French terror attacks drag on revenue at AccorHotels

The fallout from terrorist events in France weighed on AccorHotels’ sales in the country, pushing them down nearly 3pc in 2016.

The owner of the Novotel and Mercure chains, reporting its full year results for 2016, said business was “very challenging” in Paris in particular, where revenue per room - a key industry performance metric - was down 13.2pc.

The performance elsewhere in France, its second largest market by sales, was not enough to offset the poor demand for the capital, which was rocked in 2015 by the Bataclan concert hall attack. Management said the recent terrorist events in the capital and Nice contributed to the 13pc fall in operating profits to €150m for France.

However Accor's sales rose 0.9pc at the group level, to €5.63bn (£4.75bn), or 2.2pc on a like-for-like basis, thanks to strong demand in markets including Asia Pacific and the Americas, where revenue rose 5.5pc and 4.7pc respectively.

Revenue was helped by the group’s development programme, which added €418m to the top line, but this was more than counteracted by disposals, which cut revenue by €355m, and the impact of currencies, which had a negative €136m hit. The largest currency impact for the period, of €72m, came from the fall in sterling against the euro, as money made in pounds translates less favourably into the now stronger single currency.

The French-based group has a hotel services division, which uses a franchise model, while its HotelInvest division owns and leases sites.

The group saw operating profit rise 3.8pc to €696m, partly helped by the recent acquisitions of Fairmont Raffles Hotels International, onefinestay and John Paul.

Management has also been eyeing up further deals with announcements since the end of its financial year on 31 December. Earlier this month it had started exclusive negotiations to acquire Travel Keys, which it dubbed as a leading global player in the luxury private rental market, with more than 5,000 villas across 100 destinations.

At the end of December, the cost to the group of servicing its €1.48bn net debthit a record low of 2.85pc versus 2.89pc at the same time in 2015. Since then, a €600m, seven-year bond was issued with a low 1.25pc coupon, meaning the interest rate on the group’s debt has dropped further to 2.57pc. This suggests the company is increasingly able to borrow money cheaply and so should be able to fund further deals if it wanted.

Former French president Nicolas Sarkozy was appointed to the company’s board this week. He has been ordered by a judge to stand trial on charges of illegally financing his failed 2012 re-election campaign.