Accor shares drop as new CEO's revamp plan disappoints

* Accor (Paris: FR0000120404 - news) splits into hotel operator and hotel owner/investor

* No further sale of owned hotels unless underperforming

* CEO keeps 2013 EBIT goal, sets no targets for new strategy

* Shares down 5 pct to lowest in a month (Rewrites first paragraph, adds CEO quotes, analyst comment)

By Dominique Vidalon

PARIS, Nov 27 (Reuters) - Accor's new chief has stymied expectations that his strategic rethink at the hotels group would result in more cash-generating disposals and cost cuts, offering instead a reorganisation he said would boost shareholder returns.

Shares in the company, which had spiked to a 2-1/2 year high ahead of Wednesday's statement, dropped more than 5 percent to their lowest in over a month.

Three months after joining Accor from the private equity group which is one of its biggest shareholders, Sebastien Bazin set out a strategy which he conceded meant no further disposals of owned hotels unless they were underperforming.

"Sorry to disappoint you, that's behind us... If we had sold our assets, this would have hampered our growth," Bazin told analysts.

"Success (Other OTC: SHGR - news) is our only option ... This is a transformative development that cannot be done in six months. I am impatient but I have to control my own impatience," he said.

Under former CEO Denis Hennequin, Europe's largest hotels group by revenue had been selling real estate and using the proceeds to grow in emerging markets to offset European weakness. Bazin had been expected to speed up that strategy, as well as cutting costs.

The CEO did not provide any targets under his plan, but said those set under a three-year revamp initiated a year ago by Hennequin were no longer valid. "We are banking on returns well above the previous plan," he said.

Societe Generale (Paris: FR0000130809 - news) analyst Sabrina Blanc said investors may be disappointed because they expected a new cost-cutting plan and an acceleration of the group's transformation.

Bazin confirmed Accor's target to achieve an operating profit of between 510 million euros ($691.6 million) and 530 million in 2013, compared with 526 million last year.

"I want Accor to become the world's best-performing and best-valued hotel group," he told journalists.

PACE OF CHANGE

Bazin, previously Europe head of Colony Capital, one of Accor's biggest shareholders, had been unhappy with the pace of change under Hennequin and as CEO he is under pressure to prove he can improve the group's performance.

Colony and fellow private equity firm Eurazeo (Frankfurt: EUQ.F - news) are Accor's top investors with a combined 21.4 percent holding.

Bazin's strategy entails splitting Accor into a fee-oriented hotel operator and franchisor, HotelServices, and a hotel owner and investor, HotelInvest.

He did not give any timetable for his strategy to take effect, nor quantify any savings it could generate, saying he understood analysts' frustrations but did not want to overpromise.

Accor, which competes with the likes of InterContinental , Marriott and Starwood, has lagged the profit margins of some of its peers, as a large part of its hotels are owned or leased, generating lower profitability and returns on invested capital than franchised hotels or those under management contracts.

Accor achieved an operating margin of 9.3 percent last year, whereas InterContinental - which owns less than 1 percent of its hotel portfolio - had a margin of 33 percent.

Under the new plan, HotelServices will operate nearly 3,600 hotels and 460,000 rooms worldwide under 14 brands and will be "a high margin and cash generative business", Accor said.

Proforma 2012 figures give HotelServices revenue of 1.12 billion euros and an EBIT of 372 million, or a margin of 33 percent.

HotelInvest will start with a portfolio of 1,400 hotels, of which nearly 300 are in full ownership. The business had pro-forma 2012 revenue of 5.12 billion euros and an EBIT of 239 million, or a margin of 5 percent.

Bazin's revamp also involves the creation of a new executive committee of 10 members, including five regional heads of operations.

By 1100 GMT Accor shares were off 3.7 percent at 32.310 euros, against a 1 percent rise in the European sector.

The stock, which before the April (Berlin: B2B.BE - news) ouster of Hennequin had been stuck at around 27 euros, or nearly half a 2007 peak, has since then jumped 29 percent, surpassing the European sector's 15 percent advance amid hopes Bazin can improve the group's performance.

($1 = 0.7374 euros) (Editing by James Regan and David Holmes)