Earnings Call: H2 2017

Feb 21, 2018

Well, thank you for joining us. Thank you. I thought there were only going to be 12 of us, so there are more than 12 of us. My thanks to those who are following us in the internet, wherever you are. It's a great day today. Great day because we got good results. We got a lot of things to tell you about and some clarification to provide. Before handing over to Jean-Jacques Morin, his group CFO, I'd like to just give you my own personal views on where we're at and, above all, where we're headed in this group. First off, important thing, I was thinking about that last night, trying to compare Accor. Who are we? What do we resemble? If I were to describe Accor today, I would describe a fine mechanical, a timepiece, a bit like my watch. Great mechanics because in fine mechanical operation, there are a lot of things behind. There are engines and in Accor group today, there's at least three engines and they are both different and extremely complementary. The first engine is the one that represents us best, the most visible, our geographic footprint. I don't say this often enough. Accor is present today in 99 countries. Accor is number one, just about everywhere. We are far and away number one in France, far and away number one in Europe, far and away number one in Latin America, far and away number one in the Pacific, in Asia. Soon to become number one Middle East and Africa. Already number one in Africa. I'm telling you this because we always compare ourselves and we're right between Marriott, Jin Jiang, Huazhu. What really sets us apart from them? What makes us different, we're the only one to be so diversified across so many geographies, holding leadership positions. Others are more powerful than we are in China, bigger than we are in the U.S., but no one can equal this geographical footprint. Why is it important? It gives us local roots to move closer to the owners, to be familiar with the local culture and therefore, to interact on the new modes of behavior of our customers. In a country, we have a country manager. It may not sound much, but when I travel, the owners know the country managers because they're from the same country, and so we speak the same language, and this tie that unites us is extremely strong. Never been so strong as today. Second engine. Our brands. 25 brands today in the group. May not sound much, but when you talk to an owner who knows you because you're present in his country, because you're of the same nationality, and when the owner wants to invest in hospitality, of course, he will consider what segment, what price, for what customer base and what brand. When you understand the granularity and the difference between a hotelF1, ibis Budget, ibis Styles, you go to Mama Shelter, 25hours, JO&JOE, Swissôtel, Mercure, Grand Mercure. There isn't a single hole in the racket. You need a hotel owner in a country. You recognize Accor as being the strongest in your country. Each brand, every brand promise meets a customer at a price point. There may only be EUR 5 difference between two brands. EUR 5 is a huge difference in the mind of the customer in the brand promise. That's why we went from economy to upscale. That's why we won so many tenders, because we respond to each and every request of the local owners. There's a third engine. Quality. I say this with a great deal of pride. All those working at my side or I working at their side with a great deal of conviction. It's our audacity. This group is upending everything. It doesn't mean that we succeed. I don't know. Time will tell whether we're succeeding or not, but at least we will have tried. We're disrupting everything, including ourselves. What was our core business 50 years ago? What's our business today? Why have we launched Booster? Why did we move to the upscale segment? Why did we go to private rental with onefinestay? Why did we move into a Marketplace with FastBooking? Is it a failure? Yes. Did we try? Answer, yes. When we test things, of course, we need to know when to give up and exit. But of course, there have been some incredible successes, VeryChic, fine company. Gekko is going to upend ties with corporate. onefinestay is a very strong, compelling brand that meets a leader based Paris, London, L.A. with 10,000 apartments. So this constant calling into question happens because there are 270,000 bold people in the group, confident in themselves, their destiny, and the brands, and the geography, and our leadership in Jean-Jacques Morin, all those in this room. So when you add up these three engines, just spend five seconds thinking, say, those in the hotel sector who've tried so many things, who've diversified so much, who have disrupted our approach. Why do we launch AccorLocal? AccorLocal, because we're saying that in this current world, digital tech isn't a threat, but an opportunity. Through digital tech, I can have a quality of interface, communication, information with customers whom I haven't thought about for 50 years. That's AccorLocal, that I'm going to move closer to the person who doesn't need a hotel room, lives in a big city, and to whom I can provide local services. Will we succeed? I don't know. Will we give it a try? For sure. Nextdoor, ditto. Why are we leaving coworking to WeWork, whereas we're already present in 100 countries? So we said, "Right, let's embark into coworking." Why Noctis in events and catering with Potel & Chabot? Believe me, even if these initiatives only represent 5% of the group today, represent a lot more tomorrow. Some are failures, some will be outstanding successes. So put all that into perspective. We'll show you the 2017 results. They're extraordinarily robust. It's because they're strong that we can attempt many more things. Jean-Jacques, over to you. Merci, Sébastien. Bonjour. Thank you, Sébastien. Good morning, everybody. 2017 was another record year, as the title says. It was a very interesting year in many ways, and a remarkable year in terms of financial performance. Just to give you an overview, the group's gross volume rose 19%. That is excluding exchange rates, in particular, thanks to the integration of FRHI over the full year. Our revenue rose 7.9% on a like-for-like basis, which does not include FRHI. EBIT reached a record level of EUR 492 million, which was slightly above the bracket we gave you in our guidance last October. Of course, generation of cash was on a par, thanks to the good operational momentum that I mentioned, but through a number of non-recurring items that I will explain. Surplus to funds from operations up 43% to EUR 559 million, and recurring free cash flow, which was multiplied by two. That is the overview or the bird's-eye view, as we sometimes say. Let us look at revenue. The group's revenue was slightly over EUR 2 billion, almost EUR 2 billion, EUR 1.937 billion. If we look at the breakdown by segment, you see that hotel services posted like-for-like growth of 5.1%, reported growth of 14.6%. New businesses saw revenue double to reach EUR 100 million. Like-for-like growth was 6.9% in new businesses, and like-for-like includes FastBooking and three quarters of onefinestay. For hotel assets, hotel assets also performed particularly well, with 7% like-for-like growth, thanks in particular to a sustained level of activity in Europe. If we look at a synopsis of revenue, you will see that change scope of consolidation are significant but are largely due to the integration of FRHI into the group, which accounts for about 10 percentage points. Exchange rates had a negative effect of -1.4%. Let us now look at how revenue was sustained by our key markets. Our key markets are France, Europe and Asia Pacific, which account for about 70% of our key performance indicators. Looking first of all at France and Switzerland, RevPAR rose 4.2% over the year, with the fourth quarter, which was by far the best quarter of the year, with an increase of 7%, which very good momentum in France. This is a reflection of what is happening in Paris, where RevPAR rose 9.2% in Q4. If we look at the full year, the gross volume of tourism rose 20%, particularly with the return of Chinese tourists, where gross volume rose 32%, and American tourists, which saw gross volume rise 20%. So a strong recovery in 2017. Last year's figures were negative, as you will recall. This should be confirmed in 2018, probably with a regained pricing power in France. Moving on to Europe, RevPAR also was very good, up 6.7% at the end of the year in 2017. A strong Q4 at +6% as well. Central Europe still posting strong momentum with 9% growth in all segments. Strong growth in all segments. Asia-Pacific, or should I say the Iberian zone, which finished very well despite the events in Catalonia, Q4 up 8% and the full year up 12%. This is RevPAR, of course. As for Germany was still in the black in Q4. It finished the year with RevPAR up 2%. Good fundamentals in Germany and the schedule of trade fairs in 2018 will work in our favor because every second year, the calendar works in our favor in Germany. In the U.K., the situation is unchanged by comparison with previous quarters. RevPAR is relatively stable. Occupancy rates are very strong. But London was down 4.6%, which is confirmation of the transit in London. This was offset by a good performance in the provinces. This slide continues to explore RevPAR growth in Asia Pacific this time around, with a RevPAR growth of 6.2% in Q4, 5.8% over the full year. The main drivers were, of course, Australia, where we are acquiring Mantra. RevPAR in Q4 rose 3.5% in Australia. China