Sebastien Bazin - Chairman & CEO Jean-Jacques Morin - CFO

Vicki Stern - Barclays Jarrod Castle - UBS Tim Ramskill - Credit Suisse Vaughan Lewis - Morgan Stanley Jaafar Mestari - JP Morgan James Ainley - Citi Ian Rennardson - Jefferies

Good afternoon everybody, and thanks for being with us tonight for this Q1 2016 revenue call. I suggest we start the presentation right now on Page 2.

Accor Hotel delivered strong Q1 revenue performance at 1.9%, like-for-like growth to $1.161 billion. This is an improvement after a 0.4% increase in Q4 2015.

This performance is a reflection of three elements; a sound tracking in a majority of countries, and acceleration in signing base, and some mine improvements in France and Brazil which remains debt markets. Company RevPAR was marginally up at 0.4% or rather paired with both, occupancy and drive slightly positive.

As for HotelInvest, like-for-like revenue was at 0.2% at €973 million, a 7.8% drop in reported revenue for HotelInvest is actually a directive site from the disposal achieved last year as a part of our transformation plan. As for hotel services, the finance was higher, as usual, with a 5.6% increase in comparable revenue at €300 million.

35% of it is the contribution from HotelInvest, i.e.; €103 million. Cost revenue grew 4.6% of other period for hotel services on the back of the -- above this hard momentum but also record expansion level.

As a matter of fact, we added 8,961 rooms to assistance in Q1 which is an all-time record for Accor Hotel over the first quarter. To accompany on that I'll give you some more color on development, let's move to Slide 3.

So as I just said we added 9,000 rooms which correspond to 46 hotels. Now if you look at what compound it, 94% of these rooms were made to franchise and management contract with some parties, 44% of these rooms were affiliated to the economy segment 23% to midscale and 33% to the luxury and upscale segment.

So once again on that, it proves that our upscale and luxury brands are getting visibility which goes on nicely with the sum of household acquisition. If we look at geography this time, geographical mix was in line with historical patterns with 90% of the openings in Europe including France and MMEA, as well as Spain and Portugal.

At the same time, all five lines remained extremely strong with more than 158. So at the end of March 2016, Accor Hotel portfolio write down between 34% of own and his homes, 31% franchise rooms and 35% of management contract with third party owners.

Take this opportunity to get the word on the marketplace. We recruited more than 1,100 independent hotels to date and more than 500 are actually online on all distribution platforms.

This achievement gives us a lot of control on all midterm targets. Take this opportunity to get to work on are marketplace.

Moving to Slide 4, we provide you some more color on the bridge between the like-for-like numbers and the reported numbers. Expansion has a positive effect, 1.5% or €19 million.

Disposal add a negative effect 5.4% or minus €66 million. Q1 by the way was pretty busy as HotelInvest restructure 28 hotels including 12 which are transferred to Huazhu as part of our alliance in China.

The effect you see on the disposal is in fact not directly related to the transaction completed last year. This includes the hotels sold as part of the restructuring process of the Moor Park, AXA and Tritax portfolio which you may recall we acquire back in June 2014.

As for the service side, which is currency, it was flat back in H2 last year and turns strongly negative in Q1 on the back of the strengthening of the Euro, notably towards the Brazilian Real, the Sterling, and the Oz Dollar. So as a consequence of this ways, reported revenue was down 5.2% versus Q1 2016.

So going into more detail on HotelInvest, and I'm now on Slide 5, as mentioned before our regional performances are roughly in line with previous quarters. We have some improvements in France and Latin America, some mind improvements in France and Latin America.

France remains difficult with a 3.2% drop in comparable revenue, and this was saved by the tough environment that we know in Paris with security concerns that continue to wait-on-demand, and the good thing is that on the other hand we see very protective plan in convinces. As for NCEE; NCEE posted another solid quarter.

The 1.6% increase in revenue reflects decent market situations. Under Central Europe, Netherlands are particularly strong.

U.K. was at 3.2% which is linked to the HotelInvest presence in the provinces in the U.K.

On the other hand Germany was affected as anticipated by a pretty poor calendar for fair and trade show. This is going to turn around in the next three quarters.

As a consequence revenue for HotelInvest in Germany was down like-for-like by 1.2%. Moving now to MMEA, MMEA recorded the strongest growth amongst all regions at 6.1%.

This is mostly due to Southern Europe which contemplates most of the HotelInvest asset in the region. We experience solid turns in America which was at 12.5%, as well as the 30 Brazilians in Africa which was at 4.8%.

