Accor, Europe’s largest hotel chain, reported a $2.5 billion net loss in 2020 due to the deterioration in the industry linked to the spread of the COVID-19 virus worldwide and lockdown measures implemented by governments throughout the world.
Accor took drastic measures to mitigate the impact of COVID-19 on its earnings, including a $98.7 million annual cost savings program as well as a sharp reduction in other operating costs.
The French hospitality giant runs high-end chains such as Raffles and Sofitel and budget brands such as Ibis and Novotel. It operates more than 5,100 hotels. During the first half of 2020, Accor opened 86 hotels or 12,000 rooms and has a pipeline of 206,000 rooms of which 75 percent are in emerging markets.
Till September, 81 percent of Accor’s hotels were open, equating to more than 4,000 units. Accor has implemented other cost-saving measures such as h simplification and realignment of the company’s operating structures and automation of tasks for repetitive processes. Accor expects two-thirds of these cost savings will be generated by the end of 2021.
Sebastien Bazin, the hotel chain’s chief executive, said in an earlier statement, “The peak of the crisis is undoubtedly behind us, but the recovery will be gradual.
“Having taken these emergency steps, we must now finish the job from an asset-light model to a full asset-light company. Beyond COVID-19, this is essential. Accor must become simpler, leaner, more agile and even closer to the field.
“These initiatives will enable us to extend our leadership, make our decision process more efficient and boost our recovery. They will be implemented with transparency and candour and, in a spirit true to our values of solidarity and commitment.”
He added that Accor was “ideally positioned to benefit from the recovery” this year, citing the global vaccine roll out and a gradual recovery in tourism.
The group head said that Asia, the Middle East and Africa were showing “tangible signs of improvement” during the final three months of 2020.
Unfortunately, Europe was still grappling with the virus’s resurgence in the winter months and new variants.
The travel and hospitality sector is hoping that the vaccine rollout will see the industry seeing an improvement in the latter part of the year. Once the pandemic recedes somewhat with the vaccination reaching a wider audience, the sector hopes that people will return to travel and tourism with renewed rigor.
Accor lost on an average €61 million a month last year. It launched a €200 million cost-cutting program and ended the year with a cash position of €3.9 billion. Overall, revenue fell 52.4 percent to $1.5 billion, and RevPAR was down 59.3 percent. The pandemic-induced losses have meant job cuts of about 5.5% of the group’s global workforce.
The number of hotel jobs is projected to increase modestly, and it won’t return to pre-pandemic levels until 2023 at the earliest, say industry experts. This, in turn, will wipe out more than 10 years of job growth in the industry.
Annual occupancy fell to about 44% in 2020, a huge decline from 2019. Meanwhile, hotel occupancy this year is expected to average 52.5%, an increase of just 8.5% from 2020.
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