was also another strong growth driver, where Q4 saw an increase of 8.9%. In China, we have reaped the benefits of our very strong development. System wide, you will see that group RevPAR rose 4.7% over the full year, particularly good Q4 at 6.2%. This growth is to be found in all segments in the group. This leads us to believe that Q4 was a very good fourth quarter in excess of expectations. It probably was a good strong momentum with which to start 2018. After commenting revenue and RevPAR, the second major growth lever in our group is our expansion and development. A record year in terms of development, too, because on an organic basis, we opened 41,000 rooms, a level we never reached before, higher than the guidance we gave the market. We said 40,000. It was actually higher than them. If we add to that the networks that we have acquired, Rixos and BHG, the overall figure for hotels for the year was 301 added hotels and 51,400 rooms. That is what we added to the network. The mix was very much in line with previous years. That is the mix of organic. That is 30% in the mid-scale, 20% in luxury and upscale, 50% ibis. If we include Rixos and BHG, we arrive at what we were hoping to achieve with these acquisitions and joint ventures, which is luxury hotels increasing to account for one-third of our total. As in previous periods, Asia Pacific is our main growth region with 47% of our total organic growth of development patterns. The existing network has been increased, as I have explained, giving us a good geographic balance and out of which our risk profile is better spread. We have consolidated our leadership in Europe, Asia Pacific, the Middle East, and Africa, South Africa, too. We have gained strategic market share in the upscale with BHG and Rixos, but also with Banyan Tree. This better spread will continue in the periods to come. In fact, our pipeline is mainly in high growth markets for over 80% of the pipeline, with Asia Pacific accounting for 47% of our development. This record pipeline of 900 hotels and 160,000 rooms, which is about 25% of our current portfolio, will continue to grow. We have all the means at our disposal. 24 hotel brands. Just for the record, we had 14 two years ago. We now have 24. So strong growth potential thanks to that. After talking about development, let me look at each of the segments in turn and in greater detail. Beginning with hotel services, we have good momentum in all our key markets. Revenue of EUR 1.746 billion. That is a 5.1% growth rate on a like-for-like basis and a reported growth of 14.6%. The benefit of development is partly offset by changes in scope of consolidation, which explains the increase in RevPAR, particularly in France, with changes in scope accounting for the disposal of hotels in Pullman, Marseille, among others. Renovation effects, too, Pullman Montparnasse, which is our biggest single hotel in France. I have just spanned France, Europe, and Asia Pacific, which is about 70% of hotel services. Elsewhere, Middle East and Africa rose 2.7% with contrasting situations between the Gulf region and countries like Egypt or Morocco, which performed well with strong growth, benefiting from currency exchange rates. In North America, where we now have Fairmont Hotels on a like-for-like basis in the second half year, the annual growth rate was 9%, that is RevPAR growth rate of 9%, largely driven by Canada, where we have a very strong position. As for South America, the situation has been complex for a number of years, but last year we had the benefit of the Olympic Games in Rio and very good performance in Q3. Now the situation is that the recovery is beginning to take shape in Q4. Saw RevPAR increase by 14% in Q4 after a succession of negative quarters. In fact, demand increased considerably as a result of the Olympic Games in Rio. Variation in our global structures had an impact of EUR 83 million in the NCAC region last year. We will adjust this in the regions as well in 2018. This is part and parcel of the integration of FRHI in the Accor systems. On the right-hand side of the chart, what you see is a growth over time. These are fees by segment in the luxury sector. Currently, 41% of the revenue Hotel Services comes from the luxury sector. So there has been a considerable change, a completely new strategic orientation taken on by Accor in the luxury sector. Moving on to elsewhere in the P&L. We are not just looking at revenue. Let us look at EBIT margins and profitability, EBIT, EBITDA. Performance was remarkable on the part of Hotel Services. EBITDA and EBIT both up. EBITDA in New Businesses was down fractionally. This was because of the various investments we had to make to integrate John Paul and onefinestay. Hotel Assets were driven by our subsidiary in Poland called Orbis, where we have a stake of almost 53%. This is an excellent asset, but this was the least good performance of our Hotel Assets. In summary, the EBIT margin and the EBITDA margin both rose by 100 basis points, respectively, to 32% and 25%. Let us delve into the margin improvement at Hotel Services, Managed and Franchise, Sales, Marketing, Digital, and Other activities. The margin of Managed and Franchise hotels benefit from the increase in RevPAR and from development. Sales, Marketing, and Digital, stable, thanks to the end of the digital plan, and Other activities saw their margin improve. Other activities include procurement, shared services, and timesharing in Australia. The overall view of EBIT, EUR 109 million up on 2016 because of three major elements. First of all, FRHI, which now accounts for EUR 117 million in our earnings. Of these 117, EUR 55 million were synergies that we generated. I told you we were ahead of schedule for the synergies. We are still ahead of schedule. We are ahead of the improvements in our schedule. We told the market we would expect EUR 65 million. We are a year ahead of schedule. We expect to achieve that by next year. As for development, this is the second bit of, well, activity and development together accounted for about EUR 25 million. This year, we had the benefit of one-off effects for approximately EUR 12 million. One big particular one-off concerning the exit fees subsequent to the closure of the Fairmont Acapulco in Mexico. In fact, the contract was terminated even before we made the acquisition, so we received compensation for this breach of contract. Let's now look at Hotel Services performed by region. Nothing very surprising given the major trends I mentioned earlier. Asia Pacific up, I think, 10%, 12%. This was boosted by recovery write-backs in China, VAT effect. France and Europe rose by 5%. NCAC, which is North America, North Central America region. This was largely due to the integration of FRHI, but also due to the Fairmont Acapulco impact, the one-off that I just explained to you. Africa, Middle East, Latin America did not perform as well, obviously, particularly in Africa and the Middle East, where the bigger assets underperformed. That's to give you an overview of how Hotel Services EBIT breaks down worldwide. A few words now about New Businesses. We have said this time and again, but I will say it once again, our main goal with New Businesses is growth. Revenue more than doubled in 2017 due to acquisitions. More than doubled from EUR 45 million to EUR 100 million in 2017. This includes John Paul and onefinestay over the full year 2017. We acquired them in 2016, but also Availpro and VeryChic for part of the year because they were purchased in the course of the year. Year-on-year performance for all our new businesses, including those acquired during the year. All posted double-digit growth in excess, obviously, of 10%. EBITDA remains stable at -EUR 25 million due to investments I have already commented. As for new businesses, well, we can confirm that our goal is to break even in 2019. The acquisition of Gekko has been completed in January. In fact, it has just been completed last month. That's the new businesses. Moving on to hotel assets. Hotel assets performed well, with the RevPAR up 8.4% and revenue by 7% on a like-for-like basis. The 74 hotels that we own or lease. Very strong momentum with the Russian tourists benefited from in particular. These impacts more than offset the difficulties we encountered in Brazil, where we still have a handful of assets. They are mostly leased on an EBITDA basis. Orbis did very well in operational terms, reaped the benefits of the active portfolio management policy on its performance. Now looking at the lower end of the P&L. This is from EBIT down to net profit. The number of variations, number of big swings in fact here, mainly due to operational impacts. The subsidization of AccorInvest, but also to a number of non-recurring tax effects. Financial expense was reduced by half down to EUR 54 million. As we said last year, this variation is because of the mark-to-market impact. It's a non-cash impact. Acquisition of the group's head offices. This is the building you are in here today. The second main explanation is the non-recurring items on the P&L. Non-recurring items remained stable at approximately minus EUR 100 million. These include the cost of Booster, EUR 55 million, and restructuring costs for approximately EUR 44 million. One very different impact is the tax credit this year brought about by three events. First of all, a change of rules in taxation in the U.S., which reduced the tax burden by 12%, which generated a EUR 59 million tax credit. Changes in the law on dividends received 3% taxation for French residents, which