Hello and welcome to the Accor 2020 first semester results call. My name is [Dan] and I will be your operator for today's event. Please note this conference is being recorded and for the duration of the call, your lines will be on listen only. However, there will be a Q&A session at the end of the call. You may register a question by pressing star one on your telephone keypad at any time. If you require technical assistance, please press star zero on your telephone keypad to be connected with an operator. I will now hand you over to the Chairman and CEO of Accor, Sébastien Bazin, to begin today's conference. Thank you.
Thank you so much, [Dan]. Thank you for all of you to be connected as of this minute, and sorry to be a couple of minutes late. We're going to have a lot to discuss and to talk about, and of course a lot of sharings in between questions you may ask and answers we likely have as well. I know we're going to be going through the deck, so I'm going to give you the page that I'm talking from to make it easy on many of you since we're not on Webex or on Zoom. We start with page number four, which is titled, "COVID-19 Crisis Takes the World Decades Back." It's split in two graphs. I guess on the left side, it's basically factual. You have it in my quote. What we're going through, and we've been talking about it in February and March, it's global.
That crisis is global, sudden, violent, and unprecedented. It has major impact on the world GDP, which is likely to be in 2020 the worst for the last 40 years. It obviously has impact on unemployment, and I'll go back to this in a minute, likely to be the worst over the last 40 years, if you believe the numbers from International Labour Organization. Unfortunately for all of us, it is also likely to be, and we know it is, the lowest ever international travel for the last 30 years. What you see on the right side, nothing new for many of us on the phone, is then the expected GDP drop in 2020, and it varies in between different economies. If you go to page number five, it relates to the travel and leisure industry.
Of course, the impact is not only massive, but we are one of the worst industry going through the crisis, with nothing much we can do about it except coping with it, responding to it, and adapting to it. On the left side, we don't know, and it's kind of bizarre that I guess at this stage, half year, we simply have no idea whether the 1.5 billion number of travelers we enjoyed over the last years, months of 2019, will be dropping to 600 or could be dropping by 80% to 320. If that were to be the case, the 300 million is the same number the world enjoyed in 1985, which means that I guess we have to accept that we go back 35 years in a population which was probably a third of the size of what it is today.
On the right side, it's the impact of the drop of travelers on the revenues at large and the contribution to GDP of our own industry. Those numbers are, again, nothing new coming from the WTTC, likely a drop of 39%, which is $3.4 trillion disappearing in revenues to local domestic GDP. But the one thing I want to pause a minute on is the drop of 37% in the job contribution to the industry and at large. I think many of you know, and I've been repeatedly saying, it's close enough to one job out of 10 works for the travel and leisure industry on the planet, which means that again, the 330 million is close enough to 10% of people being employed today.
If we go down by one third, which is losing 120 million jobs, that means that I guess in terms of unemployment, it's going to rise to 3% only due to our industry, and I know there's a lot of ripple effects on many people not directly working for the industry, and I've been thinking on a lot of local communities living from the hotel revenues and from tourism activities also disappearing underneath them as we speak. Massive impact, not only for the industry, but for job existence on the planet. On page number six, we're getting closer to Accor as it is, and then Jean-Jacques is going to come to you even deeper in the Accor numbers, and I'll come back at the conclusion. On the left side, it's of two natures.
One, notably, I guess it's interesting to notice that Europe, as we open its frontiers to the extent of 92%, very daring, they've done so over the last five to six weeks now. I know every day as we're passing, there's chances of some borders being closed again on some different provinces between Belgium, Holland, and not accepting people from southern Spain. It's still in question, but it is very different from other continents, and of course, in South America, all the borders are virtually closed in between Chile, Peru, Colombia, Argentina. It's the same thing in Asia Pacific. Chinese frontiers are still closed as we speak, and kind of a similar effect in the Middle East. It only reflects on the importance of targeting domestic clientele because those domestic clientele don't need to cross the frontiers.
Thank God for our industry at large, roughly 75%-85%, depending on the country, is today domestic clientele that is not sufficient, but is critical to get back in business and to enjoy better numbers for the rest of the year. I'll give you a bit more granularity on the right side of page number six. We're going on numbers left bar as you see them, bottom of the pool, likely to be at the end of March, which is of no surprise, which is when the hotels are mostly closed, and looking for clearly better trends and rebounding ever since. I can tell you that slide ends at the 18th of July.
Let me give you, because we've been working for the last five hours, on giving you numbers, not in terms of RevPAR, but in terms of occupancy, because I think it says it's even more. I'll give you four or five numbers that you guys could write down at your leisure. For as of last night and for the last five days rolling, the occupancy in China across Accor brand is 60%. The occupancy in France is 56%. The occupancy in Germany is 39%, and the occupancy in the UK is 35%, and across North and Central America, it is 35%. It's certainly better than the numbers you see here, and it is increasing every week passing. The one thing to notice, which is extraordinarily important, which basically tells you why it is very difficult for us to project ourselves in the future.
For Europe and whether it is, and it doesn't matter which country, 60% of all the bookings made today have been made with less than five days' notice. On Monday, people decide what they will do the following weekend or the following week. That number was exactly double last year at the same pace. 2019 was at least 10 days' notice. Within two or three days, we learned so much more on what could be the end of August, what could be mid-September. We simply don't know as we speak, but surprises have been mostly good over the last three weeks of early summer. That's where we are. I'll hand over to JJ, and I'll come back to you on the closing remarks.
Good morning, everybody. Good morning, ladies and gentlemen. Very happy to be with you for that H1 result presentation. In line with what Sébastien just discussed, we've been traditionally disclosing guidance for the full year during this H1 call, and this one, with the context that was just explained, we won't. With that being put aside, let's move to page eight, where we described, in fact, the overview of the business momentum and the financial performance. You can see here that in terms of the business momentum, the figure reflects, with unfortunately not much surprise, the unprecedented deterioration in the industry linked to the spread of COVID across the world. RevPAR is down 59%, and in fact, 88% in Q2. Occupancy is at 31% for H1 and 15% for Q2, and we've got, as of today, 81% of our portfolio of hotels open.
I'll go into more details later on that statistics. To translate that into numbers, the revenue at EUR 917 million is down 48.8%. The EBITDA is a negative EUR 227 million, and the recurring free cash flow is a negative EUR 473 million. If you move to the next page, which is page nine, what did we do? There are things that are under our control. There are things that we can't really do much around. The health epidemic situation is obviously not in the control of the company. But on anything that we had under our control, we took immediate and drastic measures in order to protect, on the one side, the earnings, and on the other side, making sure that we've got the proper financial headroom. Let me go into some detail about that.
On improving the operating leverage, you may recall that in the Q120 call, I mentioned an EBITDA impact on the group coming from the COVID of 170 million EUR. If you were to, as a rule of thumb, compute what it implies in terms of EBITDA sensitivity to RevPAR, the number we had discussed is 28 million. And I provided you with a number that we would probably be north of 20 million for the rest of the year, and I am happy to report that we are below 20 million EUR over H1. This has been the fruit of a lot of cost-saving plans, actions from all the teams around the world. We also came public on reducing G&A to the tune of 60 million in 2020, and as of the end of June, we have already achieved 60% of that 60 million.
