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Edited Transcript of AC.PA earnings conference call or presentation 22-Feb-17 7:30am GMT

Thomson Reuters StreetEvents

Full Year 2016 Accor SA Earnings Presentation

Issy les Moulineaux Feb 22, 2017 (Thomson StreetEvents) -- Edited Transcript of Accor SA earnings conference call or presentation Wednesday, February 22, 2017 at 7:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Sebastien Bazin

Accor SA - Chairman and CEO

* Jean-Jacques Morin

Accor SA - CFO

* John Ozinga

Accor SA - CEO, HotelInvest

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Conference Call Participants

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* Andre Juillard

Kepler Cheuvreux - Analyst

* Jamie Rollo

Morgan Stanley - Analyst

* Nicolas Brice

Equigest - Analyst

* Tim Ramskill

Credit Suisse - Analyst

* Richard Clarke

AB Bernstein - Analyst

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Presentation

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Sebastien Bazin, Accor SA - Chairman and CEO [1]

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(Interpreted) Good morning. Good morning to all. We're going to talk you through our results. Our results are good. We're going to talk to you about 2016, which was a complex year, one of -- or a busy year.

In preparing for this meeting three or four days ago, we said to ourselves, well, 2016 is something that we tend to forget about all too quickly. But when we spent two minutes thinking about it we actually came to realize that a lot of unusual things had actually happened, quite a number of events that hadn't been foreseen this time last year when I gave you our results for 2015.

I remember at the time I told you that we would probably be posting record results. Well, that's what happened, in fact, except that the breakdown isn't quite what we thought it would be. In fact, the prevailing environment wasn't quite what we thought it would be.

Had you all foreseen Brexit? Some of you had maybe, but not all, not that many of you, in fact. What about the outcome of the US elections? Well, not many of us either saw that coming.

Could we have foreseen what is happening now in the Middle East? Well, more so. Brazil? Maybe; maybe we might have foreseen that. What about France and the various dramatic events? There was no foreseeing them.

So the macroeconomic and geopolitical environment was a very difficult one to guide the boat through, but we've continued on track. We have continued to do what we had to do, which was all about focusing on hotels business, the operational side of the business, the focus on our development.

The interest rate environment was conducive, even though the trend has been reversed over the last five or six weeks. But I think the most important thing to take away is that even despite these great uncertainties, a group like ours has always borne in mind what it is we are expected to do, that is to improve our results and the return.

I have 10 small boxes here; I would prefer 12, one a month, but we haven't, we have 10 small boxes. But that's a lot of deals and they're very different transactions, different times of year of course. Two of them are probably bigger than the others; when I say bigger, bigger because of the fact that they can have a transformational effect on the Group.

One of them has been completed -- and I'll come back to you on this in just a few seconds -- that's the acquisition of Fairmont Raffles, and Swissotel was signed in December and closed in June. That completely changes our perception of the Group, completely changes our positioning, our strength, size.

There's a second deal that's going to have a major effect; that is the Booster project that I will be telling you more about a little bit later on. It was announced last July. It will be carried out by June of this year.

But over and beyond that there are quite a number of smaller deals, smaller in size but that also have a considerable impact on how the Group is perceived, how the Group is positioned, but also in terms of the initiatives we're taking. So we have bought into John Paul, Banyan Tree, or 25h. I'll tell you more about that a little bit later on.

Now, here we have what we call a pivotal movement, change of access, where with the Group with 4,144 hotels, which is a very big portfolio, I'll say this, I've said it time and again, in fact, it's not that it's a bigger portfolio than our American counterparts, but it's -- 99% of it is outside of the US. They have 60%, 70%, maybe 80% in the USA. So we will have much greater depth and much greater diversification than our American counterparts.

I'll talk about the pipeline as well. We have 910 hotels that have been signed up and that will be opening up over the next three or four years. It's very impressive to open a hotel every 36 hours as we do in this Group.

You will see that 2016 was a record year in terms of openings. This is the first time we have ever opened 38,000 hotels (sic - "rooms", see slide 10) in the one year. We have six important brands here. Raffles Fairmont, Swissotel, onefinestay, Oasis, TravelKeys and so on, these are segments that we weren't present in or weren't very present in.

In luxury hotels we had Sofitel, in fact we only had Sofitel, and all of a sudden we have Fairmont and Raffles. We now find ourselves ranked number 2 in luxury hotels in the world, in managed hotels. We were probably ranked 12th or 13th before the acquisition.

Another segment we weren't present in was the one which we have what we call lifestyle hotels, Mama Shelter. These are boutique hotels that meet demand on the part of people who are young and maybe sometimes not so young, but who are non-conformists, who are off the beaten track.

And of course, then there's the resorts where we have very little presence where we now are with Banyan Tree. Now, that wasn't fortuitous; we really needed to become involved in a certain number of areas because that's what our customers wanted.

As I said, I also confirm it here that we need to diversify here outside of hotels. Not that we don't like hotels, we do and we will continue to work in hotels for the next 50 years as we have over the last 50 years, but we will certainly improve our results in hotels. But as we have 240,000 employees in the world -- [over 4,000] -- what about when our colleagues want something more? What about when people want more than just a hotel room?

This is why we've become involved in what's known as private rentals. This is the renting of private apartments, homes with Oasis, onefinestay, Squarebreak, or more recently the deal we signed with TravelKeys, and that's all within less than 12 months. Within 12 months we've become the world leader with 9,300 homes listed and with services to hotels as well. But we decided to go a step further, and I'll be telling you more about this a little bit later on. I'll tell you how we catalogue all these initiatives.

We have another one that's much more transformational than it would appear, that's John Paul concierge services, because this is all about what we call customer care. When you have a Visa card or a Gold card or an Air France card, or an [Allianz] or an Amazon card, you have people answering the phone to meet your needs in terms of service, these are what we call white label services.

You think you're dealing with Visa or you think you're dealing with Volkswagen or Air France; you are not. You are dealing with somebody else, and these people are very often called John Paul. John Paul, what they do is they make your life easier because they solve your problems for you.

For our travelers, for our personnel, for our future residents in our rental homes, with John Paul in the digital world we are capable of providing all these services to people in their daily lives. This is enriching our database of the various and very, very numerous people that need these services throughout the world.

Fairmont Raffles; let me spend a minute or two here. Some of you have quite legitimately asked if Accor is capable of withstanding the onslaught of 115 hotels with a very different culture, with a very different positioning. And then there's a risk of -- a risk and it amounts to EUR2.7 billion.

Did we have the culture to integrate luxury brands? Weren't we going to lose talent, wouldn't there be a talent drain, wouldn't we lose contract? Because these very wealthy hotel owners could have felt, well, not too comfortable with Accor managing our hotels. What's actually happened is exactly the opposite, and this is what we were convinced, we the management, when we took on this deal, when we talked about it at Board level.

Not only have we not lost a single contract, the talent drain has been very nominal, very often people that we didn't want to retain anyway. And within barely seven months we have signed 20 new contracts, Fairmont Raffles, more than they had signed over the last two years in fact.

So these Fairmont Raffles owners are also signing up contracts with Pullman, with Novotel, Sofitel, with Ibis, whereas a lot of them would never have even considered signing in any other segment than the luxury segment. The synergies are there.

We have achieved more and probably are going to be a year ahead of schedule in terms of realizing these synergies. So in terms of talent, in terms of dealings with the owners, in terms of brand positioning, in terms of the pricing, we have become number 2 in the world in this segment, which proves that it was a really great idea, the Fairmont Raffles deal.

That has also changed the perception of the Group because we are now present in all segments right across the board.

Huazhu changed everything too. Huazhu is a Chinese company that's listed on the NASDAQ. It's called China Lodging on the NASDAQ. It's headed by a marvelous gentleman called Chairman Qi Ji, with whom we decided a year ago that we weren't going to continue to develop alone, not through our Ibis and Mercure brands. If we were to grow in China it would be better through a deal with a Chinese counterpart than to go alone, yet we had gone it alone in China for 30 years.

Admittedly, at the time we also decided that we would keep the Grand Mercure, Pullman, Sofitel under our own structure, in which Huazhu has a 25% stake. And I think we were right to do that for several reasons, at least two or three.

The first of these is that Chairman Qi Ji is keeping every single one of his promises. He said I want to be capable of increasing the number of openings; 70 hotels were signed up under our brands in China in 2016. That's three times more than we did two years ago. In addition to those 70 hotels, there's another 150 that are in the pipeline. Remember, the Huazhu Group opens over 500 hotels a year in China.

However, over and beyond our ability to open our own brands through the Huazhu network in China, we decided that we wanted to take a stake, a 10% stake in the share capital of Huazhu and that I would join their board of directors, which is exactly what happened. That was all in the January of last year, $197 million/$193 million.

Yesterday, or was it the day before, it was worth $390 million, which means it more than doubled the value of our investment. That's because this market cap has increased from EUR1.9 billion to EUR2.9 billion on the NASDAQ, market cap.

In the last year in China, we probably made much more than we made in China over the last 35 years. That was exactly what we told you we would do a year and a half ago when we talked with you about this partnership in China.

This doesn't in any way question our discussions with the Jin Jiang Group which is a competitor. Huazhu and Jin Jiang know one another well, respect one another, admire one another probably but we have a partnership agreement with Huazhu and a cross-shareholding with Jin Jiang.

We have also ventured a whole series of new businesses. I'll keep it simple by giving you a vertical presentation. On the left hand side, we have what I mentioned earlier on, the world of private rentals. We have a wonderful company called onefinestay that we now wholly own.

Yes, the CEO left three months later. He didn't fully agree with the roadmap, not entirely anyway, so we have taken on new management, two co-founders who are working with the new manager. A CFO from the UK, Herve Deligny, went to join them in onefinestay, and it's all working very well.