has an impact of about EUR 63 million. That is a tax credit. So it is a EUR 63 million tax credit and a deferred tax credit corresponding to the impacts of the Booster carve-out for Germany and the Netherlands. This combined one-off effect is EUR 180 million. This means that we have very good operating performance because we have a tax credit of EUR 51 million here. So there is a tax credit and not a tax expense here. We find all this on the bottom line, of course, resulting in a sharp increase in net profit, which is up from EUR 265 million to EUR 441 million. Discontinued operations. This is AccorInvest in line with IFRS 5. Comment this in greater detail on the next slide where you will find net profits up or down from EUR 104 million to EUR 67 million. RevPAR in AccorInvest was up 3%. Revenue is stable mainly due to changes in the scope of consolidation, particularly with the disposal of part of the hotelF1 portfolio and of course, major renovations on a number of our bigger hotels, including Swissôtel Singapore, a particularly large hotel, and the work we are doing refurbishing Sofitel Rio. These had a negative impact on the EBITDA and EBIT. EBITDA down EUR 11 million. As for net income or net profits, there is a lot included in that line, but we have a significant tax burden for EUR 195 million due to the legal restructuring with Booster and of course the burden of setting up Booster. These are partly offset by the discontinuation of amortization as required under IFRS 5. A total positive effect of 233. These are expenses that you have to pay when you transfer assets or entities to create Booster. Let us look at cash. How do we get from EBITDA to recurring free cash flow? The recurring free cash flow, as I have told you, is up sharply. It is more than doubled. This was due to the combined effects of a better business, a better EBITDA, but also tax impacts. As I told you, the impact on the P&L is also an impact on cash. The FFO was up 43% to EUR 559 million, to which we have to add recurring CapEx, which were down on 2016. These are recurring CapEx, so mainly in hotel services. You will find the breakdown on the right-hand side of the chart. The combination of these two effects are such that we have doubled our recurring cash flow. Our cash conversion is 69%, up from a mere 39% last year. Let us now look at how we go from recurring free cash flow to changes in net debt on the balance sheet. The group's debt was EUR 1.9 billion at the end of 2016. The main variations over the year were due to acquisitions for EUR 357 million. These included new businesses. Hotel services account for EUR 170 million, BHG and Rixos in particular, and of course, the Orbis operation, which accounted for EUR 110 million. There is the breakdown of the EUR 357 million in non-recurring development. As for disposals, considerable disposals for EUR 147 million, mainly the disposal of the stake that FRHI had traditionally in the North American company called Avendra, which was sold to Aramark for EUR 103 million. That was our share of the sale. Changes in working capital requirements, the variation was positive at positive EUR 37 million. That is the explanation regarding the change of net debt. Let us now look at the net debt over time. What you see as regards to the debt profile is that the average rate is down. The cost of debt is down from 2.85% at the end of 2016 to 2.04% in 2017. A very good indicator there. This was all due to the EUR 600 million bond issue that we made of 1.25% in early 2017, which enabled us to redeem two bonds at an average yield of 4% for a total of EUR 600 million in the summer. The cost of debt has improved, but the maturity has also improved because we have extended from 3.6 to 4.2 years. Again, good performance as regards to our debt profile. Now we have committed ourselves to maintaining our investment grade. We are currently BBB- by Standard & Poor's and Fitch. This brings me to the dividend we are proposing, which is, as always, subject to approval by the shareholders at the AGM on the 20th of April this year. As you saw, 2017 was an excellent vintage, and the board of directors, which met yesterday, has proposed the payment of a dividend of EUR 1.25 per share. EUR 1.05, I am sorry, per share, which will be put to the AGM on the 20th of April. This dividend is unchanged by comparison with 2016. It represents a payout ratio of 56%. That is on pre-tax recurring income, and will be fully paid in cash. One last slide, just to make sure we are all wide awake. The impact of new accounting principles. IFRS 15, which concerns revenue recognition, is currently being implemented. This IFRS 15 corresponds to the American standard ASU 2014-09. The impact of IFRS 15 will be twofold. Two significant impacts anyway. The first of these concerns the refunding of personnel costs, which is what you find on the right-hand side. Employees paid by Accor are actually reinvoiced at real cost to owners in our current reporting. These are costs that are reimbursed, but they do not appear on the P&L. Under IFRS 15, these costs should be recognized in our accounts. This will not have an impact on EBIT or EBITDA value but will have a dilutive impact on margin. This is an impact that we have estimated at eight percentage points. There is approximately EUR 700 million in additional costs that will be booked to the hotels. The second impact is less significant, approximately EUR 10 million impact on revenue. The second impact concerns what we call key monies. Key monies are the funds we pay for new management contracts, particularly in the luxury sector. In our current reporting system, key monies amortize over the duration of management contracts. Under the new rule, key money will be recognized under revenue and again over the period of the contract. So this will reduce revenue and EBITDA approximately by EUR 10 million per annum. We will be applying IFRS 15 as of the 2018 accounts, and we will be publishing pro forma accounts very soon, which will reflect these changes to ensure that everything is perfectly comparable. One parting slide. Looking forward towards 2018 and thereafter. We continue to record good levels of business in the vast majority of our markets. These trends are supported by underlying growth in the global travel industry. That said, we are also continuing to expand and develop our hotels at a sustained rate. We expect to exceed this year's record of 41 million hotels. We will do better in 2018, so we will continue to beat records in terms of the number of hotels we open. We have the means to grasp acquisition opportunities in the hotel business, but elsewhere too. We expect to increase the number of acquisitions we will be making over the year. Broadly speaking, we are confident about 2018. That said, I will now give the floor back to Sébastien Bazin to tell you more. I listened to you in English. If you could come and join us. We are heading for London. We will be in Boston, Chicago. Your English is certainly better than mine. IFRS 15 translated, nobody understood in French, but it is really clear in English. Right. I have forgotten my little widget. Here we go. Right. Very good translation. It is not to really just to pat ourselves endlessly on the back. I just want to actually, it was that of Sébastien Valentin, to just to recap what we said in November 2013. For me, November 2013, it seems like a very, very long time ago. But in fact, in November, before you, we set out a number of markers, put down five, actually. Never really liked the title, Most Valued, Best Performing Hotel Company. It really is very mundane. When the most valued, there is Marriott. But when we look below, we said back then, we will try and not reinvent our business, but to be very clear as to the difference between our businesses. In fact, he is at the back of the room, hidden in the back row, John Ozinga, in charge of AccorInvest. On that, John, the teams, we really delivered. Then we asked ourselves if we were going to split and divide up the whole organization, to decentralize the organization, stop deciding everything at head office to rolling out French culture everywhere. All that was done in January 2014. There has never been so much power and control. Michael Issenberg, Asia Pacific and Latin America. The organization really exploded, and it did a lot of good. Then we asked ourselves serious questions about distribution, about digital value chain. Did we have the means, the tech, the right teams, the right priorities? Did we have the money? All that was done with Vivek Badrinath, in large part on revamping the digital planner. We did well to do it when we did it. Then we asked ourselves questions about the geographic segment. You will see in the slides I present how much the group has come a long way in terms of positioning and geography. It was probably the most complicated, lastly, were we going to embark all our people? The message that was launched in November 2013, was it going to please, wow, come together, or was it going to generate fear? In which case, none of these 5 points would have been achieved. 