The other element which got significantly adjusted is the sales marketing, distribution, hotel asset, and new businesses, where in fact, here, there was a lot of adaptation to volume. The other KPI that is critical and where we've been showing some good actions and control is the cash burn. In the Q1 call, we said that the actual cash burn in March was -€150 million. In May 18th, we published a press release where it was implying a monthly cash burn of €100 million, and in H1, over H1, the monthly cash burn has finally reached €80 million, so much better than the €100 million. On top of that, you surely recall that we talked about a recurring CapEx plan of €60 million by 2020, and I am happy to confirm that we will do it, and the share buyback and dividend had been suspended.
Last but not least, part of the work that we did as a reaction, as an immediate measure and a reaction to that crisis, was to make sure that we had the proper balance sheet and financial structure. We had a good start because we started closing the Orbis transaction. And as of the end of June, we've maintained a very strong positioning because we've got more than EUR 4 billion of liquidity made up of EUR 2.4 billion of cash and EUR 1.8 billion of revolving credit facility, which are all enrolled. Besides the pure number, and I'm moving to slide 10, there is on this slide a couple of things that we did. We discussed Orbis, but we also closed Mövenpick in H1. We continued to work on strengthening our loyalty guest base. And you can see here that we added 2.3 million of members.
And last but not least, we had a good ride when it comes to development. We have 4.3 last 12 months net organic system growth, which, everything being equal in the current world, is a good number, very good number. I give you some details on that 4.3 million and the situation of our development on page 11. You can see here that we opened 12,000 rooms in H1. Asia Pacific is a bit north of 50% of the opening. And there was quite a lot of openings in Huazhu as the Chinese market has recovered and continues to be vigorous. On the pipeline, you have a number of 2,006 rooms, which is very close to the one at the year-end, so stability of the pipeline, a little bit below.
Last but not least, the churn was controlled, and we are below 2%, which is exactly what we would like it to be. I'm moving now to page 12 to give you some more highlights and color on the second pillar of the business, which is RevPAR. RevPAR is 59% over H1. Translate how the pandemic has been spreading by geography. You see here very well that April and May have been the worst months with numbers close to 90% of RevPAR, and that this RevPAR is, as you would expect, essentially driven by occupancy. If you move to a view for the key regions, Asia Pacific, RevPAR is down 77%. You have a very visible improvement, notably in China since March. Greater China, which is the pandemic epicenter, was the first also to get out of the, or to recover, I should say, from the crisis.
The RevPAR in Q2 is -63%. In June, we're at -50% with an occupancy level of 48%. In July, when we look at where we're going to end up the months of July, we should be around 60% of occupancy. Quite significant recovery from where we were back in March in China. Australia posted a -84% RevPAR, and this is essentially because the country is closed, and so most of the business is coming from government quarantine. When you come to Europe, RevPAR was -90%, but we've seen visible improvements this May, notably in Germany and in France. Germany has managed the crisis the best, and so they came out of it the fastest. You see that in the speed and their numbers. France wasn't bad. We have, in fact, today some recovery that Sébastien gave you some numbers.
There is a difference between Greater Paris and the province, as in fact, the province is benefiting from the domestic tourism flow, and Greater Paris is obviously suffering from the international travelers' flow not coming in, or not coming in as you would expect. The third key country in Europe is the UK, and the UK has been trailing as their lockdown has been trailing. We still had a significant amount of hotel closures at the end of June, and so they will recover with some delay. The rest of the world that started slower into the crisis and are now somewhat lagging. NCAC and South America have reported RevPAR of minus 95% over Q2. And Middle East and Africa is, in fact, penalized by the lack of religious pilgrims to the Holy City in Saudi, which is a very lucrative part of our business in Middle East and Africa.
If we talk not of the actuals, but how we get out of it, we see on page 13 that the reopening has been moving from 38% of the hotel network being open at the end of April, so at the worst of the crisis, moving up today at more than 80%. That's going in the right direction. And you see that translated into RevPAR. The group RevPAR, we were discussing numbers to the tune of minus 90% previously. We are, in fact, better than 70% at the end of July, minus 70% at the end of July. With the comment that Sébastien made, which is the visibility is very, very short window, very much a short window, so not a lot of visibility.
If you move to this time, the results themselves, and so the revenue by segment, which is page 14 of this presentation, you can see the revenue of 917 million EUR. Very little difference between the reported and the like-for-like, mostly, in fact, the sale of the portfolio, lease portfolio of Mövenpick. Drilling down by segment, hotel services revenue was down minus 53% on a like-for-like basis on a RevPAR of minus 59%. And in fact, just to give you more detail on that revenue, the M&F fees are down 72%, and the services to owners are down 42% for the same reason as the one that we explained back in Q1. As for hotel assets and others, the revenue is only down by 40%. And again, here, part of the explanation is where the hotel assets are situated.
And today, they're mostly Australia and Brazil, and the numbers in Australia and Brazil in Q1 were quite good. As for new businesses, the revenue is down 40% with a big difference between the travel-related activities, such as Onefinestay and other activities like digital services, which are much less linked, in fact, to the travel business, and where the results are much better. Moving now to a bit more detail on management and franchise, I'll be pretty summary because, in fact, you see that the statistics and the numbers are about the same for each of the jurisdictions. The part which is important is the fact that the 72% is, in fact, lower than the decrease of RevPAR, which is only 59%.
The reason for that is that we adjusted the incentive fees in H1, and the incentive fees, which are very much correlated to the hotel profitability, are very close to zero today. That's why you have that drop of 72% for 59% of RevPAR. You will also notice that we did that adjustment in Q2, hence the fact that the Q2 revenue is slightly negative. Moving to the EBITDA by segment, I am on page 16. I think regarding hotel asset, with an EBITDA of -10%, we ended up quite well, and I'll detail that later on. Regarding new businesses, you find again here the same differences between the business which are correlated to the travel industry and the EBITDA, basically like Accor, from the business which are related more to other industries, just like the D-EDGE, for example.
Regarding hotel services, we end up with a negative €141 million, which drives most of the loss in H1. I propose that we move, sorry, to page 17, where we gave you more detail than what we would usually do so that you understand it well. You see on that page that the loss is largely driven by sales, marketing, distribution, and loyalty. When we did the Q1 call, we explained what was happening on sales, marketing, distribution, and loyalty, which you would have in a theoretical world, expenses which are to the tune of the fees received from hotel owners. When you talk about RevPAR reduction, just like we saw in Q2, which are huge, the cost cannot be flexed as fast as the revenue, and notably the fixed cost.
And so that's why you've got that EBITDA loss, and we'll get back to that point when Sébastien will do the last part of the presentation. On reimbursed cost, it has behaved exactly like it should, i.e., it's a true pass-through. On other services to owner, which includes services like some accounting shelf services or design and technical services, again, here, it's behaving as expected, i.e., close to zero. You basically get reimbursed for the cost that you receive, for the revenue that you received. And last but not least, the management and franchise EBITDA is at break-even, and you see that consistently across all regions, largely affected, in fact, by incentives not being there.
If you move to the next page, which gives you a detail, not of hotel service, but of hotel asset, you see here numbers that illustrate, in fact, the transformation of our business model in that segment. Today, what we have there is mostly Asia Pacific and Brazil as a geography, sorry, and the other activities include Strata, Timeshare and Accor Plus, and they are in H1 about 50% of the revenue of hotel asset and other. The EBITDA was limited to €10 million, which is a good number, and this is because we took very significant actions, like in Brazil. We basically separated ourselves from more than 50% of the personnel, so that kind of variabilized the situation. In Europe and Australia, the governments were very supportive, and we had good partial employment schemes that help us, again, variabilize that cost base.