Within about a year we've increased what we call the average RevPAR by over 20%. We've also set up our distribution system. Thinking about the back of the house, we've rethought about these clients that we don't see, what about the soaps and the washing whatever, and how Accor can help through more efficient logistics.

But as planned, we opened up in Rome and Miami and we have four new cities this year. So onefinestay is flying, it's growing. The difference is that now it's fully integrated into the Accor Group while remaining independent. They have their own head office, their own staff, their own roadmap; we're just providing with the means to accelerate their growth and to grow without us intervening in their business plan.

The same thing with Squarebreak and TravelKeys which we expect to complete a deal, we expect to complete over the next few months. So this is a wonderful sector.

You'll probably hear more about this in the Q&A session but Airbnb with Luxury Retreat, which is a competitor of these companies, well, we've had discussions and that's a good thing because it shows that this segment is a very profitable one. Airbnb isn't getting involved just for any old reason; we too are getting involved.

Fastbooking is completely different. Fastbooking has two businesses. First of all, digital services, how to help independent hotels by buying keywords on Google.

How do we help them with revenue management, or yield management, how we help them with distribution channels, how we help them to make up a website or organize media campaigns but in digital and offline or online; this is what Fastbooking does, digital services, and this is expanding very rapidly. They have 4,000 independent clients in the world.

We've also decided that through Fastbooking we would offer a certain number of independent hoteliers our distribution capacity, our booking system. So we would plug them into our distribution database; 2,200 have been signed up, 1,800 hotels are now online, on our websites in the main destinations.

So that too is working well. The real difficulty with the marketplace isn't the development; we could probably sign on another 2,000 hotels this year. Our difficulty is to distribute them; not just to integrate them, we have to be able to distribute them as well, and we may develop that in the Q&A session as well.

The third business is John Paul, which I have already alluded to, everything to do with customer care is extremely important and is channeled through John Paul. John Paul is in there, not just travel but also in local communities. And we have plans for John Paul. We're going to make it bigger and stronger, as you will see.

This brings me to lifestyle hotels. We began with Mama Shelter. If you have plans to go to Rio De Janeiro, let's go. Mama Shelter opened up four months ago; believe me, it's magnificent. It's in Santa Teresa, it's a magnificent product.

So we help them, exactly like onefinestay. We have a 30% or 35% stake in Mama Shelter and they are completely independent. They have their own management and they are managed by the very competent Trigano family.

We have just given them a bit of clout, we've given them oxygen and we've given them growth opportunities. We're trying to move ahead as fast as possible but Mama has great strength insofar as Mama has a concept and a code that they wanted to preserve. That's what makes Mama Shelter unique.

Go to see them in Miami too, for those of you who haven't stayed at Mama Shelter yet. They're doing very, very well and here we're speeding up the pipeline with Mama Shelter. We're looking at 15 new units over the next 15 months or so.

JO&JOE, if you have time, maybe you haven't planned but when you leave the room here, go up to the sixth floor. On the sixth floor we have a JO&JOE. We also in the bar here have a JO&JOE to show you what we call the front of the house. This is working much better and much quicker than our greatest expectations.

If you've nothing to do in May, go to the World Paddle Championships in Hossegor near Biarritz. This will be the first JO&JOE that will be associated with Quicksilver. This will be a surf and paddle camp.

For those of you who want to stay a bit longer, we have the World Surf Championships or Surfing Championships in Biarritz just before that. That's underway elsewhere, in Bordeaux; we probably have about 20 JO&JOEs signed up just over the last four months.

JO&JOE is not a hotel, it's what we call an open house. This is a place where people, residents, guests meet. It's completely off the beaten track, it's a very, very interesting concept. We owe that to 80 people who spent three months working on the JO&JOE concept.

25hours is dovetailed nicely with Mama Shelter. Fewer norms; it's got the same intelligence about understanding clients, the same -- very well-established in large German cities.

In particular, Christoph, who is in charge of 25hours, was Hotelier of the Year in Germany. They're opening one up in Gare du Nord in Paris. This will move ahead very, very fast, just like Mama Shelter. They all know one another, meet one another. They all work together and we have I think a very, very good, strong backbone called the Accor Group.

Now, a number of people have asked me, ooh la la, do you think the Accor brands still have sex appeal? People love to knock a brand. Well, there's no better answer to that question than to say to people, do you people, you believe people would interest me with EUR150 million every 36 hours for a brand that has no sex appeal?

That's the number of hotels that we opened over the last 12 months; just look. 38,000 (sic - "230", see slide 10) on an organic basis, but the breakdown -- very much the breakdown we've had over the last 10 years, 15% to 18% in luxury and upscale, 35%/37% in the midscale -- that's Novotel, Mercure, Adagio -- and 45%, maybe 50% in the economy segment with Ibis.

Except in the meantime we bought Fairmont Raffles, which you see in orangey-yellow there. Fairmont Raffles is only luxury and upscale.

Over the year you see the shift in terms of the Group's positioning, which is actually going to accelerate its market share in the luxury and upscale. So yes, the Accor brands have sex appeal. Yes, we have the capacity and better than ever before to roll these out worldwide. And that is the world in which we operate.

Interesting, on this slide, you'll see that my goodness, France and Central Europe, 5,000 plus 17,000. This is where we're growing slowest. Except that 17,000 and 5,000 is 22,000 and if you look at the figures of our American counterparts, even with 22,000 hotels in France and Central Europe, that's more than they do any of them in Europe. So we are continuing to grow our market share in Europe.

Remember this, we've said it before. We have over 300,000 hotel rooms in Europe. Number 2, 3 and 4 between them combined haven't even got that number so we have more than the next three combined. Nobody will be taking over from Accor in terms of market share in Europe. And we are continuing to accelerate, maybe less rapidly than elsewhere on a selective basis but we're continuing to develop in France, Germany, Poland and the UK.

Where we have great roll out capacity is Asia-Pacific. It's almost 50% of the 900 hotels we'll be opening over the last three or four years. Asia-Pacific -- Malaysia, Indonesia, Myanmar, Korea, Australia, Japan, Vietnam, India. That's where we're going. And it's all happening very, very rapidly. It's another 76,000 hotel rooms in China through Huazhu.

We're not overlooking Latin America because we are also the strongest of all hotel groups in South America, another 26,000 rooms.

A lot in Brazil, because it's very often in difficult times that we should invest. It's a good time to invest in Brazil. Even though we don't know whether it will take a year, two years, three years to turn the situation around, it's important to know when to invest.

When you look back on all that's happened, should we have invested in the US four years ago, should we have invested in Spain three years ago? And I sometimes think yes, well, maybe we should have done that except that at that time, that particular point in time, people hadn't the courage to invest.

Except that we do and we are investing in Colombia, Chile, Uruguay, Argentina, Africa and Middle East, 48,000. That's almost 60% of the existing portfolio, in sub-Saharan Africa and the Middle East. Things are moving very, very rapidly in this part of the world.

This brings me to Le Club. Here too you remember that only three or four years ago we said that we weren't very good, our loyalty program wasn't as good as it might be, 14 million clients, 15% of our -- the equivalent of 15% of our revenue whereas most large hotel groups have between 40% and 60% of their revenue coming from loyalty cardholders.

So over the last three or four years we've said this is going to be a top priority. 7 million additional members are joining our loyalty group every year. We've increased from 18% to 25%, 25% to 32%, and from 32% we'll reach 36%, and of course 4 million from the Fairmont Raffles.

The President's Club is a marvelous loyalty program. For those of you who have the President's Club card, there's great finesse, great recognition, marvelous profiling of clients. They know what your expectations are, they know what your shoe size is.

And people who have this loyalty card know how important it is to have these little bits of attention, that if you need jogging shoes, in every Fairmont hotel they will have jogging shoes in your size and they'll have a tee-shirt and a pair of shorts. They know your size so they'll have them there for you, everywhere you go in the world.

We also signed agreements with Huazhu. We've merged our two programs, so we have in fact inherited 70 million loyalty cardholders in China. So all of a sudden the acceleration is exponential. 30% of the Group's revenue is now represented by cardholders; tomorrow it will be 35%, 40%, 45%.

Why is that so important? Well, it's important because for quite some time I've been telling you that one of the ways of controlling what we call customer acquisition, asserting links, establishing links without paying the online providers.

Cost of acquisition is -- 98% of cardholders do not transit via online travel agencies. If they did, or if they do, they will not get the loyalty points or the special benefits they get through the card. So the more you increase the proportion of cardholders, the more you reduce the share of OTAs in your revenue. It's as simple as that.

Before giving the floor to Jean-Jacques -- I think we show you this every year. There's an awful lot I could say about this.

The first thing that stands out is that this Group has never before reached EUR696 million in EBIT. Never before did the Group achieve an EBIT margin of 12.4% of revenue.

Now, this is a breakthrough here in 2013, which has nothing to do with my arrival, and this was all because of a decision taken by the Group, that was the decision that we in this Group actually have two businesses, one called HotelServices. As operators, franchises, developers, loyalty program, digital technology, customer relations, marketing, what have you, that is HotelServices.

The other business or business line is called HotelInvest, which is the vision business builder asset manager. When we separated these two businesses, when we separated the two business lines, the two sets of personnel, when we made people accountable for the risks they were taking on and managing, when they made them accountable for the performance, that's the leap forward.

The second thing that happened in 2011/2012, before I took up my position, the other thing that completely diversified the Group was when we moved onto the international market in Middle East, Latin America. Look at Europe, for instance. We're not very happy to see France at the level it's at.

