Battle plan launched for “difficult environment”

Accor, the French hotel and services group, reported a 3.5% fall in its pre-tax operating profit from €907m in 2007 to €875m last year.

The group said revenue for 2008 fell by 4.7% to €7,739m, compared with €8,121m in the previous year while its pre-tax earnings also dipped by 1.3% from €2,321m to €2,290m.

Accor, whose brands include Sofitel, Novotel, Ibis and Mercure, said its hotel revenue dropped slightly by 1% and its consolidated pre-tax earnings for the division were €2,290m.

The company said its economy hotels had “fared well” outside the US while its up- and mid-market properties had also done well.

Accor said it was also launching a “battle plan” to cope with the difficult environment.

This involved €100m cuts, €75m this year and a further €25m in 2010, mainly in marketing but also some in delaying or cancelling non-priority projects.

The group said this followed the effects of the global downturn which “quickly spread to the hotel business, especially in the fourth quarter.”

Accor said it had already cut its renovation budget by €25m in the last half of 2008 and it now taking a further €125m out which was due to be spent this year.

The group said: “After four years of major capital expenditure, renovation projects will be more carefully selected, without diminishing quality of service.”

It was also reducing its hotel expansion budget from €500m to €400m for 2009 and 2010.

The cuts would be made in its budget for up-market hotels (€55m) and mid-market properties (€65m).

Accor has also announced a re-structuring of its board of directors. Six directors including the chairman Serge Weinberg have resigned and ceo Giles Pélisson has taken over as chairman of a smaller board.

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