And also, last but not least, the lease structure, the variable lease structure that we've got in Brazil is such that you don't have to pay the lease because the business is not there. So all of that has been helping at weathering, in fact, the EBITDA line. Now, moving below EBITDA to net profit, and I am on page 19, you see here net profit loss of EUR 1.5 billion. There are three comments I would like to do. Number one, the share of net losses of associates, which is a minus EUR 363 million loss. What you find here, and it's on the table, is AccorInvest, Wazoo, and SBE. These guys are in the same business line as we are, and they were basically impacted by the COVID-19, just like we are.
And so that has been affecting their EBITDA, that has been affecting their impairment, and what we take on that line, as you know, is our share of their net income. And on top of that, at net income level, you have, in the case of Accor Invest and SBE, a high level of indebtedness that is impacting the net income of those entities. The second point I'd like to highlight is the non-recurring item to the tune of EUR 1 billion, which is essentially impairment. As you know, we've been transforming that company over the last five years through acquisition. We did several billions of acquisitions, which technically result in a significant amount of intangible being recognized on the balance sheet at market value.
With the current situation, IFRS has been requiring that specific impairment tests are conducted in H1, and so we revised, in fact, the valuation of those intangibles. And as you have discount rate, which is significantly going up because of the hospitality market volatility and since the fact that you are not projecting to be back to the 2019 level before 2023, you've got mechanical computation of that impairment, which drives the EUR 1 billion. Again, as you know, it's a non-cash charge, but this is what we took in the accounts of H1. Orbis translated into a profit, no surprise, and there was a EUR 200 million, sorry, profit coming from the discontinuation of Orbis. If you move to the cash view, so moving from EBITDA to recurring free cash flow, recurring free cash flow reached -EUR 473 million.
This equates to the EUR 80 million if you divide it by six months that I was earlier mentioning. What is notable on that table, sorry, is the working capital change where you see a negative working capital change of EUR 180 million compared to EUR 74 million last year, and that translates, in fact, the fee collection deferral that we saw over H1. I think that's it for this table. If I were moving to the last slide of my presentation today, which is page 21, you have on that table two things: the liquidity position and the net debt. Let's start with the net debt. You have a bridge between December 2019 and June 2020, and you can see a slight improvement of the net debt position to EUR 1.1 billion of net debt.
If you go through the bridge, you see the recurring free cash flow that we just went through of EUR 473 million, negative. You see the completion of Orbis, EUR 1 billion positive. You see the completion of the share buyback of Q1, EUR 300 million negative. I remind you that since then, we've been suspending any share buyback. The last but not least that you probably are not aware of is that we decided to monetize our Paris headquarters, the tower that we own. So we are in an active sale process, and as per the rules, the IFRS 5 rules, we are deconsolidating in that bridge the amount of net debt associated to the Paris headquarters building. So that's EUR 290 million. Liquidity, all in all, the EUR 1.1 billion of net debt translates into EUR 2.4 billion of cash position.
To that, you add the RCF, revolver, credit facility, and drawn, and that's how you come to the €4 billion that I was alluding to before. The other element, because I'd love to have more positive things to say, sorry, and in this gloomy world of the COVID-19 crisis, we got a bluebird in July. We received a €300 million cash payment from the tax authorities, which relates to litigation that we have had with them since the year 2000, so something which is about 20 years old, and I am very happy to have that cash in my bank account. I think with that positive note, I'll close my presentation of the account and pass over to Sébastien.
So there's no misunderstanding. He's talking about Accor bank account, not his bank account, but Accor's high life. Yeah, yeah, I know Accor's high life, but let's not be confused. On the closing remark, we're on page 23. There's two phases here, and you can actually split the four bullet points in the two phases. Those phases have been in between early March to the end of July. It is exactly five months. The first two months and a half, everything we have done was with a sense of urgency, caring, preventing everybody from drawing into very rough waters.
It's been a matter of taking care of employees, guests, owners, communities, and you. Remember what we have done with the ALL Heartist Fund. And it was also a matter of making the appropriate measure to not only weather the storm, but to make sure we adapt the cost to the lack of demand. And you remember a couple hundred thousand people being furloughed temporarily, and it's been extremely intense.
Very quickly, before the end of the confinement and the end of the lockdown, we've been preparing for the future with one thing in mind, which is to make sure all the hotels were safe. Then you give proofs of it that people will come back to your properties because they have a different nature and they feel reassured. But then you have another two and a half months, which is very different in nature from the first two and a half. And it's different because it has nothing to do with temporary. It has nothing to do with event-driven. It has to do with much more structural, medium, long-term, broader thinker, in which you learn from the crisis. You try to anticipate how your guests would change in their own behaviors, and we may talk about it, about group, business travelers, and others.
And then you prepare for building the structure, the future of Accor. If you want to use the same metaphor on the water and drownings, the first two and a half months, you are in the water. The last two and a half months, you are safe on your paddleboard, but you stand up. So you can see the next wave, you can anticipate, you can decide to surf through it, or you can decide to surf on it and to get speed and agility. That's where we are. We're safe on the board. We can actually easily see what's going on around us, and we can actually choose and pick on whether we're going through or whether we surf on. That's where we are at this minute.
I have to tell you, when you go to page number 24 on the ZBB, zero-based budgeting, that that reflection on broader, medium, long-term thinking started in October of 2019, has nothing to do with the COVID crisis, zero. We knew that we had to finish the job. We knew we transformed the business model of Accor from asset-heavy to asset-light. We had done booster. We were hoping, praying that Orbis would go through, and it did. But we knew that we had to adapt, which we haven't done so far, the asset-light model to a full asset-light company in terms of alignment of your organization to your business model. That's been never done because we've never been an asset-light model company.
Here we stand to do it, and it is what we have done with the executive committee in January and February and the outskirts of Paris for three days, and then I'm taking advantage of the last two and a half months with lesser activity and demand on taking the time heavily needed on having people helping us on really opening the engine, mapping 7,000 different tasks all across the different regions, all across the different segments, on selecting what are the value-added and non-value-added activities on which we don't get paid for or there's not enough margin, on deciding what would be the gross savings, and of course, when you do it, top-down analysis, you have to confront it a month after with the regional CEOs to make sure that they understand it, they share it, and they accept the rendering, which is called the bottom-up buy-in.
And then you have to be disciplined because it's not a matter of diagnosis, it's a matter of execution and implementing it. What you have on the right side is the five or six big tasks ahead of us. One of them is, of course, eliminating so I guess it doesn't start again. All the things you should not be doing anymore. Two is leaner management structure. There are seven layers between a hotel GM and myself. There's certainly one or two too many for sure. Frugality, it's obvious, is you do more with less, which of course we can do. Real estate, let's make sure we use less square meters all over the planet. Mutualization, you don't do twice what's done in São Paulo and could be replicated in Singapore, but they simply didn't know about it. Automation, make sure you have less human interaction.
There's a lot of software, a lot of technology permitting today to be more agile and simpler. And contractors, reduce the numbers of IT providers interfering in your day-to-day life, making your IT system even more complex because they are the only ones who understand it. So they basically protect the nature of your own business, but they don't protect Accor. On page number 25, this is the result of those two and a half months between mid-May and end of July. And of course, we've been able to do it in two and a half months because we started in October of 2019. It is EUR 200 million, and it is permanent and recurring.
