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Economy hotels drive UK Accor growth as company reveals negative Olympics impact

By Peter Ruddick , 18-Jul-2012
Last updated the 18-Jul-2012 at 15:47 GMT

Related topics: Business, Venues, Trends & Reports, Hotels

Global hotel operator Accor has revealed strong performance from its economy hotels has driven growth for the business in the UK while preparations for the London 2012 Olympic Games have damaged revenue from the upscale and midscale properties.

Accor has announced its financial results for the first half of 2012 with budget hotels, including those under the Ibis brand, driving growth in the UK while the Olympics has a negative impact on the upscale and midscale segments

Accor has announced its financial results for the first half of 2012 with budget hotels, including those under the Ibis brand, driving growth in the UK while the Olympics has a negative impact on the upscale and midscale segments

Announcing the financial results for the first half of the year, the France-based operator of brands including Ibis, Novotel and Mercure, revealed the company had experienced global like-for-like revenue growth of 3.6 per cent.

However the worldwide jump in revenue for both economy and upscale and midscale venues was not something that was repeated in the UK market where only the economy segment enjoyed rising revenues.

Negative Olympics

Despite continued demand, Accor said 'preparations for the London Olympic Games had a negative impact' on its non-economy brands which in the UK includes MGallery and Sofitel. 

Like for like revenues fell by 3.9 per cent in the six months - a development also down in part to the renovation of a number of hotels in the portfolio and the upcoming closure of the ExCeL centre and the O2 Arena for the Games.

Despite London hoteliers last month reporting the benefits the Olympics was having on post-Games bookings , BigHospitality yesterday revealed 23 per cent of the capital's rooms are still empty  for the duration of the Olympics as the race to increase occupancy reaches the final lap.

Economy expansion

There was better news for Accor in the performance of its economy hotels however where revenue rose by 4.3 per cent in like-for-like terms. The operator attributed the performance to optimised revenue per available room (RevPAR) as a result of a 'dynamic pricing structure' and its expansion programme in the UK.

Continuing its record programme of expansion , Accor opened nearly 21,000 new hotel rooms in the first half of the year. The majority (85 per cent) of these were through management or franchise contracts. 

Much of the growth in economy hotels in the UK for Accor has been through its Ibis brand re-positioning  under three sub-brands - Ibis, Ibis Styles and Ibis Budget. The company recently unveiled its first hotel under the new Ibis Budget brand in London's Whitechapel  - a hotel previously operated under the Etap name.

Jonathan Sheard, managing director of the MGallery and Mercure brands for Accor in the UK and Ireland, told BigHospitality: "It would be wrong to say that these last few years haven't been difficult to operate in. One of the strengths we have in the Mercure branding is that these hotels do not rely on international flows, even in some cases domestic flows. They are supported very well in the locality."

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