts for 2019, which was approved. The second resolution concerned approval of the consolidated financial statements for 2019, and it too, was approved. The third resolution concerns the allocation of earnings for 2019 entirely paid into reserves as no dividend is paid out. This resolution was also approved. The fourth resolution concerns the renewal of Sebastien Monde's (sic) [ Bazin's ] term of office for a 3-year period, expiring at the end of the AGM in 2023, the resolution was approved. The fifth resolution concerns the reelection of Iris Knobloch for a 3-year term of office expiring at the end of the AGM, voting on the accounts at -- for 2022. This resolution was also approved. The sixth resolution concerns the election of Bruno Pavlovsky as a director for a 3-year term of office expiring at the end of the AGM deliberating on the accounts for 2022. I'd like to remind you that all information concerning members of the Board and whose term of office is renewed or otherwise, is presented in the notice of meeting and on our website. All that information is available. The seventh resolution concerns the approval of a related party agreement with SASP, Paris Saint-German, concerns sponsorship for the club. This resolution was approved. The eighth resolution concerns ratification, if required, of Ernst & Young as statutory auditors, Ernst & Young and others. This was because of a clerical error that was entered in the 12th resolution that has since been rectified, and the resolution has been approved. The ninth resolution asks you to approve the report on compensation for all executive directors, including directors in respect of the period ended December 31, 2019. And as presented to you in the universal registration document, this resolution was approved. The tenth resolution concerns approval of the compensation of the fixed, variable and exceptional items of the total compensation and advantages of all times paid in respect of 2019 to the Chairman and CEO, Sébastien Bazin. This tenth resolution was also approved. The 11th resolution asks you to approve the Chairman and CEOs or the -- I should say, the compensation policy for the CEO's compensation in 2020. This was approved. The 12th resolution concerns the compensation policy for directors in respect to 2020, again, as set forth in the 2020 URD. Again, this was approved. The 13th resolution concerns an authorization, when you give every year to your Board to trade in the company's shares up to a maximum of 10% of the share capital. The resolution was carried. 14th resolution concerns -- asks you to approve the Board of Directors to carry out an increase in share capital without preference [ subscription ] rights for employee savings schemes. This resolution was approved. The 15th resolution concerns the amendment of articles 12 and 15 of the company's articles of corporation in order to adapt them to recent developments in the commercial code. This consists in reducing the threshold above which the Board of Directors must have 2 directors representing employees. That threshold is now at 8 rather than 12 beforehand. And the second amendment enables the Board of Directors if it so wishes to take certain decisions by written consultation. This resolution was approved. The 16th resolution asks you to authorize the Board of Directors to issue equity warrants to be distributed free of charge to employees in the event of a takeover bid on the company. This was approved. And finally, 17th and final resolution concerns powers for authorities and the 17th resolution was also approved. All resolutions have been approved, and I'd like to thank you for your attention. We can now move on to the Q&A session.