Up until say 2012, France always accounted for between 35% and 60% of the Group's performance. Look at where France is now, and EBIT is probably 22%/23%. It's on the right hand side. So yes, a lot of this is because of the very complex environment we operated in in late 2015 and throughout 2016, but yes, the Group is intentionally accelerating its diversification into Europe, Central Europe, Asia-Pacific and the Middle East.

That's the lie of the land, that's where we are and you'll see that we will continue to accelerate this trend throughout 2017.

I'll come back to you in a few minutes' time, five minutes' time, three quarters of an hour -- how long do you want, Jean-Jacques?

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Jean-Jacques Morin, Accor SA - CFO [2]

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(Interpreted) We'll see.

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Sebastien Bazin, Accor SA - Chairman and CEO [3]

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(Interpreted) Jean-Jacques. Jean-Jacques Morin.

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Jean-Jacques Morin, Accor SA - CFO [4]

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(Interpreted) Good morning to you all, thanks Sebastien for giving me the floor. Delighted to be with you today to present the full-year financials for 2016. They're very good. Before going into the details, two key items that I'd like to stress that account for the financials, [last par].

Acquisition of Fairmont Raffles since July 2016, they're included in the Accor accounts and the Booster project for the end-of-year accounts lead us to use IFRS 5 concerning activities held for sale. So for the sake of comparison with previous years and also comparison versus guidance given for 2016, we begin by presenting our accounts under their usual form and then I'll return later on the implications of the presentation on IFRS 5.

All in all, Group's results reflecting good performance in a very contrasted environment, Group revenues up 2.2% on a like-for-like basis. Constant currency comes in at EUR5.6 billion; EBIT is up like-for-like 3.8% at a record level of EUR696 million and the EBIT margin is up 20 basis points on a like-for-like to come in at 12.4%. Really, these like-for-like results reflects good control over our operations.

Cash generation is in line with an FFO of 6.4% at a level never previously reached of EUR868 million, on the basis of the items presented to the Board, it was decided to propose to the shareholders the payment of a dividend of EUR1.05 for 2016. That's an increase of 5% over last year.

So just to return to what Sebastien began to introduce about FRHI. Here's a chart that summarizes the contribution of Fairmont Raffles to Accor's financials. Fairmont Raffles has benefited from a sustained increase, 3% of RevPAR on a like-for-like basis, buoyed by good performance in the Rockies and also the center of Canada with a windfall effect for the US customers given the difference between the US and Canadian dollars.

Revenue of FRHI is close to EUR2 billion in the second half. Contribution of Fairmont Raffles to EBIT stands at EUR48 million; that's about 7% of the total. You have the split on the chart, the difference between HotelServices and HotelInvest.

HotelServices margin at 25.1%, HotelInvest 6.1% (sic - "6.0%", see slide 16), pretty comparable with what we achieve.

In terms of net income, the contribution of Fairmont Raffles stands at EUR37 million. Deferred taxes in the US for EUR62 million offsetting the restructuring costs as part of the Fairmont integration.

Looking at the balance sheet, Group balance sheet strengthened by EUR2.5 billion in assets, including the brands Fairmont Raffles, Swissotel, but also EUR800 million goodwill. Cash generation is strong with recurring free cash flow of EUR53 million, which is cash conversion rate of 83%.

I mentioned the integration of Fairmont Raffles; you'll see on this chart that we've delivered EUR45 million in synergies in exit run-rate at the end of 2016 and that when we look at what's to be found in the accounts for the period concerned, that's EUR13 million in synergies at Group EBIT. So EUR65 million in synergies that we mentioned when we announced the deal secured to the tune of 70%; today we're delivering, as you can see, a plan for 2019, a year ahead of time.

On the cost front, costs linked to the Fairmont integration were in line with the total package of EUR120 million and this year we've spent EUR55 million. To that we can add commercial synergies thanks to the combination of the loyalty programs, also better use of our customer base using what Sebastien introduced about John Paul, the concierge services.

Another important point, the integration of Fairmont Raffles, is that the hotel owners will also benefit from synergies, notably through Group contracts that are more attractive such as contracts with OTAs.

Turning now to RevPAR, just turn to organic performance. RevPAR overall is up 1.1% in 2016. If we take the key regions, what we see in France is Q4 was the first quarter where we're back to breakeven zero in RevPAR whereas full year we'll have delivered minus 3%.

The situation is improving in Paris going from minus 18% in Q3 to 6% in Q4. [Province] continues to grow with a RevPAR of 5% in Q4. RevPAR in France in January is up 10%, buoyed by the Handball World Cup, trade fairs, good performance.

The UK now. Q4 was the strongest quarter of the year. The slide in sterling buoyed business with increased foreign visitors to the UK and we also saw staycation where they stayed for their vacation in the UK because of the slide in the pound, and this good trading is reflected in London, also in the provinces of the UK. January RevPAR is up 10% and with London 13%.

Germany now. It's a real engine for the Group, saw its RevPAR grow by 3%, buoyed by good economy and favorable calendar for 2016. We had Drupa Dusseldorf, Bauma Fair in Munich, and a little impact of the attacks in Munich and Berlin in the 2016 numbers. If we look to January what we're seeing is that in Germany RevPAR has grown by 7% for Accor. That's fine momentum achieved in the RevPARs for our key markets.

Moving on now to the split between the revenue growth, like-for-like 2.2% and reported growth at 0.9%. In this chart we have the explanation, the key effects of the Group's transformation launch, both expansion via Fairmont Raffles and also everything we achieved in terms of asset management and also what we did on Grape Hospitality.

To give you a bit more color, the growth of the hotels includes FRHI, consolidation, other acquisitions. That growth has a positive effect of 7.5% on revenue on a total of EUR4.18 million.

Disposals accounted for 6.4% and that includes the 85 hotels sold and franchised in June to Grape Hospitality for about EUR100 million and the impact of the franchise or management sales of last year's deals. Notably, part of the Moor Park portfolio, it includes also the sale of hotels to Huazhu in the first half.

Currency effects were on the whole negative for the year, accounting for 2.4% with the pound that remained weak versus the euro, devaluation of the Argentine peso in percentage terms and the Brazilian real had a negative impact of EUR12 million on the year in spite of a recovery versus the euro in the second half of the year. So all in all, revenue comes in up 0.9% on a reported basis.

Look at revenue now in greater detail by region, by segment. The two segments, HotelServices, HotelInvest. HotelServices put in a better performance than HotelInvest, as always, better geographic split, greater exposure to non-European markets but above all, because in like-for-like revenue we include expansion and management and franchise mode.

All regions are up save France with a notable drop at HotelInvest. HotelInvest in fact are more exposed in Paris than HotelServices. We have a lot of HotelInvest properties in Paris.

Other regions posting performance in line with what we saw for the first half. NCE region up 4.1%, driven by the two engines -- actually, three engines, UK, Germany and also our Polish unit, Orbis, covering all our activities in central eastern Europe.

And then we have MM, the Middle East and Africa where we have continued growth of Spain and Portugal this year with revenue that's up over 10% like-for-like as very significant.

Acceleration of ASPAC with the expansion you saw in the previous slides. Then the Americas revenue is up 4.7% like-for-like, in part driven by inflation in these Latin American countries.

Worldwide structures, that's where you find the revenue of Fastbooking and onefinestay and now for two months of John Paul, the new businesses that we integrated last year.

Moving on now to the contribution of both business lines to EBIT. HS and HotelInvest, we are above EUR1 billion, EUR1.57 billion and EBIT margin 70 bps above 2015. EBIT margin is a record level and for memory, corporate and intercos, the items of elimination of these between HotelInvest and HotelServices and also the corporate results.

If we now look at the bridge between 2015 EBIT margin, 2016 EBIT margin, what the bridge reflects is shown on the slide, sound operating resilience. Our EBIT grew EUR31 million this year and the EBIT margin is up 50 bps, that's 20 basis points like-for-like. And the prime effects are expansion to the tune of EUR38 million, with a contribution of Fairmont Raffles, EUR48 million Fairmont Raffles in second half.

Conversely, a negative contribution to the tune of EUR17 million for new business, EUR14 million for onefinestay and John Paul contributes positively for two months for EUR2 million. New hotels contributed EUR8 million to EBIT growth. Activity is up EUR25 million, reflecting sound operational management, we'll see that for France, in a universe that was very mixed, both economically, politically, as you all know.

Next we have disposals, all the disposals, Grape Hospitality which accounts for EUR15 million. And ForEx, the usual suspects, pound sterling, EUR14 million.

Giving a bit more detail across the chart between segments and regions, what we see is that operations are holding up well. Operational EBIT EUR754 million, up 5% on like-for-like.

So if we detail this performance by geography, France obviously hurt by activity, that's sharply down, notably in Q3. We were hurt by a very poor Q3 after the Nice attack. HotelInvest is hurt the most, because in Paris we have about 140 hotels in the HotelInvest scope.

Americas post a drop of 18% on like-for-like and that's primarily due to Brazil, which is struggling to emerge from its political economic crisis. Other countries in the area, that are faring as they did in H1 last year, Chile, Peru. All the other smaller countries, where performance is very robust.

Other regions of the Group are driving growth, where NCEE contributes 50% of EBIT of the regions for the year. We have the UK, Germany, Orbis in NCEE. Asia Pacific benefiting from its expansion in the region, with close on 30,000 rooms opened full year.

And growth in MMEA, which is driven by HotelInvest and benefits from the rebound of Spain and Portugal, as we saw last year. So after some difficult years, two fine years for Portugal and Spain. Worldwide structures are impacted, notably by the integration of onefinestay.

If we now focus on HotelServices. Revenue reaches over EUR15 billion, integration of Fairmont close on EUR2 billion, organic growth 38,000 rooms. Revenue close on EUR1.6 billion, half for fees, franchise and management fees and 36% from sales, marketing and distribution funds, reflect of the expansion of the Group on asset light.

