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While Accor has done a nice job with its cost cutting, it is not immune to the global slowdown. Kudos to management, however, for a realistic outlook on the significant hurdles facing the hotel industry. Most relevant in my view is the duration of the slowdown. Management of this global hotel company warned that 2009 and 2010 “could be more difficult”. The sell side needs to pay attention. Hope for a 2009 recovery is fading fast. Models need to be adjusted. Estimates need to come down, again. Valuations on current estimates are meaningless.

I’ve written extensively on the issues facing lodging investors. Some of these include:

• The underestimated margin impact from slowing RevPAR
• Inflated RevPAR in gateway US cities from a weak dollar and strong global economies – both trends are reversing
• Slowdown in travel and tourism globally
• Aggressive analysts’ estimates that assume 2009 recovery

Maybe the Accor commentary will open some eyes in the sell side community. Probably not. I guess we’ll have to wait for Q3 earnings reports to see estimate reductions.


Sofitel London St. James