2014 Registration Document and Annual Financial Report - page 193

5
Financial Statemements
Consolidated Financial Statements and Notes
HotelInvest’s main challenges are to:
ƒƒ
strengthen its position as the leading hotel investor in the economy
and midscale segments in Europe, with strategic positions in
emerging markets;
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optimize cash flow generation and reduce earnings volatility,
particularly by reducing the number of lease contracts.To achieve
this objective, certain hotels could be subject to restructuring
and lease contracts will not be systematically renewed when
they expire. In addition, hotel development will no longer take
place via lease contracts, except for contracts on which Accor
has already made a commitment;
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manage and rationalize the asset portfolio, with a focus on value
creation through the strategic allocation of capital expenditure;
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support the Group’s growth strategy, by holding a selective
portfolio of profitable hotel property assets.
With this new strategy, Accor has a solid base for maximizing
operational performance and creating value for shareholders and
all other stakeholders.
Deployment of this strategy during 2014 led to:
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changes in the presentation of segment information in the
consolidated financial statements (see Note 39);
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reallocation of goodwill to the two businesses, based on discounted
cash flow projections (see Note 2.E.6).
A.1. Digital Transformation
On October 30, 2014, Accor announced a five-year, €225 million
investment plan. The aim of this strategic plan is to rethink and
incorporate digital technology throughout the customer journey, improve
the services on offer for investor partners and consolidate the Group’s
distribution market share.The plan includes eight programs focused
on clients (four programs), partners, employees, IT infrastructure
and data management.The €225 million envelope earmarked for the
2014-2018 period will be allocated to capital expenditure for 55%
and to operating expenditure for the remaining 45%.
In line with its digital transformation objectives, in 2014 Accor also
acquired French start-upWipolo, which has developed a cutting-edge
mobile travel app, for an acquisition price of €1.9 million.
A.2. Strategic Alliance with Huazhu
On December 14, 2014, Accor and Nasdaq-listed Huazhu Hotels
Group (also known as China Lodging) announced the signature of
a strategic alliance in China. As part of the arrangement, Accor’s
Economy and Midscale hotels in China will be sold to Huazhu, which
will hold an exclusive master franchise agreement for the ibis, ibis
Styles, Mercure, Novotel and Grand Mercure brands. Huazhu will
also become a minority shareholder in Accor’s Luxury and Upscale
business in China, with a 10% stake.
In exchange, Accor will receive a 10% interest in Huazhu and a
seat on the Company’s Board of Directors. This major alliance will
enable the two groups to accelerate their development, with a
medium-termobjective of 350 to 400 new hotels under Accor brands.
The agreement will also give the members of both partners’ loyalty
programs access to a combined network of 5,600 hotels worldwide.
The transaction is scheduled for completion in the second half of
2015. As a result, the 12 hotels earmarked for sale were reclassified
as “Assets held for sale” at December 31, 2014.
B. HotelInvest
In light of their specific characteristics, all acquisitions of asset portfolios
completed during the period have been classified as acquisitions
of assets and not as business combinations (see Note 2.B.5). For
Accor, all of these the transactions consisted of becoming the owner
of hotels that it previously operated under leases.
B.1 Acquisition of an 86-hotel portfolio
from Moor Park
On May 27, 2014, Accor announced the acquisition by HotelInvest
of a portfolio of 86 hotels (11,286 rooms) – 67 in Germany and
19 in the Netherlands – that had been operated by Accor since
2007 under variable leases under the ibis, ibis
budget
, Mercure
and Novotel brands. The hotels were acquired at a total cost of
€715 million, of which €657 million for the repayment of debt. The
vendors are two funds, Moor Park Fund I and II. The transaction
was completed on June 30, 2014.
The acquisition price has been allocated to the 86 hotels and other
assets and liabilities based on their fair values determined by the
rental yield capitalization method applied to each hotel separately.
They include 27 hotels that have been reclassified as “Assets held
for sale”.
B.2 Acquisition of an 11-hotel portfolio
from Axa Real Estate
Accor also announced on May 27, 2014 the acquisition by HotelInvest
of a portfolio of 11 Swiss hotels (1,592 rooms) that had been operated
by Accor since 2008 under variable leases under the ibis, ibis
budget
,
Novotel and MGallery brands. The hotels were acquired at a total
cost of €176 million (CHF 219 million), of which €108 million for the
repayment of debt.The transaction was completed on June 27, 2014.
The acquisition price has been allocated to the 11 hotels and other
assets and liabilities based on their fair values determined by the
rental yield capitalization method applied to each hotel separately.
They include one hotel that has been reclassified as “Assets held
for sale” (see Note 46).
Registration Document 2014
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