Fairmont's integration fees paid by HotelInvest to HotelServices went from 55% 2013 to 38%, that you can see in the chart here in 2016.

EBITDA comes in at EUR450 million, that's a margin of 28.7%, slightly down but that's due to the lesser performance of France and Brazil. And CapEx in fact reflects the digital investment -- return to that in a moment. What it shows all in all is that HotelServices demonstrating its resilience in terms of cash conversion and profit generation.

Well let's say a word about the digital plan. The digital plan is rolling out as planned, we're at about 70% of the amount of EUR250 million, that was the plan set out just over two years ago. For 2016, the spend total is EUR90 million cash, that's in line with the plan.

Stage 2, there was rebalancing between CapEx and OpEx that we discussed at the first half results presentation. That was one of your questions. The P&L impact for 2016 is EUR54 million, EUR34 million OpEx as well as the depreciation of the run of the application.

2017 cash out would total EUR59 million, which is also in line with what we said previously. So for the P&L, what we say is the OpEx reduction will be offset by an increase in amortization and the run costs. The P&L cost is EUR50 million, whereas it was EUR54 million for 2016.

If we now take a closer look at EBITDA and EBITDA generation for HotelServices. EBITDA of management and franchises is up 54.6% versus 54.1%, illustrates the resilience of the HS model and scale effects, because we're in fact developing the network increasingly.

Sales, marketing and digital is breakeven before the impact of digital plan and negative after. Other activities, the EBIT margin is due to the integration of new business. Same thing; onefinestay, John Paul and Fastbooking to a lesser extent.

Moving on now to a focus on HotelInvest. HotelInvest transformations continuing. Transformation that was initiated early 2014 is continuing. Activity levels in Germany and Spain offset the difficulties experienced in France and in Brazil in HotelInvest.

EBIT goes from EUR378 million to EUR385 million. That's an increase of 50 basis points and reaches a record level of 8.3%. If we look back, we were at 4.1% 2013, we more or less doubled the EBIT margin since 2013.

Renovation CapEx have remained flat and development CapEx up 42% 2016, notably with the development programs for new hotels launched, the Canary Wharf Novotel opening this month and the Arnulfstrasse Novotel in Munich.

When we now look at how GAV, gross asset value of HotelInvest has trended, we see that it's continued to grow to reach EUR7.6 billion at the end of 2016. If we look at this historically, we look at GAV between 2013 and 2016, we have a gap of EUR3.1 billion. EUR1.7 billion asset management, EUR1.4 billion value creation, numbers that are significant, really illustrating the continuous effort that was put in by the HotelInvest team in order to generate value for the Group.

2016, in fact, the main changes are as follows. Acquisitions EUR400 million, notably integration of the seven hotels owned and leased with Fairmont. Disposals, the same, Grape Hospitality, Huazhu. We invested, as we've just seen, renovation and maintenance and that's the bridge between the EUR6.9 billion and EUR7.6 billion of GAV December 2015 through December 2016.

So just as a reminder, Booster, which is a subset of HotelInvest that we published in January 2016 is EUR6.6 billion at December 31. Part of the EUR7.6 billion, EUR6.6 billion that have Booster, the gap between the two, primarily Orbis.

If we now come to everything that is below EBIT, from EBIT to net profit, financial income's down EUR54 million. You'll probably recall our financial expense, we had an opportunity for deferred purchase for the headquarters. Interest rates led us to secure financial terms in exercising this put option we covered against the -- hedged against the rate rise until expiry. Change in value of the hedging instruments impacts the P&L without any cash impacts.

At the end of H1 we had a number of EUR41 million, at the end of December 2016 we have EUR24 million. That in fact reflects what happened in H2, that is a sharp hike in interest rates. Added to that, the EUR12 million that concerned the hedge that we've put in place for the acquisition in dollars of Fairmont Raffles.

One-off costs are stable over 2015. Restructuring costs that are significant for Fairmont, also a little for France. Impairment costs that are stable year-on-year for about EUR60 million. Costs linked to Booster and Fairmont integration, deal fees, et cetera and some capital gains on asset sales, notably the two sales, Grape Hospitality and Huazhu, where we generated book profits when we sold the assets.

Taxes down 60%, that's quite a remarkable number. What's happening here is that in fact we had deferred deficits following the Motel 6 deal in the US. Now that we have Fairmont Raffles in the US, we can activate those deficits in the balance sheet by activating them as balance sheet, that's generating a tax profit of EUR62 million, so that's a knock-on effect from Fairmont Raffles, that's very useful.

Turning now to cash going from EBITDA to recurring free cash flow, there it's in line with 2015 because we don't have the non-cash portion of the (inaudible) hedge. And then we have FFO trending in line with EBITDA.

Funds from operation increase of EUR52 million to come in at EUR868 million and as detailed in the review of the segments, HS, HI, CapEx are up 14% linked notably to all the expansion initiatives in the HI segment that we want to push. The EBITDA to cash conversion comes in at 31% owing to that investment.

Moving on now to the balance sheet at work, the debt situation, net debt comes in at EUR1.2 billion at the end of 2016, whereas we were net cash to the tune of EUR200 million end of 2015.

And the key items of this transition are, of course, Fairmont Raffles that we acquired for EUR2.5 billion, financed in part through a capital increase for EUR1.7 billion and partly in cash. We have HotelInvest for EUR300 million. Acquisition new business, John Paul, onefinestay for a total of close of EUR300 million and also investment in Huazhu EUR152 million.

Change in working capital is negative this year, it was positive last year and that's due to a lag in tax payments. We had receivables, very significant receivables collected last year, here it's the opposite, payables, so there's quite a significant one-off effect there on our tax payment.

We also sold 85 hotels to Grape Hospitality which are WCR positive, contributing positively to the Group. We don't have those any longer because we've sold them.

Other items impacting net debt are non-recurring, linked notably to restructuring, restructuring costs that I referred to earlier and the acquisitions in 2016.

Looking at our debt profile now, in 2016 we continued to optimize our debt profile at the end of December. Our average maturity was 3.6 years, at a cost of 2.85%. In January of this year we made a EUR600 million bond issue at a record coupon of 1.25% dual impact. We have extended the scheduling to 4.2 years, after 3.6 years at the end of last year. We've also reduced the cost of debt, which is down from 2.85% to 2.57%.

The other thing I wanted to draw your attention to is that I can confirm that we have committed to remain investment grade, as we say every year and S&P and Fitch recently confirmed these ratings, that was in December in fact.

This now brings me to the proposed dividends based on the aforesaid, we will be submitting to the AGM convened for May 5 next, we will be proposing the payment of a dividend of EUR1.05 per share. The pared ratio will be 64%, that's on recurring profits.

Remember that we invested EUR46 million in shares, 20% of the total share capital in July. That's from the Fairmont Raffles acquisition, which has increased the number of shares in circulation now. This can be paid as a dividend, be paid fully in cash or fully in shares at a discount of 5% to recent trading.

This brings me to the second financial presentation. It would be a shame if we only had one, this is our second financial presentation. So this is AccorHotels' financials from present to IFRS 5 and to future financials.

Now as I mentioned at the start of my presentation, in the course of the presentation we explained what we're doing and how we compare with the former guidance. Now obviously with Booster, Booster is classified as assets held for sale. So what we're doing here is simply applying the rules of the famous IFRS 5.

Why? Because the sale process is underway, it's been approved by management and we expect the sale to take place over the next 12 months.

The amounts are under discussion, but the Group intends to relinquish the majority of the capital and under contractual terms, we will be relinquishing -- or AccorHotels will be relinquishing its control over the Booster perimeter. So 430 reporting entities, 40% of the Group and part of the holding costs that need to be reclassified as assets held for sale.

In the financial statements after application of IFRS 5, intercompany costs between Booster and the rest of the group will be eliminated. We're mainly talking about management fees, which is nothing more than what we do as things stand.

But to give you some order of magnitude about what we're talking about with Booster, well we're talking about a total of some EUR4 billion in revenue, EBIT of EUR300 million, net assets of EUR3.3 billion and a recurring cash flow of EUR130 million.

Now let me give you some details. On the left-hand side of this chart, you'll see the present financials under what we call the historical methods. This is what we call present financials, where you will find HotelServices, HotelInvest, corporates and intercos and AccorHotels pre-Booster.

Second from right, you have the IFRS adjustment and on the right-hand side in red, you have the financial statements as they will figure, as we will report them.

Now what we've taken out of this Booster scope, Booster is a subsection of HotelInvest. So what happens when we transfer or we take Booster out of the accounts of AccorHotels, we do not transfer Orbis, which is our listed entity in Poland, with revenue of approximately slightly over EUR300 million.

We do not transfer the management lease on EBITDA, which is mainly with regard to Brazil and we do not transfer the amounts of small subsidiary hotels that will have been disposed of before Booster is closed down. That's a total of EUR300 million.

Now looking at corporate costs, what we do transfer is a net amount of small -- it's EUR1 million, which corresponds to the personnel costs at head office, that's approximately 20% of the staff. Offset partly by the discontinuation of fees to head office currently paid by Booster entities to Accor SA and commission on rent guarantees given to the subsidiaries by Accor SA.

Now this is a synopsis here. I think it's important at this point in time to explain what will happen once the Booster deal goes through and once the Booster and AccorHotels become two separate groups. Transactions between the two groups, which are what we now call intercompany deals, will no longer be eliminated. This will be in the case of fees that Booster pays to AccorHotels and to a much lesser extent, discounts on purchasing commission on loyalty programs.