It is 17% of EUR 1 billion to hotel service cost base, which means, and I know Jean-Jacques talked to you about it, there's another EUR 1 billion of hotel asset cost share services, which hasn't been addressed as of yet. Certainly not the same extent of percent of saving, but certainly something that we cannot move away from and shy away from, which has to be addressable in the very short-term nature. I won't go back on the M&F holding is self-explanatory. I won't go back on sales marketing, contractors, IT. Pausing a minute with you on, it's a very quick, probably quicker than I even expected myself with JJ. 20 months payback, two-thirds of it is achievable by the end of 2021, and the last one-third will be achieved by the end of 2022.
So very detailed, and the PMO will be in place, actually is in place to make sure that we have people fully responsible for it. And it is, of course, at the top of the management agenda for the weeks ahead of us. On page number 26, the title here is probably what reflects 100% of what we've been sharing with you is we need to finish the job, and we need to go to a full asset-light company in terms of organization. If we do so, and bet on me, we will. We will have a stronger Accor, we'll have a greater capacity to rebound, and we'll have a greater profitability and cash conversion, which is being long awaited for. Potential is just right underneath our fingers. It is just the time to grasp it. And if anything, COVID is an accelerator.
It's not an excuse, it's not the cause, but it is certainly helping us for people to understand the necessity to readjust. On the long-term vision, the one thing I want to make sure here as well, which is the second bullet point in the middle of the page, is there is no way we're going to be reneging on our core prior commitment when it comes to carbon, plastic-free, green ecology, less footprint in local communities in terms of architecture. That will be preserved. We will meet obligations that we have made to a lot of different government agencies, and we will, of course, go deeper when it comes to inclusion, diversity, solidarity, as demonstrated, certainly more so than ever during the days of the confinement, and the last topic here had to do on the sought-after grants, DNA of Accor.
We can't talk much about it, and I'm sure some of you are going to have questions, but for the last four months, I've never, ever seen so many inquiries by so many small, medium-sized groups looking for whether they could partner and basically get help from Accor when it comes to distribution, when it comes to access to loyalty program. I'm not talking balance sheet here. We're not a bank. Accor is not here to provide financing to other owners or other brands. But again, it is really progressing. The one thing that I want to share with you when it comes to my frame of mind as of this minute is we are in a world where there is no margin for errors. The team is not only aware of what's going on, but all the diagnostic has been shared. It has been endorsed.
It will be implemented, and people will be made accountable. 100% will be results-driven with rigor and discipline. So that's where we are. Those numbers are not light numbers. They will be in place with people not happy to do it, but totally understanding the necessity to do it. Accor will become even stronger after we have the ability to have greater cash in the balance sheet and a greater system of distribution and more powerful brand with clear promises, with much better experiences to the guests. That's where we are. Now we actually hand over Q&A to you guys on any matters you wish to discuss with us. Merci.
So, ladies and gentlemen, if you wish to submit a question, you can press star one on your telephone keypad now. Please ensure your phone is unmuted locally so that I may announce your name and advise when to ask your question. Again, that is star one on your keypad if you wish to ask a question. And the first caller we have on the line here is Vicki Stern calling from Barclays . Vicki, when you are ready, please go ahead.
Yeah, hi. Three questions, please. Just firstly on exit rates. So it looks like the implied drop-through in the quarter was about EUR 19 million for every 1% change on RevPAR. Could you sort of give us a sense on what the exit rate was there and then what we should be expecting as we look into the second half? Similarly, on cash burn, what the EUR 80 million, again, sort of exited at and anything we should have in mind for H2. And then, Sébastien, just coming back on your comments just at the end there. So you said you've never seen so many inquiries. Just then your perspective on what that might look like from a net system growth standpoint, both this year, but as you look really into the next few years. Thanks.
JJ, you go first.
I mean, the first two questions that, by the way, good afternoon, Vicki, first. But your first two questions, in fact, you should take as a proxy for H2 the same number as the one of H1. So your 19 and the 80 is a good proxy of what will happen over H2. All right, thank you. When it comes to the, I won't go in greater detail, Vicki, because there's a lot of things that are being MOU and confidential. There's one that is being in the press, and I have no idea what will be the outcome of it, and it is closer to your home, which is Travelodge. Travelodge would have never happened without this crisis being there. Travelodge is actually a very fine brand, and it's just a question of structuring and inability to pay rent.
We've been competing with many international brands, not many, all of them, with some Travelodge owners, that guy, Viv, on trying to and creating that company called Ago, on basically saying that, I guess, there is probably a way where we can actually be inventive, innovative, audacious by putting a master franchise company in operating in nature in an Accor with a very small participant, but providing the brand ibis budget and providing some IT key money equivalent.
I have no idea, Vicki, whether we're going to have 20 Travelodge basically coming up to Ibis budget or whether we're going to have the 500 who are eligible to pop in. It's going to be probably between 20 and 500. That alone is a very, very significant amount of room, certainly way in excess of the 35 Ibis budget we have hotels in England. There's other stories like this one of people basically thinking hard to convert to a different operator and basically knocking and having discussion with us on whether we can get, they can get the size of Accor leadership strength in many different jurisdictions, which I won't talk to you. So it won't be a matter of one by one.
It's going to be a group of hotels of 10,000 rooms and above joining the Accor portfolio, which, again, would not have been there without the COVID. Whatever we do, clearly has to be discipline, which is why I use the word rigor and discipline. There's no time here to have fun. So we'll see whether they pop in. We'll see whether it makes sense. We'll see what the return on capital is. But that's what I refer to.
Thank you. And just perhaps a follow-up. I suppose that's one side of the net unit growth. And just on the other side, in terms of the health of your existing owners, both small and large, just perhaps some additional comments there. Thanks.
Remarkably strong, much stronger than I ever expected myself. Gaurav actually is in town with us today. Out of the 5,000 hotels, there's probably less than 10 today in financial disarray. So minuscule, anecdotal. Stronger. And again, probably better news than I expected myself and Jean-Jacques two and a half months ago. Much less need and ask from those owners to Accor. Otherwise, we wouldn't be at the €180 million working capital deficit. It would have been a much larger number. So again, but I've been very clear from the outset, Accor is not a bank. They should be asking for money from government subsidies.
Great. Thank you very much.
And the next caller we have is Leo Carrington calling from Credit Suisse. Leo, when you are ready, please go ahead.
Good evening. Thank you. I was wondering if you could perhaps talk through the cost savings program, fixed cost savings program a little bit more, and elaborate on, I think you indicated in the comments, but how much of this will really be genuine structural changes that could have been done before had Accor been, as I said, like it is now. And can you give some more tangible examples of these? And I think this would be helpful to understand how this is different to simply resizing the organization to match the lower demand environment that might be expected near term.
I'm taking a crack at the answer, Sébastien, here, and JJ will step in. And I'll give you my feel. Out of a couple hundred million, no question, €30 million could have been spotted and has very little to do with the asset-light, asset-heavy model. But we never turned 7,000 stones the way we've done it with the ZBB exercise that we've done in two and a half months. We had the time. We had the right expertise. So those could have been, again, funded and probably executed much sooner, probably our fault.
The rest is clearly linked to two things. Asset-light, so no one could have done it before. And two, you heard me before when it came to booster. There's always sequence when you transform a company. And we haven't touched upon it, but some of you actually wrote it down. That couple hundred million implies 1,000 jobs basically being terminated and laid off. That 1,000 jobs, there's two ways to compare it. One, which is coward way, is you compare it to 18,000 people, which the number looks okay because that's 5.5% of the workforce employed by Accor directly.
