Accor SA ($AC)

Welcome to the Accor Q1 2026 revenue presentation. Today's conference will be hosted by Martine Gerow, Group CFO. [Operator Instructions] Now I will hand the conference over to Mrs. Gerow. Please go ahead.

Good evening, everyone, and thank you for joining Accor's first quarter trading call. And so I'll start with the highlights on Page 3. So we entered 2026, keeping pace with the fourth quarter of 2025 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% and March for RevPAR remained positive at 1.6% despite the Iran conflict with all the regions, again except some of the GCC performing above our expectations. The performance in the quarter was mostly driven by price for about 2/3 with occupancy rate improving by 1 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 12-month basis, that's up from 3.7% at the end of 2025. 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 NUG growth algorithm. 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 Essendi for a consideration of up to EUR 975 million, with EUR 675 million to be received upfront and up to EUR 300 million in [ our NUG, in ] subsequent. Having cleared the insider information pursuant to that transaction, we launched on April 2, a first tranche of EUR 225 million of the EUR 450 million 2026 share buyback program. 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 4 and Q1 RevPAR by division. Starting with PME, which posted a very resilient RevPAR growth of plus 4.5% and rate was up 3%, and occupancy rate was up 1 point at 62%. [ Faena ] posted a solid 2.7% RevPAR that's an acceleration from the fourth quarter of 2020. and that was driven by occupancy and exceeded our expectations for the first quarter with France and the U.K. posting growth in line with the fourth quarter. 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 U.K., 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 fair activity with the calendar that was weaker in the first quarter. In [ EMEAPAC ], 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. Singapore and Japan also posted solid RevPAR growth. Meat posted a positive mid-single-digit RevPAR growth overall in the first quarter with March RevPAR turning negative in the high single digits. 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 Echo mid-scale. Americas posted another strong quarter with RevPAR up 9.1%. The areas mostly driven by Brazil, as you know, which continued to post low double-digit RevPAR growth in the period. Turning to luxury and lifestyle. RevPAR growth was a solid plus 6%, with rate up 4% in the first quarter and occupancy up 1 point at 61%. Luxury continued to outperform in the segment with first quarter RevPAR at plus 6.8% with rates up 5% and occupancy up 1 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 have started seeing some demand being redirected to Egypt and Turkey in late March and early April. Lifestyle collective hotels posted a high single-digit RevPAR growth in line with the fourth quarter of 2025. Turning to Slide 5, 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 2 points from the first quarter of 2025. As usual, for first quarter, Q1 '26 pace of opening was moderate, but included 2 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 MEA APAC region. Notable signings included the [ Gramercy in Fukokin Vietnam and Ibis Bradfield City Hotel ] in Australia. The M&F revenue per room was stable in the quarter at EUR 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. benefited, 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 1 point from December 2025. and the M&A fee is also stable at EUR 4,000 per room. At group level, therefore, NUG reached 3.8% on an LTM basis, which is again slightly above where we finished the year. 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 6 with revenue by segment. 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 EUR [ 1.313 ] billion in the first quarter, up 2.3% at constant currency versus prior. 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 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 content. If we exclude the disposal, hotel assets and other revenue on a like-for-like basis, 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 7. Again, plus 8.3% in the first quarter. Thanks to a strong performance in luxury and lifestyle. As you can see here, it was 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. As for M&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 franchise contract, which impacted the first quarter by about 1 point. Now that is half of what we had experienced in 2025, where the impact was 2-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&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. And to conclude this presentation and before we move to Q&A, on Slide 8, 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 -- [ to 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 India, 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 active in March, a group-wide profit protection plan to protect margin and to mitigate the impact of lower trading on our EBITDA. 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 6 months, with 46 hotels that we have signed or under MOU across the PME and the luxury portfolio in the last 6 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&A session.

[Operator Instructions] The next question comes from Jarrod Castle from UBS.

Maybe 3 from me. 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 is up, but the portfolio was actually down versus the year-end. Is this just kind of 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 while it was slightly down, broadly flat. And then just lastly, you obviously launched the buyback. Can you just give a quick update how much you've done? And should we expect a follow-on sometime in July with the half year results?

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. So with respect to the midterm guidance for [ '22, '27, ] that guidance is still there. And we'll give you more precision in July. What I will say though is that 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 -- 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 very low, if not flattish growth in the first quarter, actually last year, in the first quarter of 2025, we were negative. And with respect to the buyback, yes, we have started the buyback. And as of -- so far, we have bought which is about 900,000 share at about EUR 44 price. And yes, we have committed to a EUR 450 million share buyback program. And so as we usually do, we tend to do the first half in the first semester and second half in the second semester.