Italy was stable on the back of the challenging comp that followed last year World Expo in Milano. Moving to Asia-Pacific, revenue was down 0.7% with soft trends in Australia and some stabilization in China.

And the last on the table is Americas, which -- we're at 0.7% with some competitive goals in Mexico and Argentina which offset 6% drop in Brazil, and overall a very inflationary environmental across Latin America. On a positive note, SNB revenue was up in the region despite occupancy decreasing thanks to our new initiative.

So moving now to Slide 6 to go into more details on the hotel services revenue, we -- overall saw a solid 5.6% growth in quarterly revenue with sharp increases in NCEE, MMEA, Asia-Pacific and Americas, so quite across the bond. As explained before, the over performance versus HotelInvest is primarily linked to two factors.

First, there is a no favorable geographical mix for hotel services, and with less exposure to countries like France, Brazil and Australia. Second, comparable growth at hotel service includes expansion which was steadily fast over the last, let's say whole quarter.

So going in details by sub-regions; so in NCEE, the 8.3% growth was led by Poland and the U.K., both at strong double-digit on the back of fast expansion. Germany was flat over the quarter and Belgium; we're down by 7%.

In MMEA and in line with HotelInvest, a 5.3% revenue growth at hotel services reflects another sharp increase in Spain and Portugal, whereas Africa and Middle East posted negative revenue growth of about 1%. For Asia-Pacific, they benefitted from the fast expansion actually recently with more than a hundred managed and franchised hotel added in one year, and that generated 8.2% growth in revenue as you know as a fact is, well a lot of the expansion is taking place and you see that in the numbers.

Latin America. Performance was led by North America as 9%.

In Latin America, the rest are growth party reflects the inflation that we mentioned before. So going into further more detail and discussing the France RevPAR on Slide 7.

What I like to say in connection is that as we have promised you last year the rest of France, Germany and the U.K. that we're going to disclose on the next three slides now include the data from the franchising which means that these numbers are fully consistent with the total RevPAR numbers that we provide typically in the appendix to these presentation.

So RevPAR for France comes as no surprise and are very much in line with our expectation. Upscale and luxury hotels are more effective than others due to the larger exposure to Paris and international leisure title.

Not the prices remained quite high in four and five-star hotels as the leisure group title is the most affected segment in the current environment, and so we benefit from a clientele mix that improved. On the positive, we are seeing encouraging business level in provinces where RevPAR was at 5% in Q1 with a strong match.

So going forward in Q2, we will benefit from a good calendar month in May and more importantly Euro 2016 will start in June and July, and that should help us turn the year. So let's move now to Slide 8 and discuss in a bit more detail the German RevPAR.

So as you see German RevPAR was marginally negative on the back of the calendar of affairs. The 13% brought on the luxury and upscale segment is also widely driven by large renovation and the way the Sofitel Bayerpost in Munich which is by far our largest luxury property in the country and is currently.

Many persons were affected by the absence of sales, you may remember there was the bout fight last year, Q1 which kind of gold business in Q1 2016 aligned with the other city impacted by calendar this quarter with the loss of two large fairs versus last year, and also the colon camera which was being reduced by one week with on the 31st of December. So going forward for Germany, we do expect some improvement in German RevPAR as soon as Q2, and this will be first stop by large fairs and the two quotes on our bell.

We have the bullmine Munich, we have the Popeye, Dusseldorf and we have the caption in Frankfurt, so it's going to be a good year for Germany. So let's start now about the UK before we turn to conclusion.

So I'm on Slide 9, so the UK was at 0.7% in Q1 and the occupancy was down 40 basis points with prices that remain positive at 1.3%. In line with the last four quarters, these overall turn is in fact a mix between a drop in London of 3% and an increase in UK provinces by 5%.

London is now close to, is in fact 20% above the 2008 ticks when restated for currency and inflation. Occupancy is under a bit of pressure driven by the strong Sterling, but it remains extremely high at close to 80% in the city.

So this regards with pricing power and the number that we described before. So in summary, we've got evidence of picking cycle in London but we are exactly today where we were 12 months ago with a constructed Q1, comcasted Q1, sorry.

So keep in mind that the business stabilized in London in Q2 2015, and that's the assumption that we are picking for the rest of the year. So at the same time as I mentioned before, the provinces remains definitely well-oriented.

So in summary, Q2 will tell us more about the full year plan, but today the U.K. delivered the highest occupancy rate across Europe and this is well above France and Germany, so this is a good place.