4 years have elapsed. There is about 1 per mil of the staff representatives. All that was done because people believed in it, and they gave 1,000%, and it was within the realm of the possible. We were right to do that in November 2013. You were right to pull this slide. Had it not been done, we would not have showed you this slide. There are others we do not show you, but this one we did want to show you. I do not know why there are 7 pillars. There is probably a lot of symbolism in the 3, 5, 7, 8 in China, but there is no symbolism as far as I am concerned. It so happens there are 7. So let us spend a little bit of a time on each financial profile, where we are at in terms of asset light, what we have done in terms of M&A. The only important thing, that is why you put a different color, is the result of these 6 initiatives, such that this group has never been as strong as it is today. Right. This pretty much summarizes what has happened over the past 7 years in this group, and it summarized quite successfully what I said in November 2013. There is a visible link. When you transform a company, when you want to embark people, you have to give proof that it works. If you do not give any proof, well, people will have doubts, motivation, energy will flag. So we tend to rely on what we have done for 50 years. With every year that passes, proof is ever more compelling regarding the increased Margins, the ability to deliver the results. It is all the more surprising at the same time as looking at this a couple of days ago. It was not a bed of roses. Have the impression that it is easy, we go from 11, 9, 10, 12, 9. At the same time, we were hit by the digital wave, Booking, Ctrip. We had AI, terrorist attacks, all that. We have the impression that it is being erased and forgotten. No, I have not forgotten one bit where we were early in 2016. I had no idea whether results were going to be down 20%, which was the case in the first half. We were going to continue to grow the group's earnings. In spite of all that, or perhaps thanks to all that, motivation was far and away higher, and so the results are achieved. The hardest part is to continue. Will we be able to continue on to gain 50 bps margin? I think people want to achieve that, but do not take it lightly because it represents a hell of a lot of work. I said earlier that there were 2 engines, the brands and the geography. On the left, the huge progression in the luxury segment. This group for 47 years, 80% was an extraordinarily powerful group, recognized, credible, ibis, Novotel, Mercure. Take a look at where we are today. The largest segment in the group, Sofitel, Pullman, Swissôtel, Fairmont, Raffles, 41%, and it's set to grow in one, two, three years. 41% will become 50%, but we didn't do it at the expense of the others, because the others have grown too. Just deliberately, we sought to diversify so as to seek out management contracts. A management contract on a Fairmont, Raffles, Sofitel 10, 15 times in terms of absolute numbers. You can make EUR 4 million in management fees here, EUR 400,000 on an ibis. So the workload is identical when it comes to opening the hotel, but after that, you have a contribution that's far higher. The Americans understood that well before we did. They, for a very long time, were very focused on this segment that we had a tendency to forget. Not forget, in fact. The Sofitel brand, however prestigious, wasn't sufficiently strong to reach 41% diversification. That's why we had to conquer and acquire existing brands. On geography, always being two-thirds Europe, now we're at 52%. 52% will probably decline with acquisitions happening in Latin America, APAC, and elsewhere. Management contract is one of the things that we need to remember. Once again, is it better? Is it not so good? Views will vary. As Accor boss, I think it's better to be 80% focused on management contracts. Put the question to InterContinental, Marriott, Hilton, they'll probably tell you the exact opposite, that it's better to be on franchise contracts. Neither one nor the other are right or wrong. It's just very different, and you need to know that 80% of Accor's fees generated by management hotels. It's the opposite in our U.S. peers. Why do I think it's better? First off, because they're longer. A management contract is between 20 to 35 years. Franchise contract, seven to 15 years. So we have clarity going forward that's much better. Since it's more important because we cover personnel operations, we of course have to manage traffic guests, and so we have a tie that is closer with the owner because we do the job for him. When you're a franchise, it's a franchisee who manages the guests, the results, who decides on the prices. Here it's us. It's more onerous, there's greater responsibility, but we're in control, in the driving seat. It's important when you come to roll out digital, you can decide to roll out 80% of the network. Ditto for luxury and upscale for our American peers, large part of luxury upscale contracts are not franchise. These are management contracts where Accor is very well equipped. With that, of course, we can better meet the expansion needs of the group. You'll recall that we spent EUR 250 million. We invested with the Vivek Badrinath plan. You have the explanation why we spent this money, why it was necessary, why it was indispensable. Loyalty program, we wouldn't know where we topped the 40 million. It was probably about 12 million, seven or eight years ago. It's very important that the number of loyalty members, cardholders, be significant. What's important is not their number, their contribution to the group's revenue. We've topped the 31% mark. Thirty-one percent of our business volume is in the hands of loyal guests. The Americans are above 50%. They started 35 years ago, we really have to go flat out. Even if we've had a twofold increase over four years, it's not good enough. This number should be 50, 60, 70 million. Gradually, we're getting there. As the network expands, the more we can convince our members. Mobile app, each of you book more and more on your device, on your smartphone, less and less on tablets. Top right, we revise our prices 9 million times a day. Price updates. Our room rate, depending on the hour, the weather, the day of the week, the occupancy. 9 million times our machines update the price. Why? It's because below, on the left for you, we have 968 solicitations per booking. To make one booking, I have 1,000 requests for information. That's to say that I do 1.7 bookings per second. That means that every second in the Accor group, I have 1,600 requests. That's 150 million times a day. Why so many? Because what you don't see, the algorithms, Trivago, TripAdvisor, Ctrip, Booking, Expedia, all the major players have a machine that bombard you with requests for information so that they can answer within a second to the price differentiation on a segment, a geography or a brand. Either we decide not to respond, in which case we're not so well ranked at Booking, TripAdvisor, Expedia, because we don't give the information they want, or we decide to answer, in which case the machine has to support those requests. That's the IT infrastructure. It's the ability not just to book, but the ability to provide information. That's why that EUR 130 million were invested out of the EUR 247 million by the teams. For TARS, reservation system can supply this information. That's why you'll see the revenue volumes up from EUR 9 billion to EUR 19 billion. Real estate, mentioned John, who once again, he's at the back of the room. Not just AccorInvest here, it's everything we've done in real estate over the past four years. EUR 1.8 billion net investments. That's to say that we acquired for EUR 2 billion, developed CapEx EUR 700 million, and sold for EUR 800 million. Doesn't sound much. We were doing the maths yesterday with John presenting to the board what he's done. It's a mammoth, colossal task, over 1,000 negotiations over three years, purchasing, sale, renegotiating rents on a thousand different contracts and hotels and all this with a team of 35 people. When we do that, of course, we ask the right questions, we take the right decisions. As long as we're well organized, we have the financial resources, the ability to decide, and John had full freedom to decide for the real estate business and the company. EUR 1.5 billion in value generated and EUR 1.2 billion cash flow generated by the business. So it's an IRR of 12%, better than the WACC. But more important than IRR and WACC, what's critically important for me is what I said earlier in the proof. All the group's real estate activity generated EUR 300 million in EBIT back then. Today, we're at EUR 550 million, close on EUR 600 million. We've doubled the margin that was 7.5%, 8%, has grown to 15%, and it's not over. The margin will probably top the 20% mark. Number of hotels will shrink. It means that this group has the ability to seek out a number of productivity efficiencies along as it's bold, has talent, technology and financial resources. What's been done here with group real estate is not only remarkable, what's very surprising, same thing when we're talking about 2013. Yesterday, we were comparing what the plan, the real estate plan was at the end of 2013 and where we're at four years later on the EUR 2 billion. 