The next question comes from Jaina Mistry from Barclays.

Three questions from me, if I may. The third question is around RevPAR. [indiscernible] 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 win RevPAR in Europe or Asia -- on the books? And then the second question is around EBITDA. Just in light of the significant RevPAR down RevPAR declines in the Middle East, your restaurants are shut do you expect EBITDA in H1 to grow? And then the full year EBITDA consensus. I know you mentioned you're comfortable with consensus. Now I was quite surprised by that, but could you maybe walk us through why you are happy with consensus where you see content this? And just the drivers of operating leverage to quantify the cost savings, just help us understand the moving parts here because there are some very big moving parts given to [indiscernible]?

Jaina, with respect to your first question on do we see any cracks in demand? We don't see any cracks in demand. When we look at the -- as you know, obviously, there's not a ton of visibility with respect to -- given the booking windows. However, when we look at the room on the books, we don't see any crack in demand outside of, again, the Middle East, in particular, the UAE. So the -- actually, if anything, so 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 it pick up. Similar to [indiscernible] we do see a lower pickup in Cypress, Turkey mainly, but that's a very slight. And again, this is not a -- and this is a very small very small part of our portfolio, but it's minor. It's really flattish to low single digit. But the rest of the NI and actually ENA overall is a positive 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 room on the books. And the U.S. is also performing well. So really no cracks in demand. With respect to the consensus, I think the consensus on RevPAR is 2.3%, right? So if you take consensus plus the consensus on NUG, which is around, I think, 3.9%, that gives you basically a 6% plus total, which should translate into M&F revenue growth. And therefore, given our profit protection plan, which we have, again, initiated in March. So you take a bit lower RevPAR, which is about 1 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 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 going to -- 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. We started obviously earlier. So that gives you a sense for what that could be.

The next question comes from Muneeba Kayani from BofA.

Just in the middle, so thank you for pointing out Marge are, 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. Is it possible to give a little bit more color on what you've learned so far?

Muneeba, I'll actually start with the 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 the conclusions of those, not just the investigations, but also any actions that we feel we would need to say 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 UA in March because basically tours going to come home, the impact was not a 10% felt in March. But what we see is we see Egypt and Saudi really holding up to where we had expected them. So it's just really the UAE and the UAE is, obviously, with a lower occupancy rate in the, let's call it, 20% to 30% in April. Now the good thing is the encouraging thing is that the UAE has -- the Emirates have decided to reopen the school. And we're seeing we're seeing also a reopening of the air space, which should encourage traffic to the region and hopefully through the region as well. And with respect to NUG, I think it's which early to tell whether that will have an impact or not. 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, 2/3 of our opening are usually in the fourth quarter, and 2026 is no different. And one thing I also would like to -- maybe would like to point out back to Jaina's question. You have to keep in mind that the activity in the Middle East is the strongest, big quarters or the first quarter and the fourth quarter, right? So we essentially run through the first quarter. And I think if we assume that the tensions are going to ease sometimes around the summer, then that should protect the fourth quarter in that region.

The next question comes from Estelle Weingrod from JPM.

I've got 2 questions. The first one, there are some concerns on potential jet fuel shortages and potential fly 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?

Estelle, so with respect to the jet fuel shortages, 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 within Europe region. And if you look at Southeast Asia, over 70% is again within the region. So to some extent, that protects us from, let's say, what could happen to fuel shortages or airline prices for that matter. And again, when we look at room on the books, in the summer, we're really not seeing any signs of lower demand in any region, frankly. Obviously, bar the -- some of the GCC markets. With respect to the branded residences, again, probably too early to tell. Could there be some of those openings that move into the 2027? Frankly, it's too early to tell at this point. And again, a lot of these are in the fourth quarter. I mean, sorry, in the second half.

The next question comes from Alex Brignall from Rothschild and Co Redburn.

I just have one really on Essendi. Could you just go into a little bit of detail as to where we are sort of contractually with that with that transaction. I know at the time it was not specifically binding, but if you could talk about where you are, what the things are that need to be completed before we'll get the serve completed announcement and what the -- you said Q3 for time frame but whether we would hear anything else before then.

Alex, well, look, we're still in the same place that we were when we released the -- our press release. Obviously, the fact that we released a press release on an MOU is 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. And then we'll have to go through regulatory approvals, that should take us in the third quarter.

The next question comes from Sabrina Blanc from Bernstein.

