Earnings Transcript for AC.PA - Q4 Fiscal Year 2023

Sebastien Bazin: Hello. We're going to be opening the 2023 year-end number release to each of you. So sorry to be a couple of minutes late. So first, welcome everybody to this session. Welcome to those of you on the phone looking mostly at Martine, and myself. Happy to be back with you and happy to be sharing with you what we believe internally being very strong numbers and performances for the Group. So, let me start with something which is a bit of a 20,000-feet altitude, which you know I love doing. What you have here on the left side is the numbers all of us know well, which is the 1.459 billion pre-COVID numbers of international travelers. A lot of us being -- hoping for V-shape scenario, which is clearly confirmed not only in the slide, but I guess in actual numbers. You see that, I guess at the end of 2023, we were still down 12% versus the peak of 2019, so roughly 1.284 billion. Most of it is people not returning from China. And I'll go in more granularity probably during the session. However, United Nations WTO, which is World Tourism Organization and which comprise the airlines have been confirming that very likely at the end of this year, 2024, we'll be above the 2019 number with the 1.488 billion. That's assuming that probably 80% of the 150 million Chinese travelers, those going outside of China, will be back by the end of this year. What you have on the right side is kind of different in the reading, but probably more interesting because you can have greater takeaways from it is the -- very much discrepancy depending on the region in terms of the international travel recovery. Middle East was already in the last 12 months far better than pre-COVID with those of you who've been going to the Middle East the last 12 months. We've never seen so many tourists, so many people, so many new openings, both in terms of restaurants, entertainment and of course hotels. Africa, still 4% negative, but some of you have been seeing the numbers for the GDP growth in the Sub-Saharan African countries, it's very robust for the last 12 months and very robust for the next 12 months, certainly in Nigeria. Europe, still lagging minus 6% and of course Asia-Pacific, I talked to you about it, minus 35%. That will be probably the bar which should go back at par in the year ahead. There's six different boxes and they are very different in nature in terms of what are the fundamentals helping us to assess the RevPAR growth for the next 12 months to 18 months. The first, on the GDP growth, many of you have seen the numbers, it was 2.9% for the world in 2023, looking in between 2.9% and 3.1% for 2024 and kind of confirmation of likely to be a soft landing as opposed to harsh landing in America. But what's so important for me is not only the average number, I think it's one of those times for the last two years where we've never seen so much discrepancy, not only from one continent to the other continent but within the same continent enormous discrepancy in between countries. And many of you in a room, you understand that the pace of growth for the Northern Europe for the last 12 months and the next 12 months is very different from the pace of growth in Southern Europe in between 1% to 3%, and France just confirmed a 1% growth in 2024, revising downwards from 1.4% to 1%. But you still have Spain, Greece, Italy fetching probably well above 2%. So, it's watch out, because we're going to be navigating through a lot of different waters depending on where we sit. Demography is probably what drives us the most and certainly in terms of the last 50 years, which many of you probably don't remember, but 65 years ago the planet had less than 3 billion people and today we're close to 8 billion people. What's most important is not going from 3 billion to 8 billion, is what is for the last 10 years the increase of the emerging middle-class population, went up 1 billion the last 10 years, half of those from India. The next 10 years, the growth of middle class population is not going to be 1 billion, but it's going to be 1.3 billion. And those are the preferred targets for many of our EBs in a hotel, Mercure, and many of the hotels of Accor. We just are blessed by the increase of demography in the world and blessed by the increase of households who wants to travel. One single item, which is interesting, on the most emerged countries in the world, the percentage of spent from an average household in Europe, in America, 20% goes to travel and entertainment. If you go to the constrained supply versus demand, this is one also of the important KPI because that one is easy to read. For the last probably 20 years, this industry has been benefiting and you've heard me say that many times, 3% to 5% growth per annum, with the notable exception of COVID and 2008, 2009. Supply, average in the world, between 1.5% and 2%. So for the last 20 years, 30 years, you had a demand in excess of supply by 2x. We probably can wisely say that for the next 10 years, demand will no longer grow 3% to 5%, but probably 4% to 6%. Supply will remain 1.5% to 2%. So you very well could be looking at a 3x demand over supply. A lot of it again, has to do with India. India alone, which I told you is a 500 million additional emerging middle class, India had 35 million international travelers for the last two years to three years. There is no question in my mind that India will reach the 150 million mark that we're being enjoying with China and America. And believe me, when you're going to have an extra 10 million, 20 million, 30 million, 50 million people from India traveling either East or West through Indigo Airlines or Air India, most of them will go to Indonesia, Malaysia, Southeast Asia. If they were to go east or if they were to go west, most of them is going to go to the Middle East, to Egypt, to North Africa. This is where Accor has the greatest inventory, market share and leadership. So it's a very interesting way to look at our own core business and who are we targeting and catering for. Corporate travel strengthening, I was wrong. I was wrong three years ago when I said, we're probably going to stand to lose 25% of corporate travel forever because of this ability to work remotely. We are already at 90% of the level of 2019. So they're not only coming back, but they're coming back much quicker than I ever expected. And we're still looking for the next 12 months, probably an average of 8% additional spend from major corporate organization when it comes to business travel. So it's a different mix, it's a different business travel by the way, it's less people going alone from Seattle to Singapore, it's less people having 500 seminar organization group. It's spread over 10 cities of 50 people each and they go on Microsoft and all the system where they can regroup together even though they are in different locations. So smaller groups, greater numbers of small, medium-sized enterprises, but it is a very strong component of Accor and the rest of my peers. Change in consumption pattern, you know it, you're going more and more, each of you, in a room, we include it from owning a goods to experience and therefore, you spend more on travel, entertainment than you would do in buying an additional car. And when it comes to supportive international events in Europe, there again, we're blessed for the next 12 months. Certainly when it comes to Europe, we have the European Soccer Cup coming in Germany in May and June. We're going to be having the Olympics, we may talk about it, in the months, end of July and August. You're going to have the Americas cup in Barcelona end of August to mid-October. So, a lot of new big international events probably in where we needed them the most, which is what I told you, the Northern Europe part where the GDP growth won't be phenomenal for the next 12 months. So not bullish, but certainly a lot of growth and a lot of comfort that 2024 will be an even better year than 2023. So now I'll turn to Martine to talk to you about the last 12 months, and then we'll go back-forward. Thanks.