So moving to conclusion, Slide 10, so overall, Accor Hotel delivered the front performance in Q1, marginally better than Q4 last year and broadly in line with our expectation. What our plan is what we expected.

The group continues to enjoy good momentum globally with dynamic markets including Germany, Netherlands, Southern Europe, Central Europe and majority of the Asia-Pacific region. Expansion carries on at income base as we saw, and the Q1 number was very calm, and that will foster further revenue for hotel services.

France is still affected by the effect of the November events, particularly Paris. Roughly we do see improvement in provinces which to some extent reflects some of the initial positive plan in the French economy.

So all-in-all, we do remain optimistic that 2016 fundamentals will continue to support plan growth. The gradual recovery we saw in Q1 should carry on, driven by France, Germany and Brazil, and as a closing well before we do a panel for questions, one word about shareholder structure.

Following speculation last week, we decided to update markets on what's happening. So as mentioned in the press release you received earlier, Jin Jiang International Holdings through three wholly owned subsidiaries held 14.98% of actual shares or 13.07% of the voting right at the end of March.

There is no change in Jin Jiang intention regarding Accor versus the notification that they have done to the French market authority dated February 26, 2016. Nothing more to share on this topic and so the flow is basically yours for questions regarding our Q1 revenue.

Thanks for your attention.

Yes, hi, I got three questions. Just so could you help me understand how we get from the 0.4% RevPAR at the 1.9% like-for-like?

How these are treated within that extra day in February? Is there anything in that for that or is it food and beverage?

If you could just help us understand the bridge between RevPAR and like-for-like. Second question is around room openings.

Obviously a really good start to Q1, just to what extent can we sort of annualize that number if you were to, I guess that would get you to about 35,000 openings. Would that be reasonable to expect for the year?

And then just finally, on the U.K. that provinces number is sort of well ahead of where the industry data is tracking, just curious to know your thoughts on that.

Is there anything particularly special going on within Accor why you're outperforming the market so much in the U.K. provinces?

Thanks.

Good evening, good afternoon. On your first question, moving from RevPAR to revenue, there is nothing special.

There is no special treatment and as you described it's mostly food and beverage. So in term of your second question which was can we annualize the Q1 number, the answer is no.

But it's going to be a good year in term of openings definitely. So we see a good job in terms of spending but don't make first time.

And the other number that I'm sure you're aware off is that the pipeline is above 68 and this is a pipeline over four years. And then in terms of our firm in UK, I think a lot of it is coming from distribution that we need to the portfolio and notably our managed hotel that's why you see a very strong performance from the provinces in across the portfolio.

And just coming back on the first question, so within -- do you include whether the extra day in February, from the VPA comment, does that include within that 1.9% like-for-like result just in the reported number?

Yes, it is in the like-for-like.

Thanks.

Sure.

Thanks very much. Good evening gentlemen.

Firstly, can you say anything in terms of have there been any summer bookings you can talk about and indeed Euro 2016 bookings, how those are progressing? And secondly, I mean it does seem like in France you might be outperforming competitors.

Is this due to kind of mix or is anything specific which is going on? And then lastly, just kind of -- I guess room closures, if you could kind of -- just your thinking in terms of health keeping on the network.

Thanks.

So summer bookings on year 2016, as you know Jarrod, we -- it's not the business in which we have a very strong visibility of the bookings in advance and we probably are the subsidiaries and for that I think it's much more difficult to think. But what we can sense on, what we moved to unfinished that the program is doing good and it is difficult for -- more difficult for us.

There is nine cities into which there are going to be some games in the year 2016, football games in the year 2016 and we've got a lot of hotels in those nine cities. So I think we'll repeat what we said back in the February call.

I mean the town [indiscernible] are moving back to positive territory, definitely realized on the year 2016 and the juncture of this assumption remains the same. In terms of outperforming the competition, I think maybe what is the difference versus what you see is the nice business where we have stronger exposure.

So I call that is the competition with quite lot of flagship in Paris and so that maybe explaining some of the differences that's there. In terms of your question of closing, the Q1 number is always a bit high.

And so the number that we should take or assume is 1% to 2% of churn which is more or less the industry average. So there is nothing to more than that in the Q1 quarter.

Okay, thanks very much.

Sure. Welcome.

Thank you. Just two questions please.

I think in the statement you talk about taking actions to mitigate where trading is more difficult. So I just wondered if you could share with us what actions have been taken and to what extent you see you can mitigate the more difficult trading areas of -- like as Paris and Latin.

