Accor´s First-Quarter Sales Rise 5.6 Percent, as Price Hikes Help the Economy

Hotels group Accor S.A. said Wednesday its first-quarter revenue rose 5.6 percent on strong bookings at its budget hotels.

Revenue between January and March notched €1.68 billion under the new IFRS accounting standards. Accor said that the comparable figure for the first- quarter of 2004 would have been €1.59 billion under IFRS.

Revenue growth of 5.6 percent beat the analyst´ forecast of 5 percent growth, which had been made using French accounting standards, not IFRS.

"These figures are evidence of a rebound in the activity following the good momentum since the fourth quarter," Accor Vice-Chairman Benjamin Cohen said during a conference call.

Accor, which operates hotels ranging from the luxury Sofitel chain to Motel 6 in the U.S., said that the early Easter holiday reduced revenue by 0.5 percent. Accor derives a large portion of its revenue from business as opposed to leisure travel.

In the budget hotel division excluding the U.S., revenue grew 6.7 percent to €294 million from €276 million due to higher average prices. Accor said that revenue grew faster in the key French market than in the rest of Europe.

In the U.S. budget hotels, made up of Red Roof Inns and Motel 6, revenue slipped 0.7 percent because of the weak dollar. At constant exchange rates, revenue would have risen 4.5 percent in the first quarter.

Accor´s upscale and mid-scale hotels turned in a mixed performance. In the U.S., revenue was up 8 percent at constant exchange rates, and Accor said that it was able to raise its prices.

However, in Europe, revenue in the segment fell 1.6 percent, resulting in growth of 0.1 percent for the division. Revenue at the mid-scale and upscale hotels totaled €631 million in the first quarter.

"The early Easter holidays were penalizing for Accor in most European countries," said Cohen, who noted that the high-end hotels were more affected than budget hotels.

The services division, which sells restaurant and human resources vouchers, continued to outpace growth at the group level. Revenue grew 13 percent in the first quarter to €140 million.

Growth in the group´s other activities - travel agencies and casinos - jumped 16 percent to €409 million thanks to travel agency acquisitions and a change in the consolidation of the group´s casino joint venture.