95% of the plan that was written at the end of 2013, 2014, has delivered rigorously four years later. It's not down to him or to me, perhaps a stroke of luck. What's surprising is we can project ourselves into many universes and what the mobile apps will be. Will it be real estate? Will it be the geographies? Each and every time, we probably ask the right questions before getting started. This is one of the outcomes. Many of you in this room, if I'd asked you the question, how much did this group spend over the past five years? You probably have been wider than mark by over EUR 1 billion. EUR 6.3 billion in CapEx spent in four years, EUR 3.7 billion in our core business, in our brands or in our geographies. EUR 3 billion, there are two major acquisition, Fairmont Raffles with hotels and Mantra. Mama Shelter, Banyan Tree, BHG, EUR 2 billion invested in real estate. The financial markets didn't want us to do that. They felt that hoteliers couldn't derive benefit from a real estate investment. They're wrong, as we can do this as long as we have a dedicated team and dedicated expertise. EUR 600 million spent in new businesses. When I'm on a road show, people only talk to me about the EUR 600 million because they don't know what was spent next to that. Not an excuse when I say it's less than 10%. It's not because it's less than 10% that I've forgotten it's EUR 600 million, but it puts things into proportion. Accor always has its priorities. Our core business is central. Real estate is central up until a very near future. It was done and done well. This is why it was done well. Because I heard Jean-Jacques Morin, Sébastien Valentin and I, back in December 2015, what did we hear from each of you looking at me when you're based in New York or London? "It's crazy. You've gone off the rails. It's private equity. What's this business of buying at the worst time? Brands 20 times the multiple. You don't know what you're doing. Accor's not credible in luxury. You're going to use a third of the management contract. Your hotel managers will leave in droves, and you're probably poorly negotiated with our owner friends of the day. You gave stock you shouldn't give stock." I mean, I heard it all. 90% of people had doubts or were extraordinarily aggressive. "And your synergy is total rubbish. You're trying to get us to believe that you" All those of you who said that to me, come back and see me. We'll have a glass of wine together. It's on me. But take a look at what we've achieved. Outlook wasn't easy. EUR 65 million in synergies, said we're going to do that in three years through 2019. EUR 55 million achieved at the end of 2017. That is a year ahead of time. The multiple today is close to 13 and not 20. It is precisely what we said to all the doubters. None of these doubters today would come back and challenge the acquisition. It has changed everything and the group's positioning and motivation of the teams and our ties with the local owners. It has changed everything. What is more, at the same period, we signed 36 hotels under Fairmont, Sofitel and Raffles brands. That is to say, we probably won two-thirds of the tenders. None of the tenders Accor would have pitched for with the Sofitel brand. Strategic, financially smart, motivating and transformative. You have Huazhu. That is to say, China Lodging. People were not skeptical. They were agnostic. Take 10, 11% of Huazhu. Was it a smart move? It was a bold gamble to contribute to growth through our Chinese partner. Had we planned that its market cap would go from 1.5 to 10 billion? Of course not. What we had planned is what has been achieved. It is not what I am showing here. Why did we sign with China Lodging? We decided back then the Chinese market was indispensable. It was the market where we could not exit a market where we had not made any money because the prices, the modus operandi, such that local competition is far better than foreign competition. We did not have the weapons to go fight on a very strategic market. We decided, instead of fighting, that we would team up, and we teamed up with Chairman Xishi and his group. But in this alliance, we had written a number of things. Not that his group was going to increase its market cap fivefold, but we had written third milestone in five years, you need to have opened 250 hotels under the brands that we are entrusting you with the franchise, ibis, Novotel and Mercure. Barely 18 months, the gentleman since then has opened 68 hotels under our banners. He has signed 177 hotels under our banners. That is 243 hotels in 18 months, where 350 were planned in five years. You know what? 243 in 18 months is a lot more than what Accor did in 40 years with the same brands. This partnership is hugely strategic in our ability to roll out our brands, ibis, Novotel, Mercure in China. Over there we have very good knowledge of the country, of great fears, opportunities, but a very good reading of the situation because we have two precious allies, China Lodging and our main shareholder, Jin Jiang, who is growing as fast and in an expert and sophisticated manner like China Lodging. Accor, thanks to those two relationships, really does have presence, credibility, visibility in China that others do not have. When I said skeptical or agnostic, why do we take part? Quite simply because there is nothing amateurish about the Accor group. Nothing at all amateurish about us. Very fortunately, we are capable of thinking situations out, of taking in issues. The reason being that we are disciplined. We want to move forward, but we are very disciplined about it. If you look at the chart, you see what we are trying to do. What we try to do is never to lose market share in regions where we have a dominant role. We try to accelerate growth where we have growth. Asia Pacific, Latin America, Middle East, and elsewhere. And of course, we endeavor to expand over and beyond our comfort zone to venture into new businesses. And of course, we try not to make silly mistakes. We try to acquire groups and companies that we are perfectly capable of taking on in terms of risk. So when you put all these criteria into a basket, you can then pick what is best, what is idiotic, what makes sense. And this is why we have key performance indicators. Must be accretive in terms of earnings per share. Must be a reasonable multiple, and after the synergies, the multiple must be lower than the group's multiple. We must look at the return on capital employed. How much we put into the acquisition. How much money needs to be invested after the acquisition. How this compares with our own return on capital employed. And of course, does this dovetail with the group's strategy in terms of segments and in terms of geographic regions? Now, the KPIs on new businesses have to be different. These are growth areas with different customer experiences. These are things where we look at data, the emotional side of things, encounters. So we have what we call disruptional growth. FastBooking, John Paul, Noctis, and so many. Potel et Chabot, and so many others. These are by far the most important. I have been talking to you about this kind of thing for four years now. The frequency of the points of contact with our clients. I have been saying for four years now, how come Apple, Amazon, Alibaba, and the other, Facebook, all these platforms, how come they are so powerful? And the reason is that they are in your minds every day, and they are in your minds because you use them every day. So they are in your homes, in your field of vision, in your minds, and many of you are actually dependent on them. Ask your teenagers how much time they spend on Facebook every day, how often they open their Facebook. You know, in America, how much time do the Americans spend online? 24 hours a week. That is one full 24-hour day every week for your average American on, of course, different applications. This is something mind-boggling. I imagine our children spend about 2 hours a day on various applications. What is our point of contact with our customers? Well, we have improved. Four times a year would be really tops. So I need to increase from four times a year to four times a month. And you are not going to come four times a month to an Accor hotel. But if I can catch your attention when you are at home, if we can provide you with a service of any type, if I could find you in a onefinestay or a Noctis restaurant, or if you could use Potel et Chabot. There are so many ways in which I could increase the number of points of contact, and the more frequently I can multiply them, the more contact we have, the more pushing we can do, and the more, one day, Accor will become top of mind. It is extremely important to do that, and to do that, you cannot stay within your comfort zone as a hotel group. So this brings us to customer retention, anchoring customer loyalty. Now, it costs us so much to acquire you that I don't want to lose you once we get your attention, which brings us to data, which brings us to another world, the world of protecting 60% of our core business, that is corporate clients. This is why we acquired Gekko. I'm going to introduce you to the Gekko management team. You'll see that you'll be absolutely dazzled by what they do, just like me. I talked to you about evidence and proof earlier on, but here we have proof. It's easy to see because we've given you multiples. If you look at brands, we've multiplied the brands by two. We've increased from 13 to 25 in 2017. Of course, the pipeline has been improved. It's up 50%. It's 161,000 rooms, which 900 hotels signed up and are due to open over the next four to five years. The business volume, I mentioned earlier on, business volume has increased from $9 billion under our Accor brands to $18 billion in five years. We've doubled that figure. This is why we invested in infrastructure, to be able to meet this doubling of business volume. The more hotels you open, the more rooms you have. 616,000 rooms, 41,000 opened every year, much more than in the past. I hope some of you have spent five or 10 minutes or an hour with Gohan Bouchama, the group head of development. This is an extraordinary guy in terms of his ability to project into the future, to understand and seduce, charm