And then secondly, obviously you've been after couple of funds already about sort of the Euros but what are your thoughts in terms of the right pricing strategy for that major event, is it just a case of maximizing revenues? But also related to that, are you concerned in anyway about Airbnb making that price optimization around that event more challenging or not?

Okay. So on your first question, taking action; here there is no magic, we believe the good work that we do at managing hotels which means that we're basically and it is to Brazil and also to in France being adapting a cost structure so that the city in fact, the demand label and so there's always a little bit of delay between the time that you start the action, the time that you see the -- did you see the benefit.

But varies definitely and adaptation that we do notably on temporary people and another thing that we push for is the sharing of structure by putting some combos in place, and that we've done in Brazil. And then as we can, we do marketing promotions.

For example in Brazil, we have the campaign of two for one, so you get two nights for the price of one, these kinds of things. So here I would say good actions also good manager that you will expect in a good business.

But it definitely pays off, that's the point. It definitely paid off and that you see notably when you have little bit more on way which is the case of Brazil, because Brazil, the crisis started more than 12 months ago.

The Europe pricing strategy, again there is no, it's pure demand-supply management and need management. At the beginning of the event we did put the price a bit too high and trying to log the people for more than one day, and so we've been adapting as we can do in revenue management what the actions so that we maximize the loading.

So that's pretty much we've done there.

And Airbnb?

Did you ask something on Airbnb?

Yes, just wanted to ask specifically about whether you thought they would, that would have an impact during the football tournament, but maybe you can comment on it more generally as well. You're one of the only companies I supposed that's acknowledged some impact on the business.

So if you have anything new to say versus what we would go, whatever.

Yes, you're right, Tim, we were very candid. At this juncture, we don't really fit, and it's probably something until which we can better report on or analyze once we have more data.

But at this juncture, we don't really see an impact of Airbnb on Euro bookings. Again, not that we would see one but at this juncture, I don't have any data that supports that.

Okay, thank you.

Ciao.

Hi, just the first one -- just following on from that one actually you previously talked about the impact on weekends in Paris from Airbnb. Just wondering if you continue to see that, if it's got worse, and if you're seeing any impact in any other cities at all?

Secondly, what was the impact of Easter on the period, can you give us an estimate on that? And then thirdly, on your comments on the marketplace that tells that those 500 hotels that are live, can you give us any sort of rough estimates on revenue contribution from those or how we might think about that going forward?

Thanks.

So on revenue and Airbnb, and then weekend, we don't -- we are not seeing much evolution, to be frank, we don't see this year an effect of any significant at this juncture. So that's what I would say.

We did quote Airbnb when we had the revenue call on Q3, and that was on the back of summer and summer vacation. And so there we have been able to see some effect, for the rest, we don't really see.

On your last question in term of marketplace, I mean this is no significant revenue -- I don't know if there is any significant revenue that needs to be more hampered before it really becomes something which is much larger volume. But again, the good thing about it and why I was commenting is that this is going on exactly part of plan, and as you know our plan is to go up to 10,000 hotels.

So as we're there we will see the financial benefit of the marketplace. Can you tell me again your second question, if you don't mind?

Just wondering what the impact to the early Easter has been on the business.

Oh, early Easter?

Yes. Hello, Vaughan, this is Sebastien.

Just to tell you that the impact for the holiday was predominantly a mix between Siberian and March for the winter holiday. For the moment we haven't seen much of an impact for Easter which is more in April actually.

There was no impact on business travel from Easter shifting?

No, not that we've seen in Q1 numbers.

Right. Okay, thank you.

Hi, good evening. I have two questions please.

The first one is on those HotelInvest rooms that come out of HotelInvest. Can you maybe just quantify and isolate how many of those were effectively directly transferred to hotel services under franchise or management and what the revenue impact was of the different operating model in the quarter?

And my second question is on the partner hotels, you've got 500 live and looking at your website it looks like big chunk of those are in France and in Paris more than 100 which does not necessarily strike me as places where you need to plug a gap. And is this because you're starting up there or has the final logic changed?

Are you going to do findings more opportunistically or just really going to open and add these partner hotels where you don't have your own franchisees or hotels?

Okay, so on your first question, our hotel outright is marginally, so it is in big numbers. On your second question, we don't sell like I said on the previous question that I got a math.

I mean again it's early stage on this initiative which as you may recall we casted back in November 2015. And so for share you don't see today the mix that you would see under [ph], and so we probably need to wait little bit more to our numbers which are representative of what it will look when it will be running at full speed.

Alright, thank you.

Sure.