Thank you very much, Besma. In the Q&A session will be moving through this in an efficient fashion. Now first set of questions in writing. Many of them came in great detail. We've got a lot of questions on CSR from organization called the Forum for Responsible Investments. It's a questionnaire which they sent us, which certainly, we answered the questionnaire in detail. It's already been posted on the Accor Group's website. So you can see, amongst others, that question and the answers we've given. Then a second set of questions, they're less detailed, therefore, easier to discuss. I'll go through some of these and answer these live. There's a third set of questions, which are what we're calling the chat. For those of you who've been listening, and who'd like to ask a question, you can do this via the chat that comes into our website and Sebastien Valentin, who is to my right here, in front of me will look through the questions and select a few of them for us to be able to answer these live for you. First of all though, pertaining to the first set of questions, those that come from individual shareholders. We've got a first question coming from Mr. [ Matthew Drape ]. He asked several -- 3 questions. He said, first of all, how can we know the number of shares that each member of the Board of Directors holds? I'll answer Mr. Drape. All you need to do is go to the website and look at the registration document for the Accor Group, and you can find by name, each Board of Director. Remember, they must all have at least 1,000 shares. Many of them have a lot more than the minimum of 1,000 shares. Second question. Now this one is slightly longer. The question has to do with Accor's strategy. So is Accor's strategy free and independent. The context of his question is follows. This helps us understand. It says here, why the Deputy Secretary for financial affairs, the Ministry of Finance of Qatar, is he a member of the Board of Directors of the Accor Company? President of Mr. Aziz Fakhroo, the representative at the Accor Board of Directors. Does this make the Accor company dependent on Qatar? Are you considering a strategy to regain your independence? What is our strategy? Well, the question certainly is acceptable to be asked, though it's not true. The Board of Directors is completely and fully independent. Over half of its members or as they're called independent directors as per the Mid-f code. I mentioned Bruno and his endeavors, he has done a beautiful job. All of our directors have made major contributions to the Board, a very distinct contributions. You saw this during the time of crisis. We stood together at the Board and we moved forward together. And this was very beneficial. It's a great thing that we're all different with our own different ways of doing things and ways of thinking. So yes, the Board of Directors for quite some time, precisely, has different members that are complementary members, and we, therefore, are able to look very carefully at the decisions before they're made. Often very frankly, difficult questions asked about the company's strategy, about the ways and is implementing a strategy such as our independence and so forth, shareholders' policies and political independence, international, strategic questions have often arisen. Some board members come in -- bring in a vantage point that's quite broad. So I can say to you, certainly have no fear whatsoever. All decisions made by the Board of Directors are independent, enabling the company clearly to be fully free and independent of any shareholder whomever. Mr. Aziz [indiscernible] knows hospitality very well, and he'll look at tourism very, very well. He makes very precious contributions to many subjects. Question number three from Mr. Drape. What is the Accor company's commercial strategy going to be for 2020? It's quite straightforward. It's the logical follow-up on what we've been doing for the past 5, 6 years, i.e., we're identifying and addressing our brand and making our brand distinctive, showing how it's different from other brands and different family brands to be going their own way and being distinctive. We're delivering on our promise. This is beneficial to the customers. If there were to be some change in 2020, you're referring to this. Today, we have to focus our commercial strategy much more on domestic travel. Domestic travel much more than international, as I said about an hour ago. Unfortunately, though it's going to go back upward, we'll be losing 1 billion international. We've lost about 1 billion in international travelers. 75% of our business, though, is domestic or European. And the borders are reopened in Europe. So we can say that many targeted actions are being taken to win over the domestic travelers and the travelers that are closer to home. Now another question from Mr. Drape as well, it's as follows. An improvement in Accor's customer service, will it be taking place in 2020? This gentleman had some difficulties with the customer service, particularly located in North Africa. As with loyalty card that wasn't received. The online services in France were able to fix the problem that wasn't fixed in North Africa, says he. In our answer, we say, we very much apologize if you feel that this was a problem. To explain what happened is at the time, your loyalty card was to be renewed. That's when we were launching the new loyalty program ALL. So it took about 1.5 months. When we weren't renewing previous cards. They didn't have the new logo, the new loyalty card called Accor Limitless. So we do apologize. Our North African services are just as sufficient as all the other departments we have worldwide. And of course, we'll be keeping local services to benefit the local customers. Another question from another shareholder, [ Marcel Chasener ] his name. He asks, in spite of the health situation, why not maintain a reduced