Alwaleed-backed AccorHotels closes in on property deal

AccorHotels sale of a stake in its property business is in its final stages, Europe’s largest hotel company said on Wednesday. (Reuters)
Updated 21 February 2018
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Alwaleed-backed AccorHotels closes in on property deal

PARIS: AccorHotels’ long-delayed sale of a stake in its property business is in its final stages, Europe’s largest hotel company said on Wednesday, after reporting record 2017 earnings.
The French group, with more than 4,000 hotels ranging from luxury Sofitels to the budget Ibis brand, also expressed confidence over prospects for this year and over potential returns to investors once the property deal is sealed.
There was initial disappointment over the absence of any concrete developments on the plans for outside investment in property unit AccorInvest — known as “Booster” by the company — as well as the lack of increase in the annual dividend.
But the shares recovered early losses to trade up 2.6 percent at 1055 GMT, as analysts welcomed the prospect of better returns for investors. The stock is up about 8 percent in 2018.
AccorHotels has said the stake sale, now delayed by more than six months, will give it greater financial leeway to accelerate growth and fight the rising challenges from companies such as Airbnb and online travel agents.
CEO Sebastien Bazin said it was “a matter of weeks” before a deal was sealed, while finance chief Jean-Jacques Morin said the group would adjust its dividend policy after the sale and hinted at a possible special dividend.
“Overall, an upbeat message with confidence around deal execution, RevPar (revenues per available room) and encouraging comments regarding the future cash return potential,” wrote Barclays analysts, who have an “overweight” rating on the stock.
AccorHotels, which competes with InterContinental, Marriott and Starwood, beat forecasts with a 10 percent rise in like-for-like operating profit to 492 million euros ($606 million) for 2017.
InterContinental, which focuses on business customers, also reported higher profits this week and unveiled plans to expand further in the upmarket part of the hotel industry.
AccorHotels has struck deals in areas such as concierge services and luxury rentals to try to combat competition from the likes of Airbnb and Expedia.
Bazin reiterated on a call to analysts and reporters that strong growth was expected from these new lines of business over the medium term.
The only region where AccorHotels did not have strong growth last year was South America and in particular Brazil, which is slowly emerging from a recession, although the company said trends in Brazil improved in the fourth quarter.
Bazin, who took over in August 2013, has been cutting costs and expanding in China and the luxury hotels market, with AccorHotels having bought FRHI Holdings, the owner of London’s Savoy and New York’s Plaza hotels.
In October, AccorHotels also clinched a deal to buy Mantra Group Ltd. for A$1.18 billion ($926 million) to create the biggest hotel group in Australia. Bazin said he expected to finalize the deal during the second quarter of 2018.
Kingdom Holding, Saudi billionaire Prince Alwaleed bin Talal’s investment company, has a 5.71 percent stake in AccorHotels. The prince was released last month from detention following an anti-corruption crackdown.
Asked if there had been any signs of a possible change in the prince’s shareholding, Bazin said: “We have been comforted on the fact that there was no change in governance, shareholding. Prince Alwaleeed is and remains the third-largest shareholder of this group.”


2 years on, Brexit vote has taken a toll on UK economy

Updated 23 June 2018
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2 years on, Brexit vote has taken a toll on UK economy

  • Big companies are sounding the alarm bell, with plane making giant Airbus this week threatening to pull out of the country, where it employs 14,000, if it gets no clarity on future trade deals
  • The governor of the Bank of England, Mark Carney, estimated recently that average household incomes are around 900 pounds lower than the bank was forecasting on the eve of the referendum

LONDON: While it’s still unclear what Brexit will look like when it happens next year, the decision to leave has already had a clear effect on the economy: households are poorer, companies are more cautious about investing, and the property market has cooled.
In the two years since the vote to leave the European Union, Britain has gone from being a pace-setter among the world’s big economies to falling into the slow lane. And the uncertainty over what relations with the EU will be when Brexit becomes official on March 29, 2019 could make matters worse.
Prime Minister Theresa May’s Conservative government remains split on what those relations should be. There are those who favor a “hard Brexit,” a clean break that takes Britain out of the bloc’s free trade union but also gives it more freedom to strike new trade deals around the world. Others want to keep Britain as close as possible to the EU, Britain’s biggest trading partner, which could mean it has to obey more of the bloc’s rules.
Big companies are sounding the alarm bell, with plane making giant Airbus this week threatening to pull out of the country, where it employs 14,000, if it gets no clarity on future trade deals.
“Thousands of skilled, well-paid jobs are now on the line because of the shambolic mess the government have created over the Brexit negotiations,” said Darren Jones, the lawmaker for the community where Airbus has its plant.
Before the referendum of June 2016, the British economy had been one of the fastest-growing industrial economies for years. Now, it’s barely growing. In the first quarter of this year it expanded by just 0.1 percent from the previous three-month period, its slowest rate in about five years.
For most people, the first and most noticeable impact was the drop in the pound. The currency slid 15 percent after the vote in June 2016 to a post-1985 low of $1.21. That boosted prices by making imports and energy more expensive for consumers and companies — the rate of inflation hit a high of 3 percent late last year.
The weaker pound helped some companies: exporters and multinationals that do not sell mainly in the UK But it hurt consumer spending and businesses that depend on their shopping. The retail industry was hit hard, with high-profile companies like Toys R Us and Maplin going bust, and supermarket chain Marks and Spencer planning deep cuts.
While prices rose, wages lagged, even though unemployment is at its lowest since 1975, at 4.2 percent.
“After Brexit, prices definitely went up,” said Nagesh Balusu, manager of the Salt Whisky Bar and Dining Room in London. “We struggled a bit earlier this year, so now we’ve increased the prices.” The bar is next to Hyde Park, a popular destination for foreign visitors. “The tourists have a good exchange rate. They know they can spend a little bit more than they usually do. But the locals are coming a little less. They are starting to think about how much they spend.”
The governor of the Bank of England, Mark Carney, estimated recently that average household incomes are around 900 pounds lower than the bank was forecasting on the eve of the referendum.
The real estate market, meanwhile, has cooled considerably, with the number of property sales in London near a historic low last year, according to estate agent Foxtons.
While some foreign prospective buyers were attracted by the drop in the pound, others seem to have been scared off by uncertainty over what Brexit might mean for their investment.
House prices are stagnating after years of gains, also due to expectations that the Bank of England will keep gradually increasing interest rates.
Nic Budden, Foxton’s CEO, predicts that the real estate market will remain challenging this year, while Samuel Tombs, analyst at Pantheon Economics, predicts that house prices will flatline for the next 6 months.
Against the backdrop of uncertainty, businesses have become more reluctant to invest in big projects. Because Brexit could lead to tariffs on EU imports of British goods, companies are hesitant to spend big on British plants and office space before they know what the new rules will be.
Benoit Rochet, the deputy chief of the port of Calais, the French town across the Channel from Britain, complained to a parliamentary committee this month that “we know there is Brexit but we don’t know exactly what Brexit means.”
“You are not alone,” responded the Conservative chair of the committee, Nicky Morgan.