French hospitality group Accor has unveiled a €70 million (US$76 million) ALL Heartist Fund to assist its most vulnerable staff, partners and medical workers impacted by Covid-19.
This amount has been withdrawn from the Accor’s Board of Directors proposal for a 2019 dividend payment of €280 million, after consultation with the Group’s main shareholders JinJiang International, Qatar Investment Authority, Kingdom Holding Company and Harris Associates.
The fund will assist the Group’s 300,000 employees, and will be pledged towards their Covid-19-related hospital expenses, for those who do not have social security or medical insurance; furloughed employees suffering great financial distress; and individual partners facing financial difficulty. In addition, the Group will further deploy its solidarity initiatives to support frontline healthcare professionals and non-profit organisations.
Sébastien Bazin, chairman and CEO of Accor, commented: “Welcoming, protecting and taking care of others is at the very heart of what we do. In light of the urgency and the scale of the situation, we have decided to act in an immediate and meaningful way, in the spirit of our values and commitments. Through this impactful gesture, we wish to express our solidarity and gratitude to all those demonstrating courage and selflessness during this crisis. On behalf of the Board, I would like to thank the Group’s main shareholders. Without them, the ALL Heartist Fund would not have been possible.”
This decision has received unanimous support from the Board members, who collectively decided to reduce their attendance fees by 20 per cent to the benefit the Fund. Additionally, Bazin will forego 25 per cent of its compensation during the crisis. The cash equivalent will also be contributed to the Fund.
Across the Group, mitigation measures that have been implemented since February include travel bans, hiring freezes, reduced schedules and/or furloughing for 75 per cent of global head office teams for 2Q resulting in a minimum €60 million reduction in G&A expenses for 2020; as well as reviewed its recurring investment plan for 2020 resulting in a €60 million reduction in capital expenditures.
The Group is further streamlining all other costs (e.g. sales, marketing, IT), in line with lower systemwide revenues. Accor also shared that it has more than €2.5 billion in cash on hand and an undrawn revolving credit facility of €1.2 billion, thanks to its recent asset-light transformation and cash preservation strategy.
Today, more than half Accor branded hotels worldwide are closed, likely over two-thirds in the coming weeks. One piece of good news is the confirmation of initial recovery of the Chinese hotel market, with mild improvements in occupancy and F&B activity.
“I also want to pay a special tribute to the Accor teams around the world. They are facing the current crisis with admirable courage, dedication and professionalism. As our industry is going through tough times, we have to make tough decisions, but Accor has a strong balance sheet which will enable it to withstand this crisis and emerge with strength during the recovery period. I am confident that Accor will soon rediscover the road to growth,” Bazin added.