people. Fortunately for us, the shareholders take a very good view of this because our market cap has risen from EUR 6 billion to EUR 13 billion over the same period. Now, let's take a real bird's-eye view. Let's look, step back. Does this work because we're good? It's also because we're in a very fortunate sector of business. We have tailwinds, very few headwinds. Just from time to time, when there are terrorist attacks, there is treads. When Airbnb signs contracts in Rio at the time of the Olympic Games, and of course, from time to time, the winds change. But, not just over the last five years, for maybe 15 years now, the tourist industry has benefited from tailwinds because this is a growth industry and industry that has clout, size, and is profitable. This is why it's one of the sectors that was most rapidly disrupted because all the digital players were quick to understand because this is a big market, a growing market, and a profitable one. It's also got great visibility. It's easier to understand the hotels business than aluminum transformation processes. The interesting thing about this transparency is that not only are we particularly fortunate, but the whole situation is gathering pace. A trillion dollars in 2010, or maybe 4 trillion, which has already increased to over 5 trillion. In all likelihood, we will reach 6 trillion but in three years' time. So it's somewhere between 2017 and 2020. So how come the industry is gathering pace? Because the world has changed and there are emerging middle classes, and most importantly, because there's a considerable increase in the number of low-cost airline companies. The number of low-cost airline companies are being more numerous. The cost of travel is probably only half of what it was 10 years ago. Of course, there are a lot of domestic travel. We talk about 1.3 billion international trips. But in China alone, you have 600 people staying in hotels. This is why China has developed so rapidly. China is not just waiting on foreign visitors. China also caters for people who arrive from local destinations, as we do in France. That is 60% of our business. This is our own domestic markets, our people from our own country. These figures are very revealing, but we do not talk about them often enough. The figure is not here. I was told everybody knows it, but one job in every 10 in the world is in the tourist and travel industry. One in every 10%. Maybe much more surprising is this figure here. 23% of job creations over the next 10 years will be in the tourist and travel industry, 23%. That is not one in 10. This is one in four if these projections are to be believed. Ours is a growth industry, both domestically and internationally. One area where we have to be very careful, and this is something I often mention, is our Chinese friends. They have become the dominant players in terms of outbound markets, but they have also become dominant players in terms of spend per travel in beauty in China or internationally. All the better. This is why we cannot afford to exit China. We cannot fail to understand who they are, what they want, what they intend to do, how they eat, what relations they have, what mobile application they use, what language, what currencies, what means of payment they use. The revolutionary thing about this is that China is well ahead of the Western world in terms of payment by mobile through WeChat and Alipay. They are well ahead of the Western world. Xi Jinping could prove these figures right because he told us that in two to three years' time, at the very most, all transactions in China, 100%, will be made by mobile. In other words, in all likelihood, in three years' time, there will be no more cash and no more plastic money. That changes everything. That changes everything for us as it does for them. So it is important not to underestimate the 70% of leisure travelers. It is 40% of our business, but that figure is rising rapidly. This is where we have 90% of Expedia, Booking and Airbnb's business. It is exactly with leisure clients. So we need to devote more time and attention to them, be more agile. This is why we have then ventured into John Paul, because John Paul is a digital interface between leisure clients and our hotels and services. This is very close to the main drivers I told you about. Well, for 99% of you, I am sure you will have no difficulty understanding what is A, what is B, and what is C and D represent. But we do not want our competitors to be telling us off. They do not mind mentioning ours, but we will not mention them. Now, looking at a period of nine months of 2017, it is openings of the leading hotel companies. So the 33.9, 34 is very close to the 41,000 rooms opened in 2017. Except that for the purpose of comparison, we only had the figures for the first nine months. Why am I showing you this slide? Quite simply because what you have here in gray is the U.S. Here you have the number of rooms they opened over the first 9 months, 52,000 for A, 18,000 that's in North America, and B has 14,000 and 14, and so on and so forth. 34,000 is our figure. 34,000, which means that we are 2 and a half times better than our main competitors in terms of rooms opened outside of the U.S.A., which means that week after week, month after month, Accor is widening the gap between itself and other hotel groups outside of the U.S.A. This is intentional. In fact, in the U.S.A., we're not good. We haven't got much. Of course, we'll continue to develop Fairmont, we'll continue to expand Sofitel in the U.S.A., and sure, we make some small acquisitions, but we will never be the leading group in the U.S.A. But we need our brands to be present in the market. We need to be present in the minds of American travelers. However, it's very easy to see that in the Middle East and Africa in yellow or Europe. Asia Pacific is the only area where we are on a par with our main competitors. South America, much better foothold, footprint. Bear that in mind because we're going to widen that gap. We're going to continue to widen that gap. I'll show you the verticals in just a couple of minutes. They're easy to remember. The first vertical is our core business, what we've been doing for the last 50 years. We are hoteliers who cater for travelers, and we do a very good job at that. Our second business is that, well, within the travel space, can we attract clients or guests who don't need a bed? Could we cater for them with our services or digital tools that we provide with FastBooking and so on? All these new initiatives that enable us to broaden our spectrum over and beyond hotel rooms. Of course, the third layer is only in the early stages. We're going to seek out people who don't travel at all. We're going to share, pool, amortize, open up existing assets, in other words, our hotels. Which are very often in prime locations, city centers, and open 24 hours a day, 7 days a week, and who have 270,000 expert and talented people providing services. And we're going to see if we can open up these services to the community, to locals, to their everyday lives, because I'm talking about points of contact. How do we go about meeting you twice a week rather than 3 to 4 times a year? This is my last slide. These are the words I want you to retain, and these are the words I want the people working with me to retain. Three different lines. Top line, obviously, we're looking at our top line, our revenue. We are a trading company. We provide services. We are at the service of our guests. We are at the service of asset owners. So we have obligations. We must attract owners to sign a contract. We must attract guests who ensure that they prefer the Accor brands. Once we've attracted them, we must then convert them, so far as possible, to our mobile applications. We don't want people joining accor.com and then booking and ending up at Hyatt or elsewhere. We know all about that. We have the data. We know how many clients we lose because we weren't fast or agile enough, we weren't responsive enough with regards to the information they were seeking. Once they've come along, once we've taken that trouble, we have to retain them by providing something else. We need to understand who they are, their habits, what they want, where, what culture. The next line is acceleration. It's growth. We must expand our geographic coverage, the number of brands. We've already expanded from 13 to 25, and you've seen the breakdown by segment. We will then multiply the touch points or points of contact, as I've been calling them. Then we must transform all this. At the bottom line, we transform not our guests. Our guests are who they are, and our clients are who they are. We transform ourselves. We transform the people in this room around me. In other words, we enable our employees to reinvent themselves. We'll continue to do what we've always done well, but we will continue to challenge unhindered, unfettered, accepting failure, accepting flops. We will ensure that we go further, faster, and very differently to everybody else. That is the lie of the land. That's who we are. Now, I know we're moving on to what you really love. This is the Q&A session. Thank you for your attention. When I don't know, I'll hand over to Jean-Jacques and vice versa. Who'd like to kick off? Hello, Kepler Cheuvreux. Two questions for you from me. The first on new business, what you gave us in terms of mid-term targets, 30% of growth from new business. In terms of EBITDA, are we still on those objectives and how do you see the ramp up going forward? Secondly, on Airbnb, we saw they're opening their distribution network to hoteliers. Do you see that competition? Could it have an impact on your system growth going forward? Thanks. On the new business, 30% strictly the same. There are two things in new business. First off, need to be very careful because in fact we'll find another term, other new business, because another new business worries people. What's this new thing? The growth of a John Paul isn't the same of a Gekko, different from VeryChic. Yes, it's simpler to say, right, 30% of growth, but some growth rates will be 85% a year, others 15%. Some growth rates are very profitable. Gekko, John Paul growth profitable. onefinestay not profitable. The more I open cities, the more it costs EUR 1.5 million. I have the J-curve, I have to wait to get the return on the new city that was opened. So I have to spend more time with you on the granularity of this mode of growth revenue. 