EuroBusiness Media (EBM): Accor, Europe's leading and one of the world's largest hotel, travel and business services companies just reported full year earnings for 2004. Jean-Marc Espaliouxs, welcome. You are the CEO of Accor. Before we begin, briefly, what is your recap concerning 2004?
Jean-Marc Espalioux (JME): Let me start by saying that 2004 will forever remain, for the whole Accor Group, a year marked by the awful tragedy in South East Asia, especially in Khao Lak, and as I say this our thoughts go out to the victims and their families, and we wish to pay our respects to them. Concerning the business which, as the CEO, I must comment on, I would say that there is a rebound, there is a pickup, there is a new momentum after two years of setbacks following seven years of fast growth in earnings. In 2004, we experienced an increase of more than 30% in profit before tax. This is a very significant event which shows that there is a rebound, and also the effects of our cost-cutting plan.
EBM: Beyond earnings, 2004 was marked by some major events. Would you care to remind us briefly what those were?
JME: Yes, there were several strategic advances. First of all, development in hotels: 188 new hotels -- this means one new hotel every two days. Secondly, some relevant and relative acquisitions in the services field, a field in which we have been for years experiencing sustained growth. Strategic stakes also in the fields of leisure: we have a 29% stake in Club Mediterranée, a stake of 34% in Groupe Lucien Barrière that has become the leader in casinos in Europe, and also the strengthening of Carlson Wagonlit Travel which has been experiencing very good results despite a difficult context in the last two or three years.
EBM: You started 2005 with two major announcements: ColonyCapital is investing 1 billion euros in Accor and you are unveiling a new policy in real estate management. Let's begin with Colony Capital. What is the significance of this deal?
JME: This is a very significant and to a large extent very exceptional event, as Colony Capital is an international investment fund specialized in real estate and hotels, and has known Accor for years -- and when I say Accor this means the company and also the management -- and it provides us with additional financial resources, of course. This is the way to speed up expansion and consequently increase earnings. It also provides a worldwide expertise in hotel business, especially in Asia and in the U.S. All in all, I would say that it is the catalyst for a further increase in Accor's share price.
EBM: And what about your new real estate investment strategy? What are the key points?
JME: The key points are the following: in the upscale segment, following the increased recognition of Sofitel, which is undisputable, we are now able to sell properties while maintaining management. So, we have a program that will be underway in the next month. Even more important, we are now able, in the midscale segment, to substitute fixed leases for variable leases, which provides us more flexibility in order to adapt to different contexts. And these variable leases are obtained without minimum guarantees: this is new in the world of hotel business. So, I think this is a very important step for an innovative real estate management policy, enabling it to be less capital intensive and more flexible.
EBM: More generally, you have just unveiled a new corporate expansion plan designed to accelerate growth significantly in the coming years. What are the main features of this new plan?
JME: There is a rebound; there is the trust of new investors, with a very sizeable investment; there is a new real estate management policy. So it is important to associate the Accor people with this new momentum, this new dynamic. We took advantage of this situation to recently launch a corporate project to create value for customers -- who can be flighty, so we have to adapt ourselves -- we need to be even more motivated. And for customers, we must share our vision with them in a more efficient way. This is what this project is about, and all this combined shows that for Accor it is likely to be a turnaround.
EBM: So, given what you have said, and given the arrival of Colony Capital with a 1 billion euro investment, what are the priorities for development in the years to come?
JME: Well, these additional resources will provide us with more flexibility in terms of acquisitions, dividends, but also for stepping up expansion. There are three major priorities. Firstly, in Europe in the economy segment; in southern Europe: Spain and Italy; in central Europe; and in Russia. Secondly, to expand in emerging countries such as China, where we have been very successful with our first Ibis, our two-star hotels; India; Latin America; Africa; and the Middle East, where we have made a breakthrough. Thirdly, we want to capitalize on the worldwide success of Ticket Restaurant, meal vouchers, in order to become a major player in corporate human resources management services.
EBM: What are your comments about the outlook for business in 2005?
JME: It is difficult to be accurate or to make precise forecasts in January and February, as we are in seasonal businesses. But the beginning of the year is good, and the more important factor for us is that in all segments everywhere, our prices are up, and this shows our ability to have a strong position in our markets, and this is very encouraging.
EBM: Jean-Marc Espalioux, CEO of Accor, thank you very much.
JME: Thank you.
