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Accor Hotels

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2012 was an intense, eventful year in which we defined the major milestones that will enable us to reach our ambitious objective of becoming the global benchmark in hospitality. With the Executive Committee, I am pleased to present our results, review our accomplishments and share our road map for the four years to come. In many ways, 2012 will remain a watershed year for our Company, which stepped up its transformation into a more asset-light model, while delivering robust financial results in line with our objec- tives. 2012 was also a year that set a new record for development, with 38,000 new rooms opened, mostly under management or franchise contracts and mainly in emerging markets. At the same time, we pursued our active property asset management program, which is enabling us to focus on our core hotels business and improve our financial flexi- bility.

These are deep strategic trends, backed by the strength of our brands and our distribution capabilities. Our brands play an essential role in creating preference among our guests and our franchisee and investor partners. We are constantly enhancing them to make them stronger, more modern and ever more effectively positioned. Without a doubt, 2012 was the year of the fast, efficient deployment of the ibis family, which has revolutionized the economy hospitality market. In support and synergy with our brands, our booking and distribution system represents the pri- mary source of our attractiveness to partners. The digital revolution is underway and driving continuous improvement in the guest experience. These two strategic pillars will enable us to meet our ambi- tious goals. In 2012, we committed to shifting our hotel base’s operating structure mix by 2016 so that it is more profitable, less cyclical and less capital intensive.

As a result, 20% of the hotels will be owned or leased, to retain control over our brands, explore new marketing concepts, guarantee the training of our hotel managers, enter new markets and leverage the high margins in flagship hotels in key cities. 40% of the portfolio will be managed under con- tract, with in particular an ambitious expansion program in the upscale segment, which is very buoyant in the emerg- ing markets. And lastly, 40% of the rooms will be fran- chised, mainly in Europe in the economy and midscale segments. Sustained growth Accor reported robust earnings even though growth in Europe was slow at best and even negative in the Southern countries.

Consolidated revenue rose by 2.7% over the year to €5,649 million, not including the contribution of Motel 6, which was sold to Blackstone. Growth was led by gains in every market segment, as well as by the ramp-up in man- agement and franchise fees, reflecting our fast expansion and very good performance in emerging markets. Despite certain unfavorable factors, such as the structural increase in our operating costs in Europe and the recession that hurt our hotels in Southern Europe, we stabilized our EBITDAR mar- gin at 31.7% of consolidated revenue. I would also like to emphasize the record gross margin of 38.6% reported by the economy hotels business. EBIT improved by 3% to end the year at €526 million.

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