Accor's head office in Paris is showing its love to the world during the COVID-19 pandemic.
Accor’s head office in Paris is showing its love to the world during the COVID-19 pandemic.

Hotel juggernaut Accor will rally around its employees, partners and shareholders throughout the COVID-19 pandemic crisis, today unveiling a comprehensive plan to cut costs while still supporting global workers.

In a trading update issued today, the company said the deterioration of the global situation had prompted it to take “drastic action” as more than half of its branded hotels around the globe remain closed, with this number expected to climb to two-thirds in the weeks ahead. Accor said its decisions were made to limit the impact to earnings and cash as well as to prepare for the post-crisis recovery.

Thanks to a strong balance sheet leading into the pandemic, Accor said its EUR€2.5 billion in cash reserves and an undrawn EUR€1.2 billion credit facility should allow it to travel through the crisis with minimal ongoing impact. The company said it was upbeat about the long-term perspective of the hospitality industry and that recovery would come.

As part of its short-term cost reduction strategy, Accor has made the call to furlough 75% of its global head office teams for the second quarter of the year. Combined with a travel ban, hiring freeze and reduced work hours, the company says it expects to save EUR€60 million in general administration for 2020. Capital expenditure would also be reviewed, which is expected to save a further EUR€60 million.

Accor CEO, Sebastien Bazin

Staff around the world, both those kept on and those temporarily furloughed, will be supported on an ongoing and case-by-case basis, Accor said. Following the cancellation of its proposed EUR€280 million shareholder dividend, one-quarter of this will be turned into the ‘ALL Heartist Fund’ which will be put towards directly assisting employees in need during the crisis.

Accor has pledged to pay for any COVID-19 hospital expenses for any employees who do not hold social security or medical insurance. On a case-by-case basis, the company will also assist employees and partners suffering severe financial distress. Further help will be provided by the company to support frontline healthcare professionals and non-profit organisations. This fund will be assisted further by the addition of 20% of attendance fees from Accor’s Board of Directors, as well as 25% of the remuneration owed to Chief Executive Officer, Sebastien Bazin.

As part of the trading update, Bazin said welcoming and caring for each other was at the very heart of what Accor does.

“In light of the urgency and the scale of the situation, we have decided to act in an immediate and meaningful way, in the spirit of our values and commitments.

“As our industry is going through tough times, we have to make tough decisions, but Accor has a strong balance sheet which will enable it to withstand this crisis and emerge with strength during the recovery period. I am confident that Accor will soon rediscover the road to growth.”