Good evening, gentlemen. Two questions please, and the first one is on MMEA.

I look in the RevPAR details, quite a big difference between the management and franchise performance just stands 7.4% and HotelInvest which is up 4.7%. Can you just give us color on why management and franchise was so weak, as your other comments from MMEA were pretty positive?

And then second, in terms of sterling weakness and that we've seen very recently, is that had any impact on your forward-looking for London? Thank you.

Okay. So on the second question, no, it didn't get -- it is not the significant effect on what we saw in London at this stage.

On your first question, it's really the mix that we are in MMEA between places where we are firm on the HotelInvest territories, this is mostly in places Iberica, which is places like Spain and Portugal whereas the rest of MMEA is mostly managed from France. So that's why the locations are/is determining the differences in performance.

As you know, in Iberica which is Spain/Portugal, we add which were double-digit last year. We experience roughly those kind of numbers also in Q1 because in fact, we are so far from the levels that we experienced back in 2007 and 2008.

So really what's still in a recovery phase and it's very, very good number for these places, we don't tell that in the rest of MMEA.

So what are the weak markets in MMEA for hotel services?

So in fact, what you have is that anything which is related to oil, France, the energy places; so do you buy these kind of places under phase one. And to even for that, I mean, first half you know the oil prices that it wasn't -- so, it's not down at which.

And the other thing is that with the attacks there has been also a flow of tourists that used to go to those places that basically going back to other destination. And notably, Spain and Portugal, so you've seen some flow of visitors that move from going to a Middle East country to going to -- I would call it Southern Europe country this one of installation [ph] and this is to some extent also true for North Africa.

Okay, answered. Thank you.

Thank you, good evening everyone. Just one question for me is, how many hotels have you left to restructure and when will that process finish?

Thank you.

So the number of hotel we restructure was 28 in Q1. And out of the 28, 12 were -- was in conduction.

So you know we see good year in terms of restructuring for 2016 just like if you recall, we had about bit less than 100 hotels restructured last year which would be based on what I just described, good year again for 2016.

Okay. And how many would that leave -- how many have you left to do?

We don't really have disclosed our target on that but you may recall we started from 1,400 and we moved to 2,800 at the end of 2015. And probably what we would 100 this year, that's probably -- next year is bit more than 1,000.

Okay, thank you.

As you know, and not that I don't want to give you numbers but as you know it depends on portfolio and so you may get a big height up by just doing a nice portfolio. So that's also why it's difficult to be this high [ph].

Okay, thank you.

Sure.

Thank you. So just to come back on the topic of Jin Jiang, I know you said there was nothing to add.

Could you just sort of explain again, you made a comment and there was no change to that position, could you just sort of explain further exactly what their state of position is and how we should interpret that? And then later to that, maybe other people in the call are familiar, what are the rules in the French market as regards to -- this precise to which they could increase their stake before there would be any implications for making a bit for the company and its entirety and that kind of thing?

I don't know if you can just share with us the rules and regulation as to how that works please?

So since I've got a lower [ph] I'll start with the second question. No, but the threshold is 30%.

So once you cross the 30% threshold, you got to go for mandatory so called loop here. So basically buying back capital.

So that's 30% threshold. Then on your first question, I mean, what we wanted to say is or to do is to use in fact the fact that we review in order to clarify what came as loop -- and can make sure that at least the proper information was circulating and what we all communicate.

What it means by nothing is really challenge is that when they did ask to do disclosure, when the cost and presence to the equivalence of so-called a cc in the United States, they have to give what are their intentions, what is the intention of Jin Jiang. And so basically when they did that, they cannot explain that's down to take control of the company that they were not recruiting themselves or acquiring enough shares that they were not to clean themselves from asking about it, so none of that has changed.

The other thing that you may recall was discussing the fact that expertise of the core strategy, the core management and that's why in fact they are buying the shares and this is also unchanged. As you know, we know them, we know them very well because we know our Chinese colleagues or Chinese competitors -- Chinese market, we know the Chinese market very well and we have very good relationship with them, so none of that has changed.

I think the point that we are trying to say is the potential versus what was declared back in February but the number that was circulated was wrong and so we wanted to correct.

Okay, that's very helpful. Thank you.

Maybe I can just discuss something, I realized that there is one thing that I was not precise on the regulation. The statement of Jin Jiang was for six months per IMF regulation.

So when this is that what they say and what they declare is worth six months. I just wanted to be precise on that.

Okay, good. Thank you very much to everybody for taking place into that call and talk to you soon.