dividend to be paid out in the form of new shares? Answer. We could have. We discussed this. As I mentioned, we talked about this end of March when the decision was made by the Board of Directors. We want the decision to be crystal clear and have a clear impact. So that we could say clearly, too, the community of investors that this was the time to keep on hand the cash that we have. We didn't know how difficult the crisis would be. So for the sake of caution and to ensure the sustainability of the group, we decided to not pay a dividend and not any new shares. We certainly hope -- I mean, French law could authorize a payment of dividend in shares. That's not authorized right now. We have to comply with legislation, which is saying we have to either pay in cash or in shares is up to you opt for cash or share payment of a dividend. If we could adjust, say, in shares conceivably, that could help say yes to the question you've asked, but unfortunately not possible. Another question from Mr. [ Faien de Favre ] shareholder asking whether you're thinking about giving access to various levels of status for the Accor card, taking into account whether you're a bearer registered shareholder? We consider this every year how we could let individual shareholders reap some benefits under our loyalty program. Every year, we hear that we shouldn't to mix things up, and then we shouldn't mix the status of being a shareholder. If you want to be a shareholder of the group, it's because I hope you see an economic advantage in being a shareholder and because you want to stand at our side and this major corporation. We, nevertheless, several years ago, did help speed up the status process. If you want to be an individual shareholder and you make a request, and you've been a shareholder for several years, you can automatically get the gold status for a 12-month period. If you got the status, but you don't travel, you're not a loyal customer. Despite of the fact you may well be a loyal shareholder. Both are equally valid. But you have 12 months to have the gold status and add to it. And this is what we do and that's how we do it, and I hope that's satisfactory to you. One final question, I'd have been disappointed if he hadn't asked a question. It's from [ Roget Tranish ], who attends a lot of AGMs who wrote me a very long letter, a 4 page letter. And Mr. [ Tranish ], if you can hear me, this is for you. You said you are an ordinary shareholder, which you're not. You're a well-known shareholder and a very responsible legitimate shareholder. Your question is as well as why did you organize this AGM behind closed doors, and you'll regret that. But did you tell me that is just a lack of courage or transparency or. I think you don't know me well, [ Mr. Tranish ] Yet I talked with you. We've known one another for quite some time. We spent some time before joining and after our AGMs, we answer your questions, but simply, no, we're not trying to avoid you on the contrary. These are decisions that have been taken because we've been responsible. I did not want to have a dialogue with 2 meters away from you wearing a mask. It just didn't seem to be the right time. Come and see me, as others have. My door is always open to you as it is to all shareholders. So I think it was the best decision. I can assure you that it was taken entirely for health reasons, to protect one and all. But yes, you are entitled to meet me and the members of our Board, whenever you wish. We hope to see you next year or beforehand, if you prefer. As for the rest, well, the answers will -- are to be found on our website. Sebastien Valentin, what have we got? What have we got?

We have 2 questions.

Well, there are only two, we'll take both of them. First question is, what savings efforts do you intend to make sustainable? That is indeed a good question. I told you that there were 2 important aspects. First of all, we need our costs to be more variable. And other, should be able to align them with the economic activity, whether it's good or bad. We've too many fixed costs. The second reason is that a number of decisions that have been taken over the last couple of months that I think need to be -- need to endure. A number of things have been done for the benefit of our owners, clients, guests that are not recognized. Let's say we're not paid for these services. I think from time to time, we have to give up on certain ideas if nobody is prepared to bear the cost. I think what we -- service we provide with the not, people are not prepared to pay for these services, well, first of all, maybe we should abandon these services because they're not creating value for anybody. I'll be much more specific about this on the 4th of August, which is the date we've chosen to announce the half yearly results. So on the 4th of August, we'll probably give you the first half results, but also allow time for those of you who'd like to attend to do a Q&A session, what we call an investor call. And on the 4th of August, I'll be -- along with my 2 colleagues here, we'll be much clearer about the amounts involved, the type of reorganization we'd like to implement and the type that -- of reorganization that we wanted even before COVID-19 ever arrived. This is because we have an asset-light economic model that we have yet to implement. We are not yet an asset-light company despite our policy and strategy. So we wanted the model to be implemented before we could actually adjust. The second question is, given the current share price, wouldn't it be a good idea to buy back shares at a low cost? The answer is yes. Yes, I'd be the first to deploy the share price, which is a reflection of the lower level of business, but let's be consistent. We decided that we must preserve our cash at all costs. Cash has -- it's one of our great strengths, particularly by comparison with our peers in the hospitality sector. We