These will be restated and will increase revenue by approximately EUR550 million, that's why we have the column in red on the right-hand side, which will show you what AccorHotels will be in the future, once Booster has been carved out of the AccorHotels financial statements. That's important because you see that revenue increases, you also see that EBIT remains pretty much at the same level, so the margin will be reduced from 24% to 18% approximately.

Now from present to published financial cash flow, this is the same process, the same thought process, the impact of Booster on recurring cash flow you have. The tax and financials are mainly taxes paid by the Booster subsidiaries, whereas the burden of debt remains with AccorHotels.

IFRS adjustments do not include the future cost of funding Booster, because Booster is going to incur debt, approximately EUR2 billion, as we told you before. This will not be included under IFRS 5 and the funds from operations at AccorHotels will be approximately EUR400 million. This will be offset by a decrease in CapEx, which mainly concerns HotelInvest.

Ultimately, this will give us a recurring free cash flow of close to EUR200 million, which is an EBITDA conversion rate of approximately 40% for the new entity.

I'm now going to give the floor back to Sebastien Bazin, to conclude our presentation.

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Sebastien Bazin, Accor SA - Chairman and CEO [5]

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(Interpreted) My job is easier than yours.

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Jean-Jacques Morin, Accor SA - CFO [6]

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(Interpreted) I had to make two presentations, you see.

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Sebastien Bazin, Accor SA - Chairman and CEO [7]

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(Interpreted) I was just watching you from back up behind the room, it was very interesting. Now he's actually much funnier than you might think. I can assure you, you can spend a whole hour with him, he's great fun. So let it rip, Jean-Jacques, let it rip. No, well done, thank you.

For those of you who haven't been to Singapore, this is the Singapore Raffles. It's actually closing down in three weeks' time, so you'd better hurry up if you want to see it. We're closing it down for a year's renovation work, SGD250 million being invested by the Qatar Investment Authority, that's QIA, who own Raffles Singapore.

It's a magnificent hotel as it is, but it's going to be absolutely stunning when the renovation work is completed in (inaudible) 12 months and 15 months. Now the doorman actually at this hotel has been there for 42 years, so if you want to meet him, hurry up, he's the same guy with his turban, the same guy for the last 42 years.

Okay, let's talk to you about Booster, I know that's why you came, or largely the reason that you came today. Booster, if needs be, is a codename, it's one you will have forgotten, that I'll have forgotten as soon as this deal goes through.

We are in the process of subsidiarizing in the Luxembourg based holding company, through a certain number of legal entities. We are subsidiarizing the whole hotel portfolio, with the exception of assets that are owned through our listed entity called Orbis.

The EUR6.6 billion in value will be held by this Luxembourg based holding company. It's going to have a name, it's not going to be called Booster, nor will it be called HotelInvest; it will be called Accor Invest and that's not haphazard, believe me. There are very good reasons for having Accor alongside invest, because we are probably going to remain by far the main shareholder.

Just because we will have Accor Invest tomorrow doesn't mean that it won't be part of Accor; it will. It will be a vehicle that we are very close to in terms of personnel, in terms of local partners, in terms of the various people we work with in a different line of business, except in this instance we will be running [quality] control. We will not have a controlling stake, but we'll be the biggest shareholder for a very long time, I expect.

A number of facets to this type of deal. The first thing I want to talk to you about is that it's in our interest to ensure that from the social, fiscal, legal point of view, that it's all watertight. This is a very, very big deal.

So we've been working over the last 15 months on counting legal, fiscal aspects. We've been working at length with our social partners, as we call them, to ensure there is great transparency and I hope great mutual receptiveness about how we proceed. Because this is a transaction that has done wonders for Accor Invest, but also for AccorHotels, so nothing is to the detriment of anybody else.

This is a growth rationale for Accor Invest, as you'll see in a few seconds, but indeed for Accor Hotels. So the legal, fiscal, social roadmap is underway. There'll be no bad news. It takes time and it's perfectly natural, but we're not behind schedule; we're on track.

The second important facet is that in this exercise we said we would take on EUR2 billion in new debt in the new entity, which we call pushdown debt. This EUR2 billion, as the debt does not exist, or the proceeds will actually benefit AccorHotels, except that you don't just find EUR2 billion by lifting up a stone.

In fact there's not just EUR2 billion of new debt, but there's EUR1.5 billion that we want to secure in the form of a facility. Probably EUR1.5 billion plus EUR300 million in a revolving credit facility. So we are talking about EUR3.8 billion of debt to be agreed between now and the summer.

Here again we are on track. We have advanced discussions with 15 tier 1, tier 2 and tier 3 banks, depending on their appetite, managed by Pierre Boisselier, who knows his job particularly well.

So we know where we're going and we will be setting up this debt in good time, not just for the closing but also in the way that we use -- let me talk about the EUR1.5 billion straightaway then.

That EUR1.5 billion comprises three components; EUR500 million to be used to accelerate CapEx in renovation of part of these 1,200 hotels, another EUR500 million that will be earmarked for the acquisition of further leased assets, something we've been doing for the last three years. And the third EUR500 million that will be used to start developing and building greenfield projects, new buildings that we have authorized John Ozinga here present to do, something he has done very brilliantly in (inaudible) Canary Wharf.

The new hotel in Canary Wharf opened up on February 10, it is a marvelous example of our new generation of hotels. So if we want a broad rationale, we also need to invest in new developments. So that's the approximate breakdown of those EUR1.5 billion. That's why we need that additional funding.

We have discussions ongoing with a certain number of institutional investors, three types; insurance companies on the one hand, sovereign funds throughout the world and long-term institutional investors. They're the three categories, they're sufficiently numerous for us to make this a successful transaction. In other words, we can afford to lose one or two along the way.

They are sufficiently battle hardened for nobody to challenge their ability, if they are sufficiently wealthy to be capable of taking part with important entry tickets. As I said in October, the rationale hasn't changed, the minimum entry ticket for investing in Accor Invest will be over EUR200 million per investor, that's the entry ticket.

So the difficulty over and beyond the actual size of the deal, over and beyond the schedule, is that we are now heading for the final furlong, the home straight, where everything has been announced, everything has been analyzed and now, as a listed company, we are now facing you here and facing you here in the room and those of you following us on the web or elsewhere. We are now in a situation where in the next few weeks the situation will become a little more tense and negotiations will be materializing. We'll see who's going to yield this, who's going to invest, who's going to yield in terms of governance, who's going to yield in terms of valuation.

So I will say as little as possible today to avoid weakening the Group's hand. There's no question of disclosing here before you today what our expectations are. I know you're going to be disappointed because you're going to ask me how much will the shareholders get, will you buy Hilton, Marriott, whatever. I know you've all sorts of questions, but the last thing I intend to do here today is to make a commitment here about anything until I have the money in hand. The more I say, the stronger their hand will be. That's not the way I do things.

The news is that we will very probably have the money as expected and that everything should take shape between now and mid-July of this year, 2017. A slip of the tongue, I know I said 2016, 2017 of course I meant.

Now look at this slide here, two important slides in this presentation. One was my last slide on 2004 to 2016, on the EBITDA margin 12.4% and how the Group had evolved in terms of the breakdown by segment, in terms of breakdown by region.

But this is the other important one, because this is the one that gives Jean-Jacques, Pierre Boisselier, John Ozinga and all our people the confidence that they have. This is the slide that makes us all confident. Why? Because between 2017 and 2021 we will simply be replicating what we have succeeded in doing wonderfully between 2013 and 2016. So we're not inventing something new, on the contrary, we are replicating what we succeeded in doing.

This is a slide we give to the investors, because it's probably 80% of the whole story. In 2013, again with HotelInvest, with 1,250 hotels either rented or owned. At the time, that was revenue of EUR4.1 billion, EUR425 million in operating EBITDA, EBITDA margin of 10%. Remember the operating margin was -- or the EBIT margin was 4%. The gross asset value was EUR4 billion.

Within barely three years we've accepted to reduce the number of hotels owned or rented by almost 20% from 1,250 to 1,000 hotels. By relinquishing a certain number of hotels, by definition we lose revenue; it will be down from EUR4.1 billion to EUR3.9 billion. Except that insofar as we've worked well and that we have released the poorer performers and insofar as we have purchased rented hotels that were actually costing money because the rent was higher than the operating income, necessarily, or by definition, we have improved our operating margin and our operating EBITDA.

So the EBITDA margin has been -- operating EBITDA has been increased from EUR425 million to EUR600 million. So the gross asset value, even though we have fewer hotels, we have increased the value of the remaining assets from EUR4 billion to EUR6.6 billion.

Now look at what will happen between now and 2021. It's the same rationale for almost exactly the same amounts. We'll be reducing the number of hotels even more, probably have about 100,000 rooms. So we expect to lose a certain amount of revenue, not significantly different to what happened between 2013 and 2016.

We will also improve EBITDA by a further 50% from EUR600 million to EUR900 million and we will improve the gross asset value of the portfolio, which I hope will border on the EUR10 billion mark. That's what we call a growth story, but to do that we need that additional EUR1.5 billion in debt that will enable us to do the three things I said we'd do; to invest in the existing fleet of hotels, to build new hotels and to renovate.

So the same methods, same story, same people, except that we have two years more this time. What we were to do in the five years we did in three. There are no lies here, there is no risk taking that we do not control. That is the rationale behind HotelInvest and that is because -- that is why I believe in this and this is why I want Accor to remain a major shareholder in Accor Invest.

There is a certain logic in financial investment here for people investing EUR4.5 billion gross asset value from EUR6.6 billion, takeaway EUR2 billion in new debt and various new debt, it gives us net equity value of EUR4.5 billion. This net equity will probably grow by an annual 10%. This is annual internal rate of return, 10% per annum.