There's another way to look at it, which is unfortunately much factual, is you have 5,000 people working in regional health offices, and that's the addressable numbers of FTEs that, I guess, we're looking at. So, i.e., 1,000 happens to be 20% of the number, which is one out of four, one out of five, actually, because it's between 20%-25%. And I'm not pleased by this, but as I told you about sequence, the first thing you do is you transform the company and you get everybody to back you up and make sure they get you closed on Booster, you close on Orbis, and you don't create any social trauma, and then when you've done this, but you haven't lied either. People knew that, I guess, we're going to have to finish the job. Now is the time that you finish the job.
The one thing which I'm sorry, I'm going to take one second with you because it's very close to values of this company. What we intend to do, and it's not going to change the numbers, so I'm not going to be reneging on a couple hundred million. What we have in mind is for the underprivileged, most fragile populations of Accor, probably with salaries below 50,000 euros per year. We believe we're going to keep those people employed for two years under that core payroll, but they will leave their current position because we need to basically eliminate layers and make the company simpler.
But we're going to have them train at Accor's expense for two years until we have better clarity on the tourism hospitality activity, until they figure out that, I guess, they want to do something else, and until they probably have a chance to have a greater educational degree and better chances in life to recover and find another job. This is a duty of companies like us. We're probably going to be mutualizing that endeavor with other European companies so that they can go to other industries. But again, that's going to be comprised of a couple hundred million. But in no way, shape, or form are we going to be leaving basically underprivileged population alone in the streets of the world of today. And maybe just a complementary comment on this one.
As part of that exercise where you really go deep into the activities, we went through seven activities for all the organizations. You also will get out of that an element which is important back to the comment I made on sales marketing, distribution, and loyalty, which is you will have a model which is a pay-per-transaction kind of model, much more than a fixed cost type of model. So part also of the acceleration and the way we think about it is that it helps us to be much more agile around the changes that you can have in the business. And so that will be a side product from that analysis and an element that we integrated in the solutions. So more shared services type of things and outsourcing solution, less dependency on fixed base. Thank you.
If I might just ask a couple of follow-ups on the points on trying to protect some of the workforce. I guess this would be part of the All Heartist Fund. And secondly, on the sort of cost savings and new processes, can you just confirm that the EUR 200 million cost savings figure is a sort of net figure, or are you referring to the sort of gross amount of inflexible cost structures that you're reducing for now, but ultimately may need to be replaced by alternative processes in a couple of years' time?
Leo, you're correct. The cost of keeping on the payroll, but not in missions, those most fragile population of coworkers will be paid by All Heartist Fund, which, by the way, we haven't touched upon it, but I guess it's in between pleasant and difficult to accept. As of this minute, we have 35,000 workers of Accor who benefited from the plan with a cost of EUR 10 million, and it's increasing even more so the last 10 days that it increased the first month.
You'll see with the GDP depression, it is vastly impactful, and I am worried that it's going to be probably way beyond 50,000 and maybe close to 100,000. It's good news because it was then very much needed, and it's bad news because I would have hoped that, I guess, not that many people would have asked for it or the necessity of it. That's for the first one, but I think that was one of the best decisions this company has made over a long time, and when it comes to the couple hundred million, it's a net number. The implementation cost and the restructuring cost is roughly EUR 300 million, which is a payout of 20 months.
Thank you very much.
The next caller will be Jaafar Mestari calling from Exane BNP Paribas. Jaafar, when you are ready, please go ahead.
Hi. Good afternoon, everyone. Three questions for me, if that's all right. Firstly, could you tell us more about your short-term commercial strategy? I guess if the bookings come in five days ahead of travel at the moment, and I guess the very good point is that you can absolutely dominate if you have the right offers and the right communication, and even August, you can still make a huge difference. So I'm curious what you're doing right now to get those domestic leisure customers to press the button and to finish the summer well.
Secondly, if we move on to business customers, a huge uncertainty into September, October is obviously the calendar of trade shows and events. Could you maybe recap for us what the latest thinking in each major country? France, I think, will be trying really hard to reopen the trade fairs. Are you seeing those events actually being rescheduled? What about Germany? What about the other big countries? And just lastly, on numbers, so when you say 60% of the 2020 cost savings have been delivered, do you mean they're now in place going forward, or do you mean there's already EUR 35 million of savings in the H1 figures, in which case maybe the EBITDA sensitivity has been a bit higher?
Yeah. I mean, the answer to the last point is that it is in the H1 numbers. So the 35 is in the H1 numbers. For the other ones, since they are much more intellectual, I will pass it to my boss.
On the short-term commercial strategy, there's two things which are evident here. Number one is lesser cost on acquisitions, customers' acquisitions, lesser intervention of booking, lesser marketing being spent at the global level because 90% is tactical, domestic, local. A lot of it is being done actually at the regional level, selling the Brittany against selling Saint-Tropez against selling Biarritz or this campaign at the regional level, actually co-financed by the different regions of France, and it's something in Germany. At the end of the day, you know what works the best? It's interesting because it's going to give me the chance to talk about it. It's VeryChic. VeryChic is one phenomenal tool.
VeryChic is the last-minute, heavily discounted offer of which Accor branded only represents 11% of what VeryChic offers. VeryChic is run out of Barcelona. Never had so much traction over the last five or six weeks now. So with VeryChic, we know exactly what the traction is in between different communities. And unfortunately for us, most of it, 90% of it, is on the shore. So going through the Mediterranean, Atlantic and other parts, and much less so into the capital cities of Europe in which we suffer the most. So it is less cost being put in place and greater association joint venturing with governmental regional bodies on targeting people. 70% of our customer base come by car as we speak. So it's very close communities, three to five hours driving from their home. So as you said, tactical, lesser dependency on big booking engine.
However, you've seen Airbnb doing very well over the last five weeks. On basically that's one of the biggest competitors of ours is people will probably at some time they look for hotels, they're also looking for somebody else's home to actually have this feeling of being safer because that way they don't have to encounter other guests in the same premises. When it comes to the trade, you may know the numbers. For Europe, it was 700 trades, which were planned for 2019 in different countries between Germany, France, UK, and others. Half of them has been purely canceled, so not postponed in 2021. There's a fight in between preserving that remaining 350-400.
We're being held by the new French Minister of Events, where he's been advocating last week that we won't have any limit as of September the 1st on any groups, trades, seminar, congress, where I was actually fearful that, I guess, he could be capped at 2,000 or probably 5,000. There's no limit, and there's no limit because Germany put no limit, so we're all fighting, of course, for the same group. For Accor, if I may, it's marginally relevant. What I lose in Paris and I gain in Frankfurt, I have very massive offers, as you know, in many cities in Europe.
So it's not a total loss, but it's probably the segment in which, Jaafar, we have the most unknown because you've seen big corporation canceling business travel and by the tune of 25%-33%. It's all being announced by all the big guys. I know for a fact that will be probably the case until summer of 2021, and we could probably know for a fact that it will never come back to the level of 2018, 2019. It's probably a permanent 10%-15% impact in a medium to longer term. That could be weathered. We can substitute different offers, but we have to be lucid.
Thank you very much.
The next caller is Alex Brignall calling from Redburn. Alex, when you are ready, please go ahead.
