General presentation of Accor:
The French group Accor is known around the world thanks to its international presence. But above all, it has been the leader in the European hotel industry for several years. The activities of the group however, can be divided into different hubs according to the turnover they generate:
The management activities of owned and leased hotels which represent approximately 74.7% of the company's total turnover and which are grouped together under the HotelInvest subsidiary of the group.
The operating activities of hotels under management contracts (franchises) which represent approximately 25.3% of the company's overall turnover and are grouped together under the HôtelServices subsidiary.
In total and through these two distinct subsidiaries, the Accor group operates a large network of over 4,000 hotels around the world, i.e. more than 583,161 rooms in several countries. These hotels are classified by category within the group and go as follows:
- There are 510 luxury and high-end hotels around the world under the raffles hotels, Fairmont, Sofitel, Pullman, McGalleri, Swissotel, Grand Mercure and The Sebel brands.
- Mid-range hotels which number 1,281 under the Novotel, Novotel Suites, Mercure and Adagio brands.
- The 2318 budget hotels which are the Ibis, Ibis budget, Adagio Access, Formule 1 and Hôtel F1 brands.
- Finally, the 35 multi-brand hotels complete the group's range of hotels.
Regarding the geographical distribution of the Accor group's activities in terms of turnover, first of all there's France which alone generates more than 27.8% of the group's turnover, Europe and Middle East Africa which generate 48.4% of turnover, Asia-Pacific which generates 12.9% of turnover and the Americas which generate 9.5% of turnover. The remaining 1.4% of turnover is spread over other countries and geographic areas. These numerous hotels allow Accor to employ no less than 193,149 people around the world.
The Accor share price is listed on the Euronext Paris market, and is also included in the calculation of the Euronext 100 stock market index.
Knowing Accor shares competition:
With a franchise strategy aimed at reducing its assets on the balance sheet and developing in countries such as Brazil, Russia and China, the Accor group is still one of the leaders in the hotel industry worldwide. But competition which drives more and more drops in prices is causing damage and is likely to take some of its market shares. To fully understand how the Accor share price is likely to evolve over time, it's important to know this competition. That's why we suggest you check out the main hotel groups worldwide, those being the main competitors of Accor:
- Global Hyatt Corporation
- Hilton Hotels Corporation
- InterContinental Hotels Group PLC
- Marriott International, Inc.
- Wyndham Worldwide
The strategic alliances set up by the Accor group:
- Dubai Emaar Properties: In 2006, the Indian subsidiary of the Dubai real estate group Emaar Properties set up a joint venture with the Accor group with the aim of opening around 100 low-cost hotels in India. The joint venture has invested 300 million dollars in this project. It will launch 50 "Formula 1" type hotels in less than 5 years. It also intends to invest in many projects in the Arab world and in South Asia.
- TravelCar: In 2015, TravelerCar, a company offering a car-sharing and car rental service between individuals, developed its presence in intramural Paris through the establishment of a strategic partnership with the Accor group.
- Rixos Hotels: In 2017, AccorHotels and Rixos Hotels signed a strategic partnership aimed, for the AccorHotels subsidiary, at developing its presence in the luxury and very high-end market, through the development of its hotel resorts internationally.
The strengths and advantages of Accor shares as a stock market asset:
The positioning of the Accor group on the global market for its sector of activity is of course the company's main asset. Keep in mind that Accor is currently number 6 in the hotel sector worldwide and that it's the leader in this sector in Europe. In total, Accor holds over 40% of the market share in Europe and outside France, where it holds a third of the market share. The group is establishing its presence around the world through various brands and labels including Fairmont, McGallery, Pullman, Raffles, Sofutel, Swisshotel, the Steble in the luxury sector as well as Adagio, Mercure, and Novotel for the mid-range and finally Formula 1 and Ibis for the most economical segment. This is how Accor manages to reach all socio-economic levels.
The fact that the group separates its activities into two large distinct hubs. The HotelServices hub with regard to the hotels under franchise or owned by the management and which represents 10% of the company's turnover and the HotelInvest branch for the hotels it owns which is also an asset for the group, as it benefits from low risk exposure.
The geographical distribution of the Accor group's activities also shows certain advantages, including an attractive balance. Although 37% of the group's activities are carried out in Central and Northern Europe with 14% in France, the rest of the world is also well represented with 20% of the group's activities carried out in the Americas, 16% in Mediterranean countries, the Near East and Africa and 4% in Asia-Pacific. Once again, this gives the group a certain kind security in the face of local economic and tourist risks.
Investors are also very appreciative of the strategy implemented by the group, the main objective of which is a sustainable expansion of activities with more than 170,000 rooms opening in the near future. The Asia-Pacific market is specifically targeted by this strategy since the group intends to carry out more than 44% of its future projects there. Of course, the other emerging countries outside of South America also represent a privileged target for the group with 28% of future projects.
Accor is also banking on hotel consolidation with parallel growth in new activities. It particularly occupies a leading position in several new activities, such as renting luxury private residences or offering digital concierge services. By taking over a few companies such as Fastbooking or OneFineStay, Accor is also trying to position itself in the Travel fast sector. The group also expects significant growth in its activities on the Chinese market with partnerships created with local companies Huazhu and Jin Jiang as well as with the company Hotelinvest.
Finally, it's important to point out the significant strength of the financial structure of the company, which has recently been boosted by the HotelInvest subsidiary. This stability is considered a true guarantee of strength for investors around the world.
The weak points and disadvantages of the Accor share as a stock market asset:
We know that the Accor group is highly exposed to risks with regard to the high-end and mid-range sectors despite the security provided by its economic segment. This risk is due to the current economic situation around the world in particular. With regard to the French market, the recent attacks also had a negative impact on tourism which naturally had repercussions on bookings.
The group is also threatened by a new form of competition with the growth and very strong development in recent years of Online Travel Agencies also called OTAs, which currently generate more than 20% of room bookings. The group takes this threat very seriously since it has put in place a strategy to win back with leading digital hospitality. Other groups such as AirBNB also continue to grab market shares.
As the activities of the Accor group are highly internationalized, it's also highly exposed to negative exchange rates, which must also be taken into account depending on the situation of the foreign exchange market.
Finally, after its latest acquisitions, the group is currently showing a higher level of debt than in the past, which is discouraging investors down somewhat.