Research Update: Accor S.A. Downgraded To 'BB+' On Likelihood Of Weaker Metrics Until 2022 Due To COVID-19 Impact; Outlook Negative

We now anticipate weaker earnings and debt metrics in 2020 and 2021 than we expected for France-based hotel group Accor S.A., due to the effects of the COVID-19 pandemic on travel volumes and on the economy in general. We also believe that it will take longer and be more expensive than we expected for Accor to trim its fixed-cost base and restore its business and financial profile. We now consider that demand for hotel rooms could fall by about 50%-60% in 2020 and 30% in 2021, versus 2019 levels. This would result in negative EBITDA for Accor in 2020, and substantially lower EBITDA than we previously expected, of €180 million, including restructuring costs, together with weak free operating cash flow

...- We now anticipate weaker earnings and debt metrics in 2020 and 2021 than we expected for France-based hotel group Accor S.A., due to the effects of the COVID-19 pandemic on travel volumes and on the economy in general. We also believe that it will take longer and be more expensive than we expected for Accor to trim its fixed-cost base and restore its business and financial profile. - We now consider that demand for hotel rooms could fall by about 50%-60% in 2020 and 30% in 2021, versus 2019 levels. This would result in negative EBITDA for Accor in 2020, and substantially lower EBITDA than we previously expected, of 180 million, including restructuring costs, together with weak free operating cash flow in 2021. - Accor's revenue will be lower at a time when restructuring costs are rising significantly, and this will be only partly offset by the company's material cost-cutting and cash-conservation initiatives. This would result in S&P Global Ratings-adjusted leverage spiking significantly...

Research Update