Yeah. Afternoon, guys. Thank you so much for taking the questions. I have a couple. The first one is with respect to the pipeline. You said you asked on the health of your existing hotels. I wonder if you might tell us what your pipeline is looking at. I think if we take out new additions, the pipeline dropped a little in the quarter. That's difficult to know how that is like-for-like. If you could tell us what you think that might do in the long term, that would be great.
The second is with respect to the cost savings. On my math, which could be very wrong, if you did EUR 200 million of cost savings and you kept it all, you would sort of leapfrog IHG and Marriott in terms of your system margin and be a good 10% ahead of them, which seems quite very good or a little ambitious. So I just wondered how much of that EUR 200 million you'd get and where you think you'd be relative to those guys.
Then I think you just answered this question, but I didn't get the initial bit of it. But in terms of business travel, previously you've talked about thinking that it would probably come back in totality as after the previous crises. Could you just tell us what your kind of if there are any revisions to your expectations on absolute business travel versus sort of trade shows on the sort of longer term rather than the short term, which none of us really know? Thank you so much.
Yeah. Alex, on the last line, I just share my feelings with many of you. Short term, minus 25%-30% almost as a certainty. Short term meaning probably until summer of 2021. Longer term, my expectation is going to be it will never return to new normal. It's probably going to be like a 10% drop depending on, again, culture, geographies. But the drop will be in place because major corporations will be much more astute, will go on Webex, on Zoom. Those digital tools will prevail and will still be there.
The one thing that, I guess, some of you have heard about, and I know every year I'm actually launching something and it scares you off, but I guess there's something which has true traction as we speak and is companies today are exactly the same way we've been doing it. It's frugality, less square meter being used, and cost. There's only two options. Either you have to go back to your headquarters and your company wants you back, or you're basically going to be remaining at home and work from home. There is a third alternative for sure.
A lot of human resources CEOs have been working on it in many jurisdictions is give the guys an alternative not to stay at home because it's too confined, not to take an hour and a half of subways, but go 10 minutes by walk, bicycling, or car to the neighborhood hotels of Accor. Do it at large with 5,000 hotels. Do it on a subscription mode. Give them the ability to use lobby, toilet, bar, Wi-Fi, and meeting rooms. And why not? I am convinced that, I guess, you probably can have 5%-10% of your room counts to be transferred into premises, permanent offices, and we go by different brands. And that is in between the time of the day in which you don't need those facilities because that is between 8:00 A.M. and 8:00 P.M. And we're doing it with Wojo.
Wojo is the third largest European co-working player, which has been in place and on which we own 50% of. We launched it, Wojo Spot, Wojo Corner. I think we're going to be able to do better than the loss of 10% from business travelers on providing that third alternative at a much lesser cost, both in transportation than in health nature, and of course, in ability to work and have people waiting for you where he won't be waiting for you for the next meeting in the lobby of your apartment house. That's where we are on the couple hundred million. I leave Jean. I don't think we're going to be better than Marriott.
Yeah. I think part of where the reasoning needs to be further delved into is what is the portion of those savings which are going in M&F versus SMDL. And so that's part of the equation that needs to be resolved. Because as you know, on the face of it, we're probably 15% below the margin that those guys are doing. So we've got some rooms. So I didn't do the computation myself, but it's going to help us be where we need to be on M&F, and it's also going to help us on sales marketing distribution deficit.
So I think this is going both ways. On the pipeline, the numbers have been stable from December to March and slightly down. I mean, again, from my head, something like 208, moving to 208, and moving to 206. And I think the important point on the pipeline is that there was no more cancellation this time than there was the time before. So you don't see any cancellation increase, which I think was the thing that we looked into when we got that number. And if you talk to the development team, they are seeing a very high level of activity in terms of potential signing. And today, I mean, for example, Accor lifestyle, the level of signing is still very, very strong. So frankly, at this juncture, taking into account what we know, no sign that we need to be worried about.
You know what, Alex? I'll be a bit more granular than Jean-Jacques because when we have victories, we might as well actually shout it. On lifestyle, which you referred to, we signed last year 38 or 39 new hotels. We signed the first semester of this year, 45, and looking forward to sign above 70 properties in 2020. So much beyond what we had achieved in 2019. In a matter of six months, better than the full year of 2019. So that's a minuscule example, but it's a notable example.
Brilliant. Thank you very much.
The next caller will be Jamie Rollo calling from Morgan Stanley. Jamie, when you are ready, please go ahead.
Thanks. Afternoon, everyone. Three questions, please. Hi there. Just on the RevPAR sensitivity, you're saying still about 19 million-20 million in the second half. But on slide 17, on the SMDL costs, which only dropped by about 20%, if you're expecting those costs to drop more in line with RevPAR in the second half, shouldn't the RevPAR sensitivity come down a bit? Because that alone was about EUR 150 million additional loss on my numbers in the first half because of that mismatch between revenue and cost. And the second question is strategic.
Given this drop in corporate demand you're seeing, how does that change your strategy on loyalty and the brand portfolio? Clearly, you're pushing lifestyle more, but as we see more sort of less loyal leisure travelers, does that change anything on that outlook? And then finally, a follow-up on the cash burn question. I think on my math, it looks like second quarter cash burn was about EUR 60 million. And shouldn't that be better in the second half of the year given RevPAR recovering? Thank you.
Jamie, I think we're going to hire you in operations because you can push my cash burn to be better and my RevPAR sensitivity to be better. I mean, candidly, where we are, there is still at this juncture a very limited visibility on how the next months are developing. I mean, you see what's going on in Belgium. You see what's going on in Barcelona. So I think you want to be relatively conservative on those KPIs. And so I wouldn't change the guidance I just gave you. All that because it can go both ways.
Suppose things go very well, then there will be a significant push from operations to go and spend a lot of money to capture the people. And then suddenly, my equation on SMDL might even get worse because I'm going to get more costs than I get before I get revenue, if you will. So I think you need to be a little bit cautious on those two guidances or cautious, reasonable on those two guidances. On loyalty, sincerely, I don't have your answer. I need to dig in with the loyalty people on you do refer to lesser traffic from loyalty card members, probably because there's lesser international travelers, and those people are probably the best users of card. I can't hear you. Seriously, I won't invent an answer. I'll ask the guys, and I'll come back and we'll come back to you on this one.
Can I push you on the SMDL cost? I'm not asking about revenue, but we're in the third quarter now. Would you expect those costs to be dropping more than the sort of 20% rate in the first half then? Again, I wouldn't want to give too more. I don't want to give you much more than the guidance I provided, again, for the same reason, which is that there is solid visibility, and I was giving you a guidance of 100. We are doing 80.
I think we've pushed the equation quite a lot on some of the cost saving. We were helped by some furlough government schemes that have been lasting longer than they were anticipated initially. So there is a lot of uncertainty around all of that, Jamie. So just take the numbers as they are.
But continue pushing, JJ, Jamie.
Yeah. Yeah. Get the job in operations.
No, no, no, no. He's just pushing you.
Okay. Thank you.
Thank you.
And the next question will come from Jarrod Castle of UBS. Jarrod, when you are ready, please go ahead.
Thank you. And good afternoon, evening, gentlemen. To you three as well. Obviously, you used to have these 2022 targets and understandably on hold. But how are you thinking in terms of when do you think you'll have enough visibility to set some new targets and also linked to kind of the motivation of senior management to kind of hit new targets? Just your thinking on that. Second question, just in terms of the write-down of EUR 1 billion, can you give a bit of color in terms of how that's split between different assets and different acquisitions? And then just looking at your portfolio, I mean, is there any room for brand rationalization? And how does that fit in in terms of your thinking in terms of the distribution platform/ALL? Thanks.
