Accor to 'limit influence' of OTAs in cost-cutting plan

By Travolution
By Travolution
February 20, 2013 08:00 AM GMT

Accor is to impose €100-million in cost cuts over the next 12 months while taking action to protect its distribution against online travel agents.

The measure is being taken as the French hotel giant faces “sustained deterioration in market conditions” in southern Europe, increased operational costs and more intense competition driven by the evolution of online distribution.

Accor revealed that it is to spend about €30 million a year between now and the end of 2016 to increase online bookings to 50% of the total and to “limit the influence of online travel agents”.

Details of the planned cost cutting remain sketchy but will involve a strategic review and “prioritisation of projects,” as well as a reduction in operating costs for the group and its subsidiaries in Europe.

Calling for “disciplined cost management,” the company said: “The objective is to systematically strengthen and optimize the strategic transformations launched by the group.”

The ultimate aim is to trim net debt by €2 billion by 2016 and cut annual capital expenditure by as much as €400 million.

Expenditure on new hotels will decline by 2016 to between €100 million and €150 million a year, from €250 million last year. The future focus will be on economy hotels in strategic cities around the world.

“This transformation will also lead to a geographical shift in the income stream, with the target of earning 50% of EBIT from emerging markets,” Accord said.

This came as the group announced that 2012 operating profits had dropped to €80 million from €248 million the year earlier as revenue inched up by 1.5% to €5.6 billion.

Accor said: “Business in emerging markets remained robust throughout the year.

“Revenue was stable overall in Europe, with key markets holding firm - led by a good performance in the capital cities - and the situation in Southern Europe remaining difficult.”

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