30% of the EBITDA growth must be represented by new business. Today, the lesson, the past two months, growth was only 10% per annum, whereas probably in 2018 it will be three or four times higher than that in the past two months, because we made one mistake that I acknowledge, is that the first three months before the acquisition, first three months pre- and post-acquisition, we spent a huge amount of time challenging, not necessarily the business model of what we acquired, but imposing on the purchased company all the habits, the norms, the securities of Accor Group. We took with IT boss. We took the CEO's time. Your business is great, but notably in terms of IT security, that is to say that Accor and touch wood, Accor thus far, has never had an IT security issue losing customer data for now. We have firewalls that are very powerful. We imposed all our IT standards on these small companies, and it was a nightmare for them to adapt their IT systems in order to respond to the constraints of Accor. We did, we are right, because it is through small entry doors that you can pollute, contaminate a system. We do that. We spent more time in the back of the house than in the front of the house. Growth in 2017 is not what I expected for reasons that are probably linked to Accor and not to the leaders. But I will not change one iota. 30% will come from new group. What should have happened in 2021 may happen, slip to 2022. We have lost a year, but not the light or the direction. On Airbnb, we saw an announcement. The announcement is pretty powerful, ambitious. I said I have always had admiration for Airbnb. I have never decried the company. Seems fully reasonable and reasoned that they should go to new businesses and increase the range of offerings. Exactly what we did when we launched independent hotel distribution. Same logic. I have a distribution platform. I am distributing 4,300 hotels. Can I bring in independent hoteliers? We realized it was not a good idea. We moved from 13 to 25 brands. If they can do it, so much the better. If it assumes a considerable size, of course, Accor will look why it is detrimental and which might be profitable. Those will look sharper. Booking, Ctrip, Expedia, because it works very well. Maybe it will be the disruption of the first model. Fascinating, interesting, and pretty exciting to watch. Wide open. Hi. Deutsche Bank. Two questions, if I may, I am over here. First question, could you give us some color on the start of the year in terms of RevPAR on the first six weeks of the year, notably in Europe, in the main geographies where you are present? Secondly, maybe a word on Mantra, because we saw the Australian regulatory authorities have spoken out. Is there a fear as to the fact that, one, the deal will not happen, and secondly, that you may be forced to sell some of the Mantra assets for the deal to happen? I will let Jean-Jacques speak to the first question. On the second, on Mantra, I was there a fortnight ago. The competition authorities today have not finished their work, so I expect around mid-March we will have the report of their requirements. Accor is very strong, very powerful in Australia. Know Mantra very well. We know the competition authorities very well. There's a very clear dialogue. There's absolutely no worries on the part of Accor. Few concerns on the part of group. The deal will happen 99.9%. In a given city, maybe a A requirement by the authorities to dedensify three, four, five hotels. I don't know, it's too soon to say. What I can tell you is that you have a certainty the deal will close its finance in Q2, and will favorably respond to the requests from the competition authorities. On the early part of the year, what I said in my prez is that the exit velocity, the way we're exiting 2017, entering into 2018, is obviously very good. What we're seeing in January, that's a month that's not very representative of the group's business. Numbers that are positive, not as strong as those in Q4 for France and Germany, but are very good for Central Europe. What I'd say is that to judge what's happening in 2018 on the basis of January is not very reasonable. But in fact, I don't see anything that would counter what I said regarding the trends exiting 2017. 6% RevPAR in January, 7% February, so you need to listen to what the interpreters say. That's why, yes, I wanted to Okay, very good. Hi, good morning. Richard Clarke from Bernstein. Is English okay? English is fine. Okay, great. Three questions from me. First one, AccorInvest. I know that you will be limited in what you can say, but normally you give an update on at least the gross asset value. Anything you can say on what has changed since the last update? Anything you can say as your impressions of timetable from here. Second question is, this time last year, you had a slide to suggest you could double EBITDA, I think by 2020. I hope I have got that timing right. This time, I think on the margin slide, you said that 50 basis points would be hard work. Is this a slowing down of some of the guidance, or are you still sticking with that view? The third one, I know you have closed down the Marketplace, and some of at least the press reports on that suggest that it was because your owners did not like being pitched up against independents on the same website. That could also probably be true of some of your other ventures, like VeryChic and potentially Gekko. How are those going down with owners? Any plans to promote Accor hotels further up the list on those, perhaps? On English or French? On English. On English. To you lucky guy. Yeah. Those of you who prefer English over French. Okay. I'll answer in English, but we do have translation. This one, on AccorInvest. What I could tell you is what we wrote into the press release this morning. We've never been so close. We are in the final stages, and Inshallah. In terms of gross asset value, you're going to have to be patient, as I am, and you're going to be getting the news soon enough. I did say it's a matter of weeks, not a matter of months. But I'm not going to say anything more on this transaction. I wish I would have been able to tell you today. This is not the case. On double EBITDA, yes, we confirming, and we're probably going to be discussing it in greater details, when we're going to be meeting each of you and sell side and/or investors. Indeed, by 2021, we should be able to double the EBITDA of this group, which is a mix between the three verticals, one, two, and three. We'll probably be more granular when we're going to meet face to face. On the marketplace, no. It's not at all due to reaction from owners. Indeed, some owners in some territories were more fearful than others. For example, in Malaysia, some people were not happy about it. In some towns in France, people were dubious about it. But we did not close it because we got any nasty emails or any registered mail. That's not the case. We closed it because it didn't have traction. It didn't have traction not because it was not a good idea. It was a good idea. It's because we've never made any publicity about it. People going on accorhotels.com went there because they wanted an Accor branded hotels. We never spent the time explaining to them that we have, being a curator, basically pre-selecting for him the best independent hotels in time. The money it would have cost us, technology, talent, for converting those people into non-Accor hotel was too costly compared to really focusing on what is today 25 brands as opposed to 13 brands. It's just a question of, let's change gears. It might have been a good idea, but it's not the right focus today. Gekko and VeryChic is selling at discounted price, a lot of hotels. 