Now, of this 10% we will pay out 4% to 4.5%. That's an annual coupon, that's a yield of 4% to 4.5%. So these sovereign funds, institutional investors, insurance companies and Accor, which is probably 25%, 30%, 35%, we will all benefit from this accretion of 10% per annum between 2017 and 2021. This is a very good story, one that we have good control over and this is why Booster is going to happen.

So there's necessarily a before and an after, since we will no longer have 100% of Accor Invest. It means that very soon priorities must not be repositioned, but they must be rethought, consolidated, improved. And the AccorHotels Group, that will become what the Americans call an asset light company, management contract or franchise contract. Except that none of our assets, at least these four disappearing, is the same that have existed for 50 years in the Group.

Far and away the prime amongst these assets are the 240,000 employees and I'm not saying that because it's good to talk about the people. For three and a half years I'm amazingly struck, I'm admirative of the quality of the people in this Group I started. I said the 2016 environment, where we really -- everything happened, adverse headwinds, we didn't know what was happening in Brazil, US market was working better. We didn't know the impact of Brexit, if the results as there are people in the Company who are incredibly responsible for their destiny and for their business.

And we have 240,000 employees in the Group and we're hiring 15,000 employees a year net. In fact we're hiring 70,000 people a year, except there are 55,000 who leave us. 90% in Asia Pacific, primarily in China, Malaysia, Indonesia, because these people are trained by international companies. As soon as they're trained, local companies poach them for $100 more. That's the price to pay for all the global industries in Asia Pacific today.

But nevertheless, 15,000, they're the people we hire at these famous 240 hotels that we open every year. But we also have 4,100 addresses in 95 countries where we're probably leader, 50 out of 95 countries ahead of the competition, Latin America, Europe.

We have an IT system that allows us to generate EUR16 billion revenue. We invest EUR100 million out of the EUR220 million of the digital plan to triple its size of the business volume that wasn't possible three years ago. So we have all the means to consolidate our technology and our distribution network.

We're far and away perceived as the leading hotel operator for operations. 75% of our hotels we manage, we're hotel operators. It's our people were there to provide a result to the hotel owner.

The other groups, foreign groups, are most cases between 60% -- 85% franchises. When you're a franchiser, you're not an operator. You're a brand distributor. You give a brand concept, a promise and traffic, but you don't manage the hotel when you're a franchiser.

We're exactly in the opposite situation. Ask all the hotel owners in the world, they say that the finest hotel operator, who can transform revenue into income is the Accor Group. That's why I started out by saying that the operational lever of the Group, we have 0.6% increase in revenue and 8% net income. We can turn lead to gold. It's not easy to do in a number of countries.

So, of course, we're spreading our wings here after three and a half years consolidating the Groups. We're really giving it a strength of bedrock, so we have a core business which is the [dark-blue bull's eye], hotel distributor, customer relations, brand and guest services. Since we feel a little cramped in our core business, there are many other businesses muscling into the act that have multiplied the touch points. I haven't mentioned the touch points for a while.

Why do we want to go to the gray, to the red? Because we have one floor that we've offset with Vivek with the customer journey, the before, during and after, the Dream, the Select and all those steps. We have a customer relationship that's perhaps three, four, five times a year when we see you in our hotels.

Facebook has a relationship with its customers seven times a day. Amazon, eBay, two, three times a week, and I'm at three to five times a year, so I have absolutely to ensure that this Group leverages interaction with its customer more than three, five times. I'm not going to ask you to travel once a month, so I have to enter your daily life. What can I do for you when you're not traveling? What can I do for you when you're not traveling with me, even if you're going to Marriott or Airbnb, even if you're visiting your granny.

You want a number of services when you travel. Why can't I give you these services, even though you're not in a Novotel, Pullman, Raffles hotel? What does it matter? Since I have 240,000 people, I can meet your needs. I have John Paul with a digital conciergery. I can interact with you, not necessarily physically.

So these three circles, we're going to be a bit more granular in five seconds. This is what we're entering into. It didn't exist in 2015. Everything I showed you in 2016 is the beginning of this story and the three verticals.

Because we have a strength and a weakness. In this digital world we're beginning to know not inside out, but we're beginning to read it better, there's one thing for sure, which is that all these big market caps, Snapchat, Facebook, Airbnb, Uber, there are two things they've avoided doing in this 15 years. They don't want to have capital tied up in physical property, bricks and mortar, cars. They don't want too many people.

They're capital light, labor light. What are we? We're capital intensive, labor intensive. So through Booster, we're freeing up some of this capital and giving it to people who want yield, hence the deal, except that we have the cost of the 4,100 addresses in the world. We also have major responsibilities to 240,000 people in the world. Why not transform that weakness into a strength, because we have it? That's exactly what Bompard is doing with Fnac and Darty. Where some were saying it's dead, it will go under, no, it's not dead. We're perfectly capable of melding the physical and the digital worlds.

So through these assets, these addresses that are open 24/7, opening a department store in Paris, you can't open. I'm already open, 24/7. And I have 240,000 people. What can I do to improve the life of citizens? Something that is striking.

We always talk about 1.3 billion travelers worldwide. That number is going to grow to 2 billion by 2035, 2040, and 40 million Chinese, that will grow to 200 million Chinese visitors without a doubt. So we're blessed by the gods, but it's even more blessed than that. We're 6.7 billion people living on planet Earth, except there's only 1.3 billion who travel. That means that I have 5.4 billion who don't travel.

Another 5.4 billion that don't, I have 1 billion living in cities. And according to the stats, that 1 billion in 2035 will be 2.5 billion, and that 1 billion people living in cities, I'm sure that 500,000 of them know my hotels, because they walk past them every day. They saw the sign. But 449 million have never entered one of my hotels, there's no need for them to do. They have a bedroom except for when they go to the restaurant.

Why don't I put my hotels and addresses available to that 1 billion people to improve their daily life? What can I offer them by way of service, be it F&B, be it dry cleaning, key service, leave their luggage, recover a rental car, drop it off? An incredible number of things. When you enter that universe, you say, my God, I have everything that the digital wants. I have the size. I have growth capacity. I have a digital world, John Paul. I can interact with them.

And so entering this vertical, you're changing radically your mindset and entering revenue that can grow 20%/30% a year, whereas in my core business, it's growing 3% to 5% a year. The EBIT transformation is way above 25%/30%, because I already have the assets and the people, so my margin is way above.

So we did a test, Accor Local, with 10 hotels in the Paris region, Paris north, south, east, west, different brands, Ibis, Novotel, Pullman, Sofitel. I saw the 10 hotel managers had three years' of experience in their hotels here a month ago.

And so we launched the pilot Accor Local. The 10 were here, men and women managers. They were keyed up as ever. John Paul, we gave two people from our shadow comex who went off with him to be more self-reliant and more agile.

I talked to the 10 who'd prepared their visit here, because for two months here, they were confidentially informed, and it wasn't premeditated, because I put the question to them like I'm talking to you now. We want to develop this in the local neighborhoods, communities.

Okay, well I'm interested. So you're all in a district. Give me a frank answer, how many of you out of the 10, how many of you can give me the name and first name of the pharmacist, of the dry cleaner, of the shoemaker next to the flower shop who lives next to you? Two out of 10 have done that, over the past three years had introduced themselves to the dry cleaner, to the florist. What we're talking about here is to contact the people in your district.

The first thing is to go and talk to the people, those of you who are already providing services that you're one of them. They've been looking at you for 50 years as somebody foreign who only talks to foreigners. Because the dry cleaner has a dress or a suit of a gentleman, and he has to close at 7:00 p.m. He's a good customer. He knows that that woman's going to need her dress that evening, but he knows he has to close at 7:00 p.m. and he can't keep the shop open until 8:00 p.m. Why doesn't he drop the dress off at the hotel next door and send a text message to the customer, don't worry. I dropped your dress off. It's waiting for you at the front desk of the Novotel. It's so easy.

So that's what Accor Local is all about, and believe me, it's going to grow and grow and achieve considerable size. That's why we have three verticals here. First vertical, you know it inside out. We've been doing it for 50 years. It's our core business, and it's going to continue grow, because we're opening 340 hotels and because we have very significant market shares in the world's largest countries.

We're entering the travel space that is disconnected from the hotel room. That's where you find private rental activity, Fastbooking, partnerships with hotels where the customer is not in my hotel. He's somewhere else, but I'm servicing him.

And then the third vertical has nothing to do with travel, but it's plugged into community services. But the three had something in common. It's very important. It's CRM, customer relationship. The database will be common to the three.

The loyalty program will be common. Technology will be common, because the three will mutually enrich each other. It's the first that will nurture the second and the third. Half of you probably have an Accor Le Club loyalty card that you're going to use 90% when you come to one of our hotels. None of you -- has it ever occurred to you to use the card when you go home.

You may need something, Novotel and Ibis, something -- you need something when you're traveling and you don't need it when you're at home. Why can't we use your card when you're at home with the local hotels?

And so if we do this right, vertical two and vertical three will represent 30% of midterm results in five years' time. It's huge.

Which means that by way of a conclusion, we have four things to remember, and I'll come back on our plan 2017/2021 more granular that we'll do quietly over the summer, but for the time being we're focused on what must be delivered short term.

First thing is of course we must defend our market share and our profitability. We did it very well in 2016. We have to continue to do it in 2017, 2018, 2019. That's why you're investing with us.

Second thing is digital doesn't scare us in any way. Vertical two, vertical three wouldn't exist without digital, so they're amazing growth drivers for the group, in no way obstacles. But yes, it leads to requirements and consequences on vertical one. We're going to face up to those and use them right to seek out new contacts and customers.