Y ou want to go on the write-down?
Yeah, I'll take the write-down. So on the write-down, it's a very mechanical computation, Jamie. Sorry. So, basically, what it's going to do is that it's going to affect all the business plan that supported, in fact, the valuation of what was set up on the balance sheet. And so you, because of that, see all of the acquisition being touched by that computation. To go in a little bit more detail, you can say that about 30% of it is coming from a discount rate, which is 100 basis points higher because of the volatility of the hospitality stock market, which, as an effect, is making the average cost of capital being higher by 100 basis points.
And then the 70% remaining is the fact that you're basically losing two years of free cash flow in any of those business plans. To just give you how mechanical this computation may be. The largest element of the EUR one billion will be FRHI. And then you will have Mantra. So FRHI is to the tune of about EUR 300 million out of the EUR one billion. And then you have Mantra, EUR 400 million out of the EUR one billion. And then you have much smaller numbers for the values, Mövenpick, and others, Gekko. All of those people are affected throughout that process of valuation of the acquisition intangibles.
For the target, and you did refer to it rightly. So I'm moving away from any target, which is three years from now, because I simply don't know. What I can share with you is what I told the board of directors of this company this morning, is there is one simple way to look at when will be the time to go back to the 2019 figures. If you look at RevPAR occupancy, pricing, and so forth, I think it's going to be later than the end of 2022 and likely to be in 2023, and I know airline companies have been talking 2024-2027.
I guess it depends who you're talking to. When you talk of EBITDA and margin, that could be. I'm certainly looking forward for the 2019 to be replicated in 2022 because of the benefit of the EUR 200 million cost-saving net effect going to the bottom line and EBITDA. So what you may not have in traction, demand, lack of business travelers, probably lesser group, could be weathered, and the buffer is EUR 200 million. That's a very simple way that I guess I've been imposing on myself on trying to go back as quickly as possible to the EUR 800 million plus or minus of 2019.
We see what 760 when you do actually on the same perimeter?
On the brand rationalization, we do have 40 brands. I just want to correct. I just gave you the numbers for lifestyle, which is the correct number. It is great in terms of pipeline, but the better segment in terms of performance as we speak are the budget and lower-mid-scale segment. They are the ones, the strongest, and rebounding the nicest for the last five months. So don't discount, and I'm not discounting either, the force, the strength in current environment of being able to provide very cheap entry points to those domestic leisure markets when they can't afford to travel otherwise. So brand rationalization, part of the zero-based budget, and we never mentioned, but I can actually say that to you. All of that was done by Alvarez & Marsal.
So that was a very draconian, rigorous exercise. But part of that exercise, of course, we tapped upon the importance of each of the brands. You guys know that 12 brands represent 75% of the global fees of our core at large. So you have to question yourself for the other 28 brands. And the response is the same I gave you earlier, which is, since you know those numbers and it's imposed on you and you have to be disciplined in the implementation, we have to make them sure that, again, there's no global allocation of marketing spent or a lot of global sales being allocated to those that are not non-performing, but they are vastly local, stay there, permit that to exist because they're actually great users of loyalty members, and they give you density, strength, and coverage.
But make sure you treat them as non-global, non-core, and local. That's the way to look at them. And the thinking of disposing of some of them may come soon, but it's not coming as of this minute.
Okay. Thanks. And I hope you have a bit of a holiday now.
You know what? I kind of doubt this. I think I'm going to be. I'm certainly going to go to Brittany for four or five days. But my month of August is actually ruined, not by you guys, but I guess it is time to be actually standing up on my paddle. It's not time to be. Thanks for asking.
Good. Thanks.
And the next caller will be Richard Clarke calling from Bernstein. Richard, when you are ready, please go ahead.
Good evening. Good evening, gentlemen. Hello. A couple of questions for me, largely follow-ups, I guess. The first one's just on the follow-up from Jamie's questions on the SMDL costs. Is there any ability to claw that loss back from owners in the future to go back to break even? And I noticed you mentioned that some of the cost savings will be in that line item. Some of the €200 million will be in that line item.
To whose benefit is that? Because presumably, you can't make a profit in that line. So does this enable your owners to pay lower fees, or does that get reinvested into something? And then the third question, following on from Jarrod's really, but some of the other factors that you've talked about sort of being margin bridges in the past, the loyalty investment that was going to get paid back, new businesses coming to break even. What's the status on those? I noticed you've changed the LTIP to just be tied to the cost savings you've announced today. So is all of this pushed back now by a number of years?
Okay. Let me actually go on the last, and then JJ is preparing himself for ability to claw back and the line item. I can tell you ability to claw back and do as well. It doesn't work, and you know why, Richard? It's our fault. You can't impose on your owners and franchisee the burden of your cost. Your costs are your cost. You'd better adapt and make sure that, yes, you have a profit in whatever circumstances.
But I think you would agree with me. None of us could have anticipated a drop of 90% of RevPAR and still having some unfortunate fixed costs that, I guess, were permissible into a maybe 30%-35% occupancy environment, certainly not in a 7% occupancy environment. So it has nothing to do with the owners. It is our burden. And just make sure that, yes, we go back as swiftly as possible. But on the loyalty and on the endeavors we've made on new businesses, nothing has changed. I'm still looking for the co-branded. We're still moving along very swiftly with Visa. We're still moving along. We have lost four months because of confinement on the issuer on the European banks. But the discussion is still in place. We've signed LOI. It's going to be announced and implemented right after summer.
It's a delay of six months, but it's certainly not reneging on EUR 120 million of revenues that, I guess, we've been looking forward to have and on the EUR 25-30 million of EBITDA. That is still in place. New businesses, it's kind of the same. A lot of them have been going through the crisis, some of them fairly easily, some of them in a dramatic way because of actually Gekko. All the revenues basically went to. I mean, was halted because they are in hotel corporate, B2B digital billings with corporate travelers. But it's coming back. It's going to be interesting for you to notice that Airbnb is moving away from hotel reservation. Is Booking shying away from anything which is B2B? They've never cracked the model on how to actually intervene into the B2B model, and they're basically focusing themselves on the B2C.
So it's still there. The one thing which is new is there is a strategic review nature being undertaken today by the board and the management company on reviewing one by one all the new businesses in probably a deeper fashion on testing the market, on whether we can get outside partners to pop in or outside partners to buy them out and I call remaining a strategic anchor. So that is actually accelerating as opposed to slowing.
Okay. So on sales marketing, distribution, LLT, I mean, so I was making the points on the reset plan, the plan that Sébastien is being quoting on variabilization of the cost. I mean, the issue that we have today and the issue that we have for several months, depending on how the crisis gets resolved and the vaccine is found and whether it's 2022 or another date, is that everything being equal, I'm going to be at a negative EBITDA on SMDL for some time. And so I need those savings in order to rectify the situation. And then in two or three years or four years, then if I happen to have more money, then I can do more marketing. And when I do more marketing, I do more business. And when I do more business, I get the benefit of it through M&F.
Today, we don't have a clean, I would say, split of how the EUR 200 million goes between M&F and SMDL. We need to work on that. I think it's a discussion that we can probably continue to have in other calls. I mean, we are at the stage where we're basically putting in place that plan and going into the detail of the industrialization of the plan. So that's where we are.
Great. Thank you very much.
