Accor: Capital Markets Day Strategy Prudent, and Midterm Financial Targets Achievable; Shares Cheap

During the past decade, narrow-moat Accor has become more asset-light (97% of rooms managed and franchised today versus 59% in 2013), broadened its portfolio mix to luxury and lifestyle units (34% of fees now compared with 11% in 2013), and expanded its scale via organic and inorganic measures (over 800,000 total rooms currently from 462,000 in 2013). At its June 27 capital markets day, the hotelier laid out its midterm strategy to focus on design and consistency across its portfolio, with a heightened focus on premium brands and key geographical regions; we see this as prudent at this stage of the company’s evolution. We plan to maintain our EUR 41.50 fair value estimate and see the shares as attractive, trading at 12 times forward enterprise value/EBITDA, an unwarranted discount to the 13-14 of some peers.