Three is what I mentioned earlier about the cultural transformation. It's far and away the most complicated. It is to turn the company AccorHotels from the culture of a very large matrix, pyramid structure to an entrepreneur might. That's why the [Wepolos], the Fastbookings, the Squarebreaks, the John Paul, the onefinestay, must remain self-standing, 30% or 100%. The more we have autonomous self-standing units, the more it will benefit us.

We must think differently and take risks individually, also reward risk, not sanction those who've made mistakes. There will be mistakes, but it doesn't matter one iota. And one thing I must embark you, I have to embark the investors, I have to onboard the financial analysts, my owners, my people, the group managers, media if need be, because we're entering a new adventure, where there's boldness, innovation, risk taking. I'm going to show you that we've charted a course that we can go into vertical two and three to address the digital world.

And so to embark you, since I've been a financier for 16 years, we need proof. If there's no proof like St. Thomas every year. It's funny, it doesn't work, so we're going to embark you on a horizon of 4, 5, 6, 10, 15 years. At the same time, each and every year, we'll give you proof that the growth will be delivered when we take the initiative. For AccorHotels post-Booster, EBITDA will double over five years, and that's been done over three and a half years.

There you have it. Q&A now, since we have 15 minutes for Q&A, it shouldn't take long. Thanks.

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Questions and Answers

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Editor [1]

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(Conference instructions)

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Andre Juillard, Kepler Cheuvreux - Analyst [2]

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(Interpreted) Andre Juillard from Kepler Cheuvreux. I have a couple of questions.

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Unidentified Company Representative [3]

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(Interpreted) Several questions?

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Andre Juillard, Kepler Cheuvreux - Analyst [4]

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(Interpreted) Yes, several questions. First question concerns catering, food and beverage, you mentioned -- could you tell us what you've done over the last year, and how about the recruitment of the person to be in charge of F&B?

My second question concerns the Booster project. How much of the capital do you want to dispose of? Have you fine-tuned how much you're prepared to cede to investors?

Totally concerning development, you said you want to double the HotelServices' CapEx over the next five years. Is that organic? Your development, rather, is that organic or external growth, or how does it break down?

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Sebastien Bazin, Accor SA - Chairman and CEO [5]

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(Interpreted) F&B, we didn't talk about it. Grant you that, apologies, but there's a lot of things we haven't talked about. Amir Nahai is still in charge. His plan is a four year plan. This year's EBIT, we took in between EUR13 million to EUR15 million additional over last year.

I think the plan is EUR30 million to EUR35 million in three years from F&B. That's the improvement, so we've already achieved one-third of the progress we would plan. These are the kind of quick-win projects we've implemented.

So yes. We haven't changed the person in charge. We haven't changed the course we're on. Some countries have performed better than others, but that's because of maybe the independence, the eagerness of certain employees. I'll say it very frankly. I think where the greatest efforts were made and the greatest results were achieved in terms of guests and in terms of margin, that's Central Europe and Germany. Central Europe and Germany did a great job in F&B.

It's slower in Asia-Pacific and probably has been slower in Eastern Europe. Now, as I've seen that it works well elsewhere, I think eagerness is contagious. It's expanding.

Your second question concerns the proportion of capital. I said 25% -- 20%, 25%, that we would retain. My good feeling is that Accor will retain 30% of the share capital. It could be 25%, it could be 35%, but my guess is around 30% to 33%, not because there isn't any appetite, because that's what I'd like us to have. Also, because we don't need to have a EUR6 billion stake, and because a 10% yield is a very good yield for the years to come. Also because my investors want Accor to have skin in the game, as Warren Buffett says.

They want us to be a major player, to have skin in the game. Ultimately, it may even be 40%. It may be as little as 25%, but it's there or thereabouts. As for our ability to double the Group's EBITDA, when we give you that information, this does not include external growth, so it's on a like-for-like basis or same scope of consolidation anyway, but the 40,000, 45,000 rooms that we will be opening, the record of 38,000 a year this year, that's a record that we intend to break in years to come.

We expect to be on a year basis of 35,000 to 45,000, whereas we were well below that in the past. So that's the type of growth we're talking about. In doubling EBITDA, you will have the benefits of onefinestay, John Paul, TravelKeys and so on. These transactions aren't going to generate EBITDA, but they will in the future, but that does not include any major acquisitions.

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Unidentified Company Representative [6]

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(Interpreted) If I could just add to that, it's typically the type of area where the acquisition of FRHI is contributing a lot, because they're really good in food and beverage. A lot of their revenue in the F&B is 20% to 40% in fact, so we expect synergies to boost our performance in this area.

Maybe to qualify the figures Sebastien gave you a little bit better, in F&B revenue, we outperformed by 2%. In other words, our revenue is 2% better because of our food and beverage -- 2% better than room service, sorry.

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Unidentified Company Representative [7]

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(Interpreted) Well, if you're a photographer, can someone get the photographer a microphone?

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Unidentified Audience Member [8]

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Can you give us any more color on leverage for the remaining AccorHotels Group going forward post the Hotel Booster project?

Second, can you perhaps give us some figures for what the pro forma performance of the FRHI business was in the year just finished and how it moved year-on-year?

And thirdly, just with respect to the performance of the digital plan, can you tell us what the current system delivery is now if you include the loyalty schemes, the digital platforms, what percentage of revenues is that generating?

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Unidentified Company Representative [9]

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On leverage, that's an easy one, because as Sebastien has said, you will get a lot of cash coming from the transaction. Probably if you were to use the 70% that we just quoted, it means somewhere between EUR4 billion to EUR5 billion of cash on the balance sheet. So then you have a leverage which is just incredible, non-leverage which is just incredible.

The question, the real question, is what do you do with the cash? And so I think the true answer to your question is going to be what we will comment during the next update on Booster. But all in all, if you want to retain something, we'll have a rating which is very much comparable to what the comparable competitors in the US are having today, so BB kind of thing.

On FRHI, FRHI, you have the number for H2. The only thing you need to know is that H1, as it is in our business, is a little bit weaker than H2. Typically, the same kind of pattern on performance of H1 versus H2, so if you use that, then you are in the ballpark of what FRHI will generate in terms of a 60-40 kind of.

Then there was a question on digital.

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Unidentified Company Representative [10]

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I knew you would give to me the third question.

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Unidentified Company Representative [11]

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Digital is more intelligent, so I give it to you.

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Unidentified Company Representative [12]

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Sir, I have no idea what you've been asking. System delivery means what for you?

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Unidentified Audience Member [13]

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(Inaudible - microphone inaccessible).

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Unidentified Company Representative [14]

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Okay. What's coming through TARS, which is the customer reservation system, is today 65% to 67% of total revenue of the Group, okay? What's coming through the loyalty card is today 30%. It varies quite a bit in between regions. For example, in Brazil, it's over 50%. In England, it's less than 30%, so depending on region, the percentage is actually very different. Overall for the Group, between 30% and 31% coming from the 32 million loyalty card members. It's probably -- for FRHI, I don't know what it is. Is it better for FRHI than 30%? I don't know.

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Unidentified Company Representative [15]

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This compares to a number in 2013 and 2014 which was in the ballpark of 20%, so we move from 20% to 30%, so we are progressing year after year on that KPI.

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Unidentified Company Representative [16]

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And the online is still actually stabilizing -- not stabilizing. It's like 36% to 37%. It was 33%. It's not going as fast as we expected, so we probably expected online to go quicker to 50%. It's far from being at 50%. What's been changing quite a bit is the mobile online is taking a greater proportion today on the online business, booking through mobile as opposed to booking through tablets.

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Unidentified Audience Member [17]

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And what's the OTA percentage currently?

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Unidentified Company Representative [18]

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That we don't give. We never did and never will.

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Jamie Rollo, Morgan Stanley - Analyst [19]

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Good morning. It's Jamie Rollo from Morgan Stanley. Three questions as well, please. First, you've given us the pro formas down to the EBIT level, but could you give us a feeling so we can calculate your future associate income from Booster, what the cost of the EUR3.5 billion debt facility is and also the tax rate on that business, so we can get a net income, if you like, for 2016?

Secondly, if I calculate correctly, the number of rooms removed in the year was about 14,000, so just under 3%. Is that the sort of future run rate for hotel exits going forward?

And then finally, in terms of worldwide structures, I think we touched on some numbers, but could you please break those losses down in HotelServices between onefinestay and John Paul and give us a feeling for this year? There's quite a lot going on there on a year-on-year basis. Thank you.

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Jean-Jacques Morin, Accor SA - CFO [20]

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So I take the two accounting questions?

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Sebastien Bazin, Accor SA - Chairman and CEO [21]

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Yes, go for it.

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Jean-Jacques Morin, Accor SA - CFO [22]

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So you had a question on the kind of the rates that we're going to get on the structure of Booster going forward for your modelling. It's -- we are just in the midst of negotiating this with 14 banks, so it's not exactly the kind of information that I would like to provide publicly, but if you look at what you would expect this kind of transaction to yield, taking into account what the debt structure of that entity is, you will easily find what the rate is, and it is less than 400 basis points all in. So that's somewhat.

On the tax rate, again, it's a little bit preliminary, but I would say that if you want to use a proxy, use something around 28% as an effective tax rate. And in the case of the worldwide structure, you know that flows into that line is a minus EUR40 million for OFS, minus EUR30 million for Fastbooking, and then you've got a plus EUR2 million for John Paul. The big amounts are those.

John Paul is only two months of activity, so one thing that I would like to highlight is that it did generate a very nice margin over the last two months of the period, so just to highlight that.

