French hotel group Accor has published its latest trading update and Covid-19 response, including what it is doing to assist employees through the crisis.
The group said that more than half of its Accor-branded hotels worldwide are currently closed, with this figure likely to rise to two thirds in the coming weeks.
It did however sound a small note of optimism, highlighting “the confirmation of initial recovery of the Chinese hotel market, with mild improvements in occupancy and F&B activity”.
Accor said that the deteriorating situation had led it to take “aggressive, incremental actions”, including a travel ban, hiring freeze, reduced schedules and /or furloughing for 75 per cent of global head office teams for the second quarter of this year, resulting in a reduction in costs of at least €60m for the year.
Recurring investment plans have also been reviewed, reducing costs by another €60m, and other costs including sales, marketing and IT have been streamlined.
The group said that its “recent asset-light transformation and cash preservation strategy” meant it had a strong balance sheet, with over €2.5 billion in cash on hand and an undrawn revolving credit facility of €1.2 billion, and it stressed that while it expected “a severe impact” on its 2020 performance, it remained bullish on the long-term perspective of the hospitality industry.
The group has withdrawn a proposed €280 million dividend payment, and will allocate 25 per cent (€70 million) of this to the launch of the ‘ALL Heartist Fund’, which will provide assistance to employees and support front-line healthcare professionals and non-profit organizations.
In particular Accor pledged to pay Covid-19 related hospital expenses for all of its 300,000 employees who do not have social security or medical insurance.
Board members will forego 20 per cent of their fees, and the group’s chairman and CEO Sébastien Bazin will take a 25 per cent pay cut, with the cash equivalent being contributed to the fund.
Commenting on the news Bazin said:
“Welcoming, protecting and taking care of others is at the very heart of what we do. In light of the urgency and the scale of the situation, we have decided to act in an immediate and meaningful way, in the spirit of our values and commitments.
“Through this impactful gesture, we wish to express our solidarity and gratitude to all those demonstrating courage and selflessness during this crisis. On behalf of the Board, I would like to thank the Group’s main shareholders. Without them, the “ALL Heartist Fund” would not have been possible.
“I also want to pay a special tribute to the Accor teams around the world. They are facing the current crisis with admirable courage, dedication and professionalism. As our industry is going through tough times, we have to make tough decisions, but Accor has a strong balance sheet which will enable it to withstand this crisis and emerge with strength during the recovery period. I am confident that Accor will soon rediscover the road to growth.”