14% of VeryChic today inventory is Accor branded. It's probably going to get higher, but it's not going to be 50%. VeryChic did not get any remarks whatsoever from the competitor set of Accor. It's going fine. Gekko hasn't lost any clients, neither FastBooking nor Availpro. Did they lose any of the independent hotels client because they were bought by Accor? No. Any fear you have on basically us integrating vertically somebody, doesn't happen. How many of you here know, you probably all know that YouTube and Waze belongs to Google. How many of you knows here that Instagram and WhatsApp is Facebook? How many of you know that Trivago is part of Expedia? Many customers, when you actually deal with a new app or a new business, you actually don't care and you don't know who is on the top of it, as long as you get what you want out of it. Let's move forward. Let's be cautious. No, we haven't suffered any loss of business from any acquisitions because of Accor ownership. Thanks very much. Oh la la. What happens when you are directly on internet? Do we have any written questions, maybe? It is like a live studio recording. Well, it is not, no. Rather than break for coffee, we have a question from a lady here. Sabrina Blanc from Societe Generale, Soc Gen. Could you tell us more about your dividend policy? We saw that dividend is at EUR 1.05. That is after the disposal of AccorInvest. Can there be any changes, foreseeable changes? Well, in the post Booster era, we will review the dividend policy, and we will review it by comparing it with the pure-play asset-light players. If we look at what others are doing in terms of dividend policy, in a pure-play model, what matters is the EBIT and cash generated. Our dividend policy will probably be aligned again, subject to review, but will probably be aligned on the generation of recurring cash flow, unlike the current situation, which is based on normalized operating profit. That is the first aspect. The second important part is you will see in the main groups we compete with, we have our ordinary dividend policy, which is based on what I just explained. Secondly, as we generate EBIT and cash, these are groups that return substantial amounts of exceptional dividends to their shareholders. We will probably adopt an ordinary dividend policy based on the calculation just explained, the percentage of recurring free cash flow. We will also have a strategy over and beyond what I have just said about our operational policy. We will also have a policy on extraordinary items. I would like to jump in here. I should have said this earlier. There are a lot of friendly faces in the room. Those of you on internet probably don't see the people in the room, but for those of you who might know, as does Jean-Jacques, but those of you who like to know who they are, well, for the Booster operation, there are a lot of people in the room here who were bankers who signed up for the EUR 3.6 billion allocated to John Ozinga, who's at the back of the room. We have a lot of investment bankers here in the room. We have a lot of the group's partners. The 2017 performance is thanks to you, too. Let me thank you for coming. I hope you heard what you wanted to hear. I'd also like to say that you have played a part in what's been happening over the last four years. Indeed, over the last 10 years. Once again, thank you for being here. Those of you who have questions, well, I'm sure if you ask a journalist, there's a chance that you will find somebody able to answer any question you could have. I think we're going to enjoy the coffee break. Plenty of questions. We have another question coming. From Kepler Cheuvreux. Could you tell us once again why Orbis wasn't integrated into AccorInvest and what you plan to do with Orbis, strategically speaking? Orbis is a magnificent company in which we have a majority stake. It's based in Poland, and it's by far the biggest hotel operator in Eastern Europe. Marvelous growth in terms of market cap and profits. It's worth EUR 100 billion today. EUR 100 million, I should say. Orbis is listed on the main index in Warsaw. I smiled when you asked the question because when I tell you it's a matter of weeks, and when I see how impatient you are, just as impatient as I am, by the way, really, there was no need to make Accor any more complex by including Orbis. It would only have made matters more complicated. When you put a majority stake in a listed company, this means that you have to delist Orbis, for instance. It was just too complicated and not good timing. That said, we may disagree, John and I. John Ozinga. John would love to have Orbis' assets. I say no. Orbis will remain or continue to be an independent company with independent management, wonderful shareholders, and we will review the situation of Orbis at some stage in the future, maybe, and then maybe not. I have another question concerning CapEx. We saw that recurring CapEx is down. Could you give us some guidance for the short-term outlook in 2018, for instance, as for your new businesses and services? I think you call them new businesses. Should we anticipate additional CapEx by comparison with the previous CapEx plan? This year's recurring CapEx is unusually low. We were very key money in the course of the period. The famous key money I told you about when I was explaining IFRS 15. Year on year, from 2017 to 2018, we had the ramp down of our digital program. I think the figure for future reference in your models will be probably somewhere in excess of EUR 200 million and around the EUR 240 million mark. That will include CapEx from Orbis in particular. This is why I just don't answer your question. Orbis is an entity that's expanding through construction, the opening of new hotels. They're doing a remarkably good job with a very good return on capital employed. We will ensure you ensure ourselves that this CapEx, even though it's not what some of you would expected, our real investments are not expenditure with very, very good paybacks. Very importantly, you saw the ramp-up of our luxury assets. This is where we have this key money. We didn't spend a lot of key money in 2017. In the future, we intend to increase the fees in the luxury sector. These are, we've already explained, we're looking at 50% or more, which is going to require a certain amount of key money. In addition to the ramp-up of traditional CapEx of EUR 200 million to EUR 240 million. John, promise me you'll stay with us for coffee. There's John Ozinga at the back of the room. I don't see him, but I know he said yes. I know he means to stay with us. We have some questions from Jamie. 3 minutes at Morgan Stanley. I knew you were with Monsieur Cognacq. Exactly. The first question is on hotel services. The fees are up 5.1% on a like-to-like basis, with RevPAR being up 4.7% and net room growth of 7%. How could you bridge that? Are there any scope impacts, explaining all this, and would there be any guidance for scope impact, going forward in 2018? Also, I still unless No, I think we should be asking Sébastien Valentin to answer. Okay. The answer to that question is there are a few exceptional elements, some of which I think I covered most of them when I was explaining the numbers. One is F1 and the fact that we are disposing of a little bit less than 60 hotels. It does have an impact on the differential between the RevPAR and the revenue. The other one is the Pullman Montparnasse Hotel, which is the largest hotel that we have and which is currently closed and will come back at one point in time in 2019. But for now, it is closed, and so it has a quite significant effect on, and creates some disparity between revenue and RevPAR. The last one is that there was a deflag of also a large hotel in Marseille, the Pullman Marseille. All of that kind of explain those differences. The guidance should be that there is not much difference. Again, the revenue should grow at the RevPAR plus a portion of the development. I say portion because there is always a ramp-up in the numbers that are coming from developing hotels. That's the summary of it. To the One more question from Jamie. How sustainable is the move to profit for sales, marketing, and digital? What are your plans for improving digital performance now Marketplace has been closed? What is your OTA mix? Even though I'm not sure we answered the last one. I think on SMD, the theory of it is that it should be a zero P&L, so it should be a break-even P&L, because in a sense, what you get there is you get money which are paid to you so that you basically can distribute market and sales product. So the theory of this P&L is that it should be a zero EB P&L. The improvement and why, in fact, it had been negative over the last couple of years is because of the EUR 250 million digital plan, which was in fact costing in term of development of the product and now costing in term of running of the product. That's why you had this rundown on the SMD deficit, which you can see in the account this year. OTA mixed? OTA mixed. OTA mixed, we don't disclose. No? We don't disclose. No, we don't disclose. Okay. We will talk face-to-face. Last one for him. On AccorInvest, on the AccorInvest results. The 2% EBITDA drop in AccorInvest looks disappointing given strong RevPAR and high operational gearing. What was the underlying performance like disposals or renovations? Yeah. I think we should pass the mic to John. We told John it was disappointing as well. Yeah, we told John. In fact, it is very much in line with what we had budgeted and what we are expecting. Very much in line. It is essentially coming from large renovation that we are doing in Singapore, the Swissôtel Singapore, which is a gigantic hotel in Singapore. Also what we are doing with the Sofitel in Rio. So it is essentially renovation which is explaining. It is not ongoing. It is just a question of perimeter effect. Yeah, it is a perimeter effect, renovation effect. The performance underlying was good. Then I played a little bit with IFRS 5 so that you do not understand. No, no. I guess I mentioned that. You do not understand anything anymore. Not only it is good, and again, we will spend more time with Jamie and whomever we want to spend more time on. What I said to you earlier is the actual numbers for HotelInvest or AccorInvest for 2017 is perfectly online with what was budgeted, forecasted, shared with the investors. There is no bad surprises whatsoever, probably to the contrary. Which is why we feel good. And which is why I want to thank that guy.