have the means to withstand a crisis of even 40 months, which won't be the case. This is not the right time to use our cash, given the current circumstances. Even though from an investment point of view, it would seem to be a good idea to buy back our shares. We apologize, we bought back 300 million shares in January and February, but not now. We have other priorities. We have a third question. The third question is longer. Do you not think that your employees and head offices, which are only working 50% of the time, on average, with the substantial decrease in wages, will not be able to pick up as the hotel business picks up in France and Europe. They cannot continue to work at 50%. So here, again, this is a very understandable question, very legitimate question. I'm going to answer with my guts, I think. In the current circumstances, and we haven't got much visibility about how the recovery will take place or when it will take place or what the effects of the recovery would be. In the current circumstance, it's probably -- I think urgent for people to remain furloughed, if only partially because quite simply, the important thing for me now is that we want guests back in our hotels. If they're not in our hotels, then we have no service or no reason to offer them services. So we may be 3 or 4 weeks behind the recovery, but it's soon to be a few weeks behind the recovery than 2 months ahead of it. Unfortunately, the crisis is difficult to read into. And all we can be is be maybe less audacious than we've been over the last 3 or 4 years. We must be cautious. And well, as you know, we've taken a lot of initiatives to avoid people being in distress. And in many cases, governments are also providing various forms of compensation. True that the 80% government guarantee or 84% guarantee is what the government is counting. We add an additional 6% to bring it up to 90%, but a lot of people do not receive 100% of their wages or didn't anyway. That was the case up to the end of May, but though that changed slightly. I apologize. I would be delighted if everybody were to return to work, but the level of business would not warrant that just now. Sebastien, we've 2 other questions from the consultative Committee -- Advisory Committee. First is on the consequence of COVID-19 have make you rethink any of your structural concepts? Probably, yes. As with regards to concepts, are we going to challenge the brands? No. Well, I'm not sure I know exactly what is meant by concept in this instance. But there are no taboos here. First period was the emergency period. Since mid-May, it's been a lot about thinking, putting our heads together. We've been talking and thinking a lot with the Board of Directors and our management. It's all about resource allocation for the various activities in the group. We have 12 brands that account for 85% of our business. And we have 20 of our 110 countries that also represent 85% of our business. So one of our priorities will be to allocate the bulk of our costs of where revenue is highest. That's not to say we should overlook other countries or other brands, it's just that we must reorganize it for someone. At the very start of confinement, Chairman Sebastien Bazin was in the press and on TV, announcing that the Accor Group was putting part of its -- means at its disposal to help medical staff and to help accommodate patients. This was a very -- the start of a very long critical period. What was the extent and success of this generous proposition, which was very -- again, early and very unique at a time on everybody was defending their own their own benefits. Well, 2 types of response. The management of the company reacted extremely well. We convinced them within about 10 minutes and some 300 hotels in France were made available. There's an organization called [ Covisant ] within the PHP, whereby we dedicated a number of premises that were closed that we reopened to accommodate a certain number of COVID patients to isolate them, to protect them from their own families. They didn't need to be hospitalized, but this helped relieve hospitals. So this entire service was managed by the PHP. So a wonderful response. Another side of my answer is that this wasn't taken up to any great extent by the PHP because there weren't enough tests around and not enough people were identified as being carriers. Those who were who had symptoms and 90% of cases, people prepare to stay at home or isolate themselves in their own homes or away from their families. That was their decision, and there's no obligation for them to accept accommodation in our hotel. So all the better, if that was to be the case. However, we were there. We made ourselves available, and that's the important thing. I think as Sophie said twice on one of her videos. If we haven't said it even more often, the most important thing is that people were safe and that they are in good health, that they are close to their families, that they look after their health, first of all, then their families. And only thirdly, Accor. That's the message we've been putting out since early February. Look after yourselves, first, before you think about your job or your business. We look after you, if needs be, to ensure that we get you back among us as soon as possible. That's it. Is that it? We finished? Well, as I said at the start, this isn't an easy exercise. It's not the one I enjoy most. But in all events, thanks to those of you who have joined us by telephone, I don't know if you were numerous or not. In all events, it's an important meeting, one that we find indispensable. We look forward to seeing you in person next year. In the meantime, you can come to the head office of your company, come and meet us and talk with us. Thank you all for being with us and look forward to seeing you next year. Have a nice day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]