Sure. You guys are probably running out of questions. Are you reinventing new questions after people are asking the same question? Where are we? So who's next?
Next up, we'll have Stuart Gordon from Berenberg. Stuart, when you're ready, please go ahead.
Hi, Stuart.
Yeah. Good afternoon. I will keep it to one because I think most of the questions have been asked and possibly one clarification. On the opening of your hotels that you've flagged in slide 13, which is obviously very helpful, I think if I back out the RevPAR for sort of open rooms that's broadly flat despite the improvement in occupancy. So as hotels have opened, have you seen a material uptick in sort of competitive pressures on the room rate as the first thing?
And secondly, just going back to very early in your call, you spoke about Travelodge. And just to clarify, it seems as if you walk away from that if you can't get a sort of innovative structure that will enable you to make it asset-light with at the most a very small participation. Just to confirm that, and also what would you deem to be a small ? Thanks.
Okay. On the room rate, again, we have to be, and we're going to have to give you more granularity. We have to be very careful with hotel being open. There's a slide presented by JJ saying that, I guess, at the peak of the crisis, it looks like we had still 38% of our hotel being open. That is factually true, but it's bullshit. It's true because that is the case. It's bullshit because many of the hotels were not up, because many of the hotels were not open for reservation.
So they were legally open but with one or two employees basically guarding the hotel with no occupancy at all. So it's just for insurance purposes and other purposes, owners wanted to keep them open, but there was no activity. So let's be very careful on comparing the room revenues per hotel being open, but we should get back to you on this one.
On the room rate, the one thing which is absolutely clear and we have to be lucid is we haven't dropped the room rate for the leisure business. It's very equivalent to last year and in some cases better than last year because you have better traffic on the shores of France. But unfortunately, because you have a different mix in between business travelers and leisure travelers, when you have business travelers paying you EUR 120 for a room and a leisure paying you EUR 80, you had a EUR 100 kind of actually, if it was to be 50/50 room rate for the hotel today, you don't have the EUR 120, but you preserve the EUR 80. So when you look at it from the outside world, it looks like a decrease in room rate. It's actually not the case. It is just a different mix.
And we are very cautious, and we've sent all the signals that hoteliers should not be dropping rates. This is not the time to have panic on our needs. It depends on our needs. So on Travelodge, I have to be a bit careful because I don't know what's public and non-public, but I believe 90% is out there because it's being sent to over 400 Travelodge owners in the form of a teaser, and each of them reacting on the teaser. And I would be myself talking to them on Thursday in a town hall. The vehicle is actually very simple but quite innovative. There is an SPV being put together by a company called Ago, A-G-O, by somebody called Viv Watts, and the founder of it is called Lionel, and I forgot his last name. I apologize.
This company will be the beneficiary of a 20-odd years master franchise from Accor when it comes to ibis budget. This company will undertake to pay in the form of guarantees but not in rent, equivalent of 50% of the last 12 months' rent income received by Travelodge owners under the Travelodge brand. The people coming to that vehicle by basically converting into ibis budget will pro rata of, I think, the room counts of revenues, I can't tell you, own 49% of the shares of this SPV. Accor will own less than 10% of maximum 10% of that SPV, and Viv Watts, as a founder and creator, will own the remaining 41%. So Accor will be far from consolidating any performance guarantee minimum obligations by being a very minuscule shareholder in that SPV.
That SPV will be the operator on behalf of many of those coming through it, and each of them will have a co-sharing to the extent of their percentages of the performances of that Ago vehicle. I believe 95% of what I just told you is public. It is in the hands of people that just have to accept that different nature of structuring and will know not before probably end of August, maybe end of October because there are different days by which Travelodge owners have to give notice to their current contract. Some of it is by the end of August, and some of it is by mid-November. So it's a good exercise.
And if anything we know is that the gentlemen, Viv Watts and its partners, have chosen as an exclusive master franchise partner our Accor and did not choose the other international operators because of the visibility of ibis budget brand in the UK, which is very much similar and less burden in terms of renovation for the Travelodge owners, even though they have a larger room in terms of capacity and square meters. That is the deal. So I think, and we provide customer reservation system. We provide loyalty, and we help them on signing the signage. That is the extent of the deal. And I hope we're going to have many people attracted. And if there is not that many, it was worth attempting and daring.
Thank you very much.
You're welcome. But that actually gives you, for those of you still on the phone, it is a great credit to Ago, to the people of Ago, Philip Lassman, Camille Yazbek, I mean, all those people in the UK, they have been very, very accessible, very innovative on really trying to provide something which I think makes immense sense for the Travelodge owners. Again, at their option. But the team had the agility to step in in a matter of less than three weeks. Camille Yazbek, sorry. If I mispronounce your name, please apologize for me. She's on the phone. She's on the phone.
Voilà. Anybody else? Because it's one hour ahead of you guys, so we need a drink here.
There's just one final caller, guys. It's going to be André Juillard calling from Deutsche Bank. André, when you're ready, please go ahead.
Good afternoon. Can I come in? Sorry for the drink. You will wait a little bit.
For you alone.
I know that you haven't heard a lot of questions already, but I had just two of them. The first one is regarding owners and especially AccorInvest we have not been talking about. And I just wanted to have some more color about how healthy is the company? Is the leverage acceptable in such an environment? And if a right issue had to be done with AccorInvest, would you follow it or not? That's my first question. The second question is very rapid. It's about the headquarters because if you plan to sell the headquarters, I guess that there is a potential capital gain which will be quite appreciated in such an environment. But in the meantime, you will have to pay a lease. In IFRS 16, this lease will be recapitalized on your net debt.
Okay. So JJ, that's the. [crosstalk]
Yeah. You're right. There will be a lease that will be recapitalized, but net net, it's going to be a reduction in net debt because the amount of cash that you will receive is going to be such that the net effect of the transaction on the account will be a couple hundred million of net debt reduction. I think that's the point on Sequoia or the headquarters. And then there is the question on AccorInvest.
So on AccorInvest, I mean, yeah, we discussed a bit AccorInvest because they are part of my equity consolidation. And so I mentioned that like everybody in this industry, they are suffering from the COVID situation, obviously. They were able to renegotiate just like a lot of us have done with the banks an extension or holiday, I should call it, of their covenants. So they have time in front of us. And today, they don't have a liquidity issue. And so the question that you ask about the rights issue is not something which is being discussed.
And I recall you that in AccorInvest, they have significant portfolios which are outside Europe, namely in Latin America, in Africa, and also in Australia that they may want to monetize if they were really in dire straits. So there are some levers. I'm not saying that this is what's going to happen, but they are not in a situation which is critical, as you may have implied with the equity and the rights issue increase in the question, André. Yeah.
And I'm going to be pronouncing his name right. Camille Yazbek, if you hear me on the phone, please apologize. He's one of the best guys that I guess exists in terms of development, so. Voilà. Again, there's nothing to be proud, pleased about. I can actually apologize on my own. It is tough. Those numbers are bad, expected, however. And it just simply cannot continue that way. So whatever we announce to you is to make sure that, I guess, we preserve whatever cash we have, we move on, and we restructure this company as we've been engaging and fulfilling promises and really getting to this agility this company is in need of for a long, long time. Merci beaucoup, all of you on the phone. And then we'll talk to you again for the third quarter revenues at the end of September. Thank you. Okay. Bye-bye. Ciao.
Thank you. Bye-bye. Bye-bye.
Thank you all for joining today's conference. You may now disconnect your lines.