The victory of Nicolas Sarkozy as president of France looks set to give Accor, the world’s largest hotelier by enterprise value, a huge boost.
Sarkozy is expected to unleash a raft of business-friendly reforms in France’s ossified economy, likely to begin with moves to make it easier to hire cheap labour to ease the country’s appalling youth unemployment rate.
While Accor has 26% of its rooms in France, it makes 44% of its hotel EBIT in the country. A lowering of the cost of labour will provide a significant boost to Accor’s coffers, even though the bulk of its portfolio is in the less labour intensive mid-scale and below segments.
Other operators in France will also, of course, benefit from any easing of tax or regulations. After Accor, Louvre Hotels is the next most dominant and this group will
The nature and scale of any Sarkozy-led changes remain to be seen: while there is clear desire in France for change, few in the country are calling for the implementation of unbridled, red-blooded, Anglo-Saxon type economic reforms.
This will not be a case of Thatcher / Reagan style changes and consequent boost to corporate profits. As the riots on Sunday showed, a more consensual approach will be needed if the country is not to suffer a serious break-down in law and order.
Nonetheless, the trend is clearly in favour of business and capital. But it seems probable that it will be mostly French business that benefits.
Sarkozy has a demonstrated a preference for national champions in the past and there is no reason to expect this to change going forward. A hostile move on Accor looks no more likely to receive the green light from a Sarkozy administration than from the previous Socialist-led governments.
So Accor will have an increasingly business-friendly and more profitable domestic market. And CEO Gilles Pelisson can take his time with the restructuring process currently under way.
Perhaps the French giant will be emboldened enough to turn predator itself? Certainly, InterContinental and Starwood Hotels are currently tempting targets.