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Sebastien Bazin, Accor SA - Chairman and CEO [23]

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On a net closure, it is -- it's roughly 12,000 to 14,000. It is between 2.5% and 3.5% of total network which basically closes every year. So the more net we're going to have, so 14,000 may end up being 20,000. At the time, we're going to be having 700,000 rooms, so very similar to other people. And some of it is willing exits, some basically franchise we have that we decided not to pursue anymore. Like the Booster project, a third of the network that we let go, we decided not to continue managing those assets.

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Nicolas Brice, Equigest - Analyst [24]

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(Interpreted) Nicolas Brice from Equigest. Two questions. You gave us the contribution of FRHI to your revenue and EBIT. What about its contribution to the valuation of Booster? What FRHI assets are being sold in Booster, if you'll provide it?

Second question concerning France. Your RevPAR is flat year-on-year, certainly in Q4, except that in Q4 2015, it was a very peculiar quarter, because the first half was good and the second half was disastrous. Could you give us some idea of the -- how Q4 2016 breaks down? Q3 was down 6%, I understand, and the first half of Q4, you're down 6%, but in the second half, were you up 6%?

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Unidentified Company Representative [25]

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(Interpreted) I think you need to take some private tuition with Sebastien Valentin over the next 10 minutes. Jean-Jacques, will you answer that?

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Jean-Jacques Morin, Accor SA - CFO [26]

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(Interpreted) Concerning FRHI, we're talking about less than EUR150 million out of the EUR6.6 billion, so the FRHI assets have a total value of less than EUR150 million.

A lot happened in the last quarter, as you know, the COP 21, the trade fairs. I think a lot of these events had an impact. I think offline Sebastien will tell you some very interesting stuff. I know he does that with each and every one of you, and say well, here is actually almost beside you. Do you all know Sebastien Valentin? It's hard not to know who he is.

Yes? A question here.

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Tim Ramskill, Credit Suisse - Analyst [27]

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Tim Ramskill from Credit Suisse. Three questions as well, please. Just on the rent renegotiation process, which is still ongoing and seems to have had some good success in the year, obviously, with the smaller landlords, where there's not big announcements that you've made, could you just give us an update as to how that process is going and what you expect in the next 12 months?

Overall, obviously, you've talked about the doubling of profitability, and within HotelServices, your margins have diverged very considerably from your peers' in the last few years. So your margins have dropped quite meaningfully, and IHG yesterday obviously talked about their margins expanding over the last few years. That gap's now roughly 24 points. How do you see that closing and what are the key drivers of that? And maybe rolled into that, what are your thoughts on more digital investment, or are you convinced that enough is enough (inaudible) solution?

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Sebastien Bazin, Accor SA - Chairman and CEO [28]

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You haven't found anything good in what we've been announcing? I know you haven't. You've been gloomy on Accor for quite a while. Is there anything that I guess you've been positive about, or you just want to focus on things you don't like?

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Tim Ramskill, Credit Suisse - Analyst [29]

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I just -- I'd noted the fact that the lease progress looked good, so keen to hear more about that, and if there's an opportunity to double margins, I'd be delighted to hear about it.

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Sebastien Bazin, Accor SA - Chairman and CEO [30]

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That's good. I'm going to try to prove you wrong for the next 12 months anyhow. (Inaudible).

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Unidentified Company Representative [31]

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Well, I can talk a bit on the competition margin. It is a dicey exercise to compare the margin to the margin of the competition, so I don't have at all the same number as what you have on the 24% gap, probably because we don't compare apple to apple, because as you know, what you need to do is you need to rework the facial number for the billables so that you come back to something which is much more comparable. On the contrary, you would find that the margin of my hotels is just ridiculous.

So without going into the detailing of this in front of everybody, if you look at the core business, which is the franchiser and manager business and compare that to the manager and franchiser business of our US peers, you will find that it is not that different, if you account for things that we are much more manager than they are franchise, if you account for all of the differences.

So that's I think a gap which is much, much smaller than the one that you have, and I would be happy to go into the detail of the analysis if you want to.

Then you had a question on doubling?

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Sebastien Bazin, Accor SA - Chairman and CEO [32]

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Mr. John Ozinga, you want to go live on this one, since it is your turf?

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John Ozinga, Accor SA - CEO, HotelInvest [33]

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I think if I get the sense of your question, what we do, we renegotiate about 5% of our lease portfolio every year, and we either convert them from fixed to variable leases, or we renegotiate the terms. So we've done about 120 over the last three years, and we'll continue doing probably 40, 50 renegotiations every year. Then we have of course the major landlords.

We did one with [Francois Lemieur] in 2016, and we'll probably do one with another one this year.

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Richard Clarke, AB Bernstein - Analyst [34]

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Good morning. Richard Clarke from Bernstein. Three questions. I'll try and start off with a positive one. Your EBIT number came in above your latest guidance, so I was just wondering where that extra money -- where you see that extra money which counts -- you found the extra money down for the beat there.

The second question on -- you've talked in the past about how you need to build the Accor brand, the name Accor, to develop the digital platform. You didn't mention that again today. You also talked about how you're letting a lot of your brands manage themselves, so I was just wondering how those two strategies fit together, how onefinestay et cetera, can help develop Accor?

And then the third one on France, I think one year ago you had about 13,000 rooms in the pipeline. You've opened about 3,000, but your pipeline's gone down to 5,000, so it looks like you've taken a lot of hotels out of the pipeline in France. I'm just wondering whether you could talk about the strategy there, why you're seeing less opportunities and any costs incurred in taking hotels out of the pipeline.

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Unidentified Company Representative [35]

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I can take the one on why the results are better, if you want.

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Sebastien Bazin, Accor SA - Chairman and CEO [36]

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Sure.

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Unidentified Company Representative [37]

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So you saw the chart that we just went through on the RevPAR for the four key -- or the three key countries and the total of the book. In fact, when you take those three key countries, which are France, the UK and Germany, that accounts for more than 50% of the EBIT of the Group. So these are quite significant drivers of what's happening in the Group.

And to be very candid, the results of November and December were extremely good, extremely good in the UK. UK, everybody was telling us that it's going to be a disaster and that Brexit is going to basically stall the corporate business and that you're going to have negative numbers. And what we saw is we saw the strongest RevPAR in that quarter for the year, so that helped a lot, because the UK is a very profitable region for us.

Then in France, you saw also that we came back to zero. To be candid also, we were not anticipating such a nice return that fast. And then Germany, despite of what happened in the months of August and despite what may happen following Berlin, they performed also very well. So all of that has in fact been driving the business, plus the fact also that we put everybody on cost control, and so this is also paying off more at year end, but it is paying at the beginning of the year.

The one thing that I would also warn is that you need to be careful in using that trend, which is only two months -- plus very strong month of January, by the way. The month of January has been extremely strong -- as the basis for projecting the future. I think the future is a little bit more complex than using the last three months to go and figure out what it's really going to be, to start with the Brexit. Don't know where it's going to go, but I would say that we've been surfing year-end numbers which were much stronger than anticipated.

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Sebastien Bazin, Accor SA - Chairman and CEO [38]

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On the -- it's true I guess we haven't talked about the AccorHotels portal, with the AccorHotels name for the last 90 minutes. The one thing which is -- and I did not because there's nothing really new here, except we keep investing on the AccorHotels as a brand is a digital brand for the Group. We're slowly every month passing investing less and less on Novotel.com, Ibis.com, Pullman.com, because you cannot have 20 entry points.

So we're basically getting and fueling everyone through AccorHotels.com. It still exists. If you go on Novotel.com, it's still open, but we're not investing on it, and then you're going to be automatically -- you're going to be pushed to AccorHotels.com website.

The one thing which is to be noticed, and it's not there again, by accident, La Bernache, the bird. Three times you see the bird here on this podium, one, two, three. This is not by accident. Four now. So Bernache is the emblematic signage you will see in all the different verticals, one, two, three and some way, shape or form on all the different brands. People will go into an AccorHotels universe and will know you're part of it because the towel, the paper, whatever, you will see La Bernache. Okay, that's where we're investing quite a bit.

And on the -- I need to actually check the account, because it's true I guess, if it was 14,000 and we've done 3,000 opening and 5,000 pipeline, we're missing 5,000 or 6,000 or 7,000, I need to check in, because there is no intention whatsoever to slow down the development in France. So I think we -- sorry, we need to get back to you. It's maybe a mistake, but we need to check it out.

(Conference instructions)

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Unidentified Audience Member [39]

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(Interpreted) Hi. [Bryan Garnier]. Quick one on new business, and this target to double EBITDA in the next five years, nothing in terms of contribution today on the new business, 30% planned five years hence. Competition is quite significant. What's your degree of confidence that you'll reach such a contribution on the part of these new businesses? And how do you see a trend short term? We saw the difficulties with onefinestay. So how's all that fit together? What's the likelihood of reaching those targets?

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Unidentified Company Representative [40]

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(Interpreted) Okay, I'll give you the most honest answer in the world. When we did the digital plan -- sorry, when we did the HotelInvest plan, that plan, I did it between August 2013 and November 2013. Initially, I did it as a Board member, knowing nothing about Accor, and then after three months in the Company, we refined the plan with the numbers that I had available on hotel activities and its business. In the plan I said probably have to improve EBITDA by 50%, improve the value of the portfolio, double the EBITDA margin, probably go to 65%, 70% of the NOI contribution in owned hotels.

That was three and a half months. Three years, 80%/90% of all these markers have been delivered, of those metrics, exactly the same degree of trust that I have, and 30% on vertical, two or three happens to be down here. And if you can't project to the outside world that you can get that 30%, if you say it's only 30%, the higher you put the bar, the more likely you are to reach it.

Thanks very much. Safe trip back.

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Editor [41]

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Portions of this transcript that are marked (Interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the Company sponsoring this Event.