Accor has appointed John Ozinga from CBRE Global Investors, as COO at HotelInvest, effective from 18 June.
Ozinga will now lead the restructuring of the division as it moves away from leases and towards management contracts, with CFO Sophie Stabile telling analysts that there was “a lot of work to do”.
Commenting at the company’s first-quarter results presentation, Sophie Stabile, CFO, described HotelInvest as “a cash-flow and balance sheet driven business aimed at improving asset value”.
She added that “In terms of restructuring, we have done 21 hotels for HotelInvest, with 16 leased properties restructured since the start of the year. We are still working and the local teams are already in place around the world – with the arrival of John Ozinga in the middle of June we are confident that we can deliver the strategy.”
Most of the restructuring, Stabile said, had been sale and manageback or sale and franchise back. The company expected to update the market on the number of rooms involved at the end of August.
Stabile added: “HotelInvest and HotelServices are two totally different networks – we have a lot of work to do on the HotelInvest side. We have to improve performance.”
Ozinga’s background is one in both operations and investment, having started his career in 1991 with Accor as development director for the UK, Ireland and Benelux. A decade later he joined Dolce hotel group as VP of development in Europe, before becoming EVP in charge of international real estate activities for Groupe Casino in 2004. In 2008, he joined Carrefour as director of Carrefour Property France.
Since 2012, he has been CEO of the French platform and head of separate accounts Continental Europe for CBRE Global Investors.
Sébastien Bazin, chairman and CEO, said: “He brings 20 years of experience in real estate as well as in-depth knowledge of the hospitality industry in general and of Accor in particular, since he spent 10 years with the group.
“These will be valuable skills for the rapid deployment of Accor’s new real estate roadmap. With HotelInvest, Accor has clearly chosen to reinforce its hotel owner and investor activity. We are Europe’s leading hotel investor and our objective is to consolidate this position and improve the return on our assets.”
Ozinga’s appointment was announced as the company reported a 1.2% increase in like-for-like revenue at his new division, to EUR992m, with a 4.7% rise on the year in revenue at HotelServices to EUR262m. The company said that it had seen “robust” demand for every key market outside France, which had been hit by an increased in the VAT rate from 7% to 10%, bad weather and elections being held over two weekends.
At HotelInvest, northern, central and eastern Europe, which accounted for 44% of total HotelInvest revenues, saw a 4.0% like-for-like gain led by sustained strong demand in the UK and “solid” business in Germany. Revenue in the MMEA region (up 4.5% like-for-like) and the Americas (up 5.7%) continued to trend upwards. The group said that there were notably sustained signs of recovery in Southern Europe, where revpar was up for two straight quarters for the first time since 2007. However, Stabile said “the recovery has come mainly from occupancy so the rates are still low, so we are cautious despite the positive trend”.
She added that the situation in France should remain under pressure in the second quarter, with no plans to pass on the VAT increase but that “we expect rate to increase in the beginning of July. We expect that it will be better at the beginning of the summer. The trend should improve at the end of the year”.
Bazin said: “HotelServices confirmed its high potential and is expanding quickly in fast growing geographies, while HotelInvest consolidated its position as the leading hotel investor in Europe, benefiting in particular from strong dynamics in the United Kingdom and Germany. These trends should continue in the coming months. At the same time, the Group is pursuing deployment of its new strategy at a fast pace.”
Stabile said that, in the first quarter: “We added close to 4,500 rooms, expansion was spread across all regions, with 85% achieved through franchise and management contracts. Accor has stopped signing new leased contracts” but, she said, there had been some agreed before the new strategy was agreed.
HA Perspective [by Katherine Doggrell]: Bazin is currently assembling his troops. First off was Vivek Badrinath from Orange as deputy CEO, a statement of intent over the importance to the company of technology and distribution. Now, having announced the creation of HotelServices and HotelInvest, he has announced the head of what will surely be the more complex role.
Opinions about Ozinga are thin on the ground, which should stand him in good stead as he finds his feet and starts to work his way through the owned estate. He has experience in operations, investment and Accor, the latter of which may prove to be of the most importance.
Bazin was not present at the Q1 results call, but at the full year presentation he spoke of the company as “energetically deploying” its new strategy. Bazin said: “Let me be very clear. There will no longer be development contacts in fixed or variable leases.” And, discounting legacy agreements, that is so far the case.
Citi’s James Ainley, who rates the company as a ‘buy’ with the group “well exposed to improving European economic fundamentals” sees a “significant” acceleration of the group’s asset disposal programme as an upside risk. The issue remains for those observing Accor is how likely this is.
Ainley said that the group’s previous 40/40/20 vision had made it effectively into “a forced seller of assets at potentially the wrong point in the cycle”. The new plan should, he said, make the business more tactical and agile which in time should enhance shareholder value. In the meantime, the company will rely on the recovery to bolster fortunes.
Bazin was bought into the company to speed up its transformation, previous incumbent Dennis Hennequin having been too slow for the shareholders’ tastes. Bazin earlier this year that he expected that it would take between two and three years to exit the group’s existing leases and decide which of the owned hotels to retain. Bazin may find himself having to spell out his new vision (and its cost) more specifically if he wants everyone on board for the duration.
There is, as Stabile pointed out, work to be done.