Accor may split hotel, services units

       Europe's largest hotel group,Accor, said yesterday it might split its prepaid services division from its main hotel operations, pushing its shares up even though its first-half profits were lower.
       The company forecast operating profit before tax and non-recurring items would fall by around half this year as the economic crisis hurts demand for its top-end and mid-range hotels, and it raised its cost-savings target for the year.
       "Taking account of the depth and speed of the changes to come, the trans-formation of the two businesses will be accelerated," Accor said, adding that it would study "the merits of a separation of the business in two autonomous units with their own strategy and means of development."
       Shares in Accor rose as much as 10.7%to38.73 in early trading yesterday, as analysts welcomed the chance for prepaid services to realise a valuation premium to hotels.
       "The possibility of listing the entities autonomously allows a fair value to be given to the services shares without affecting their capacity to grow and the acceleration of the restructuring of the hotel unit, whose valuation will definitely benefit with time," Natixis analysts said.
       Accor had earlier this year dismissed splitting hotels from prepaid services,which include luncheon vouchers and prepaid bank cards, saying such services were key to supporting earnings as it countered the cyclicality of its hotel business.
       Chairman and chief executive Gilles Pelisson told analysts yesterday that it had become clear there were very limited synergies between the two businesses and that opportunities to grow services had increased.
       He cited a joint venture agreed with MasterCard in February to provide flexible payment services, called PrePay Solutions, adding that autonomy would allow both businesses to access the financing they need to grow independently.
       Accor's hotel business, ranging from the budget Ibis brand to top-of-therange Sofitel, has suffered from a drop in demand for its upscale and midscale hotels, as well as its economy hotels in the US, during the economic crisis.
       Budget hotels outside the US, especially in France, have remained resilient.
       British rival InterContinental Hotels,the world's biggest hotelier, said on Aug 11 a recovery for the industry might be two years away. Marriott International last month reported a 76% drop in second-quarter profit and cut its 2009 forecast.
       Accor's pretax profit before nonrecurring items fell 54% in the first six months of the year to 182 million ($261 million). The group forecast full-year profit of 400-450 million, down from 875 million last year.
       The group swung to a net loss of 150 million, compared with a yearearlier profit of 310 million, weighed down by 53 million of restructuring costs and 194 million of impairment losses, including for Motel 6 in the US.
       Accor raised its target to reduce operating costs this year to 150 million from 120 million.The company added that it expected no major improvement in its hotel business in the second half of the year.
       Prepaid services were expected to see a decline of over 25% in secondhalf interest income, causing like-forlike revenue to show a slight gain for the year, it said.
       Pelisson was made chairman as well as chief executive in February, leading to the departure of previous chairman Serge Weinberg and five other members of the board of directors, under pressure from top shareholders Eurazeo and Colony, which own a combined 30% of Accor.
       Accor in June sold its 4% stake in Club Mediterannee to Credit Agricole.