Europe's largest hotel chain, Accor, announced on Tuesday that it intends to add more than 1,200 hotels over the next five years, an increase of more than one-fifth from its current total.
In the wake of the epidemic, customers have rushed to travel despite increasing interest rates, fueling worries of a recession and inflation eroding household buying power, resulting in increased costs and a revival in travel demand for the hotel business.
At its capital markets day, Accor also upgraded its outlook, saying that, thanks in part to reorganization plans introduced in January, it expects its revenue per room (RevPAR) to increase by 15% to 20% in 2023.
This year, the company anticipates EBITDA (profits before interest, taxes, depreciation, and amortization) of 920–960 million euros ($1.01–1.05 billion).
CEO Sébastien Bazin attributed the expansion to "confirmation of a very broad international demand across the different countries, a summer that will be a good one based on current confirmation of booking occupancy, and therefore demand that is only growing in almost all the Group's segments, in almost all geographies," he said on a call.
From 2023 through 2027, the French-listed company expects yearly EBITDA growth of 9 to 12 percent.
During that time period, Accor expects to return around 3 billion euros to shareholders through dividends and share repurchases.
At 07:03 GMT, the stock price had risen by 1.2%, bringing its yearly gain to over 40%.
"We expect a positive share price performance today, and we will probably upgrade our recommendation on Accor as the updated mid-term guidance is stronger than expected," said AlphaValue analyst Yi Zhong.
"We see the announcement as mainly positive today, although we do highlight a few areas in the 23E outlook that are below expectations. Barclays, which has an "overweight" recommendation on the stock, said in a note that the company's pledge to return capital to shareholders was the company's best feature.
