Accor (ACFP; NR, BBB- Stable, BBB- Pos) {AC FP Equity} 1Q Results

Accor, the equity & credit favourite, has delivered firm 1Q results. As mentioned last month upgrade from Fitch is likely - we didn't see its standards being high vs. guidance/market consensus and nothing in Q1 of concern on that. As mentioned previously, asset light & geographically diversified helps it stand out for credit.

• 1Q revenue at €1.24b (c1.19b) up 8%yoy in gross and LFL times. Premium, midscale and economy grew +6% (LFL) to €690m, Luxury & lifestyle +12% to €566m.
• RevPAR growth was +7.6% (LFL) driven mostly by pricing (+5.5%) & supported by +1.2% increase in occupancy rate (to 60.9%). Strongest pricing gains win MEA & APAC (+9%).
• Its confirmed medium term outlook (2023-27) that includes CAGR'd RevPAR growth of +3-4%, net unit growth of 3-5%, EBITDA growth of 9-12%, recurring FCF conversion >55% (FY23 at 59%/€596m). Targeting return to shareholders of ~€3b over the entire period (€676m returned last year, €400m in buybacks this year).
• Expects 2% boost to France on Olympic games, given 20% of business says 40-50bps in RevPAR on FY Basis. Detailed FY guidance expected on 1H Results.
• Accor's net leverage target is 2.5-3x - mgmt did clarify even though its running at low end no boost to targeted shareholder returns. FY23 ended at 2x on company reported (2.5x Fitch) - Fitch already expected a rise to 3-3.2x on equity returns.