Yes, Martine. Two questions from my part. The first one is regarding the [ diligence ] 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 [ a vast outflow ] of cost has been postponed at the time in 2025. 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 Essendi, and that remaining impact for Essendi?

Good evening, Sabrina. Sure. So in terms of the measures, I mean, there's really 2 broad categories, right? We obviously, measures in the impacted markets. So I would say that about half of the plan is in those impacted markets, and half of the plan is, frankly, in other parts of the group. The measures are very, I would say, similar to what we did in the second half of 2025. So essentially constraining the constraining the cost and constraining 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 1 point of distortion in 2026, which is again half of what we experience in 2025, Essendi 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 Essendi portfolio is going to be gradual over several years. And again, as we indicated, in -- when we announced that MOU, it does not, in any way, impact our ability to meet our mid-term algorithm as it was factored in that algorithm.

The next question comes from Jaafar Mestari from BNP Paribas.

Two questions, please. 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. So for as long as this continues in the current state, what revenue impact you assume for the UAE, 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 EUR 7 million to EUR 8 million for each point of group RevPAR. 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 with inside. If can we still more or less use the EUR 7 million to EUR 8 million, or can we not use it, but thanks to the profit protection plan we can. What's the logic there?

Sure, Jaafar. So the minus -- so the 20% to 30s that I was referring to is the occupancy rate in the UAE, so in Dubai essentially in April. With respect to the...

Occupancy. And so total RevPAR please will be extremely useful.

Yes, yes, total RevPAR is down much more in the UAE. It's actually you're right. I mean KSA, it very much depends on when the Ramadan is. What I will say on KSA, so Saudi, is that 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 occupancy, again, as we expected. There's some redirecting of traffic actually from the lifestyle resorts into Egypt. In Turkey, we haven't talked about Turkey and actually, in Turkey, we're starting to pick up from seasonality, again, as we expect. So it's really the UAE that keeps, let's say, that stays impacted. And obviously, we'll be more in April than it was in March given the timing of the the conflict. And with respect to the algorithm, that algorithm is -- you're right, it's an average algorithm, but given the profit protection plan that we have in place that algorithm stands.

The super. So just we don't need to use something different but equally we shouldn't double count.

Correct.

EUR 7 million to EUR 8 million and then...

Correct.

The next question comes from Simon LeChipre from Jefferies. The next question comes from Jamie Rollo from Morgan Stanley.

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, I may have missed it, apologies. Are you still expecting net unit growth to begin with a 4% at the full year this year?

Jamie, yes, on SMDL, I confirm that we hold to the 6%-plus margin. And with respect to NUG, as I said, it's -- it's really too early to say whether -- because, again, 2/3 of our opening are in the fourth quarter, which is good news. Because hopefully, by then the tensions will have eased considerably.

Simon LeChipre, [Operator Instructions], please go ahead.

Yes. Three, please. First is the pricing strategy with the rise in oil price and [ FL ] going up. Do you expect the industry to react with some pricing curve to sort of stimulate stimulate demand into the summer. Secondly, on the Middle East, I think a meaningful part of our talent division is exposed to our region with our restaurant business. So can you remind us how much of the division is exposed to Middle East and minus the restaurants are still open, but I think there's probably not much activity. So what sort of drop on from the revenue loss should we expect? And you expect and you're able to reduce your cost base and you get [indiscernible]? And last one, if you can update us on the FX impact that you expect for the full year?

Simon, so with respect to rates, the only, frankly, rate pressure we see is is really in the UAE where rates are clearly clearly down. We're not seeing that pressure elsewhere, frankly. And we're not seeing that as we go into the -- when we look at the summer bookings thus far. In terms of the Middle East, the -- our restaurant business in the Middle East, which is a gas is about 10% of the hotel assets and other revenue for the group total, right? So 10% of the group hotel assets and other revenue. And we -- and obviously, this is a business actually that is because of where it's located, which is in Dubai, you can actually take the cost down very quickly because essentially, you can dismiss staff quite quickly as well. Our restaurants are open. Interestingly enough, our restaurants actually doing fairly well during the weekends. It's a bit slower during the week. But since in the last week or so, traffic has actually picked up in those restaurants because people in Dubai are actually starting to go back into the malls and on the streets. And with respect to FX, we -- 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 is a bit stronger. And therefore, we expect the FX impact to be less than the EUR 30 million 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 Ms. Gerow for any closing remarks.

Thank you. Well, again, thank you for attending the call, and I wish everyone, thank you for your questions, and I wish everyone a good evening.