Martine Gerow: Thank you, Sebastien. That's perfect. So welcome everyone. So following several quarters actually of strong performance, I'm pleased to announce that we had also a very strong fourth quarter to close the year. So, I'll start with the highlights. And starting on the left with the operating drivers, so very robust RevPAR growth in the fourth quarter, 11% like-for-like. And that growth was actually steady across the quarter. We're closing the year with a 23% RevPAR growth like-for-like, which is in line with the guidance that we had communicated in October, which was in the low 20s. Our net unit growth was 2.4% for the year. That is also in line with the 2% to 3% guidance. Our pipeline grew at a faster rate of 4.2%. And I'm pleased to report that we actually had record signings in value in 2023. And I'm also pleased to report that pipeline growth actually accelerated in the fourth quarter. So if you look at the growth quarter-over-quarter, it's actually up significantly higher. Now, let me turn to the financials. We translated this very strong operating performance through strong operating leverage and tight discipline into what is really a record EBITDA and cash generation for Accor. Revenue topped €5 billion and it's up 18% like-for-like versus prior year. And within that, M&F, which is Management & Franchise revenue, which is the core of Accor's activity stood at €1.3 billion with a very impressive growth of 29% like-for-like, right. That is six points above the RevPAR growth. So really strong ability to convert the RevPAR growth into management and franchisees. Turning to EBITDA, I talked about the strong operating leverage that allowed us to deliver an EBITDA of €1,003 million, so just about €1 billion mark. It's a major milestone for Accor and it is above the high end of the guidance, the high end of the guidance being €985 million, which we had shared with you in October. We converted this very strong EBITDA into a very strong free cash flow as well. So recurring free cash flow for the year was €596 million. That is a 59% cash conversion, which is a very healthy conversion of EBITDA into cash. And our guidance was above 55%, so clearly well above the guidance there. And finally, those very strong results as well as the confidence that we have in 2024 has allowed us to return €676 million to shareholders in 2023, which is a clear acceleration of return to shareholder. And within that, we have a €400 million share buyback program. So first tranche of the share buyback program, which we completed in December of this year -- last year sorry. So turning to RevPAR by division, and now I give you a couple of highlights by country, so starting with the Premium, Midscale and Economy, which is on the left side of the chart, so 12% RevPAR growth in the quarter. And you can see here the performance by region. In Europe, North Africa, still good level of growth at 8%. And really, performance was pretty similar across the three largest countries, which is France, U.K. and Germany. In France, we had a bit softer Paris as opposed to the Provence. But that's really related to the fact that we had some really strong events in 2022 and those events take place every two years. Therefore, 2023 you had a baseline effect and particularly the motor show or that. In the U.K., London and Provence actually were resilient and reported comparable growth. And in Germany, we were actually -- even though Germany's economy is clearly hasn't been performing as well, we had a steady improvement in RevPAR quarter-over-quarter. And there's still further upside in the years ahead as occupancy rate in Germany is a bit behind where it is in other parts of Europe. In MEA APAC, you can see here a very, very strong growth of 19%. This region has been performing very strongly throughout 2023 and that continues to be the case. The 19% growth is actually driven, as you can see here, equally by rates and by occupancy. And within that region, still very good performance in Middle East, Africa and Turkey, which reported solid price increase supported by leisure. And this is despite the fact that, obviously, we have the conflict in Israel. We had adopted somewhat of a cautious approach in our third quarter call because this was the beginning of this event. But it turned out that actually this had very little impact on Accor in the fourth quarter, and in this region in particular. In Southeast Asia, the RevPAR was also very healthy, actually comparable to Middle East Asia, also driven by price increases supported by leisure as well as some events. The Pacific, which is mainly Australia for Accor has recovered earlier than the other regions, as you may recall, and therefore is more into a normalization phase with low single-digit RevPAR growth. And finally, China; China continues to recover. Actually, China is now slightly above 2019 in the fourth quarter and obviously achieved very strong RevPAR growth, given that it was very late in the recovery. And finally, Americas again very healthy growth, 15%, mostly driven by prices with strong Congress and shows activities. Turning to Luxury & Lifestyle, so Luxury & lifestyle reported a 8% RevPAR growth in the fourth quarter. As you can see here, that's mostly driving by occupancy rate with contrasted performance across Luxury & Lifestyle. In Luxury, 10% RevPAR growth, pretty consistent across the brands and the regions, primarily driven by occupancy rate. Lifestyle was actually flat in terms of RevPAR, and this is really a factor of the 2022 baseline, which had the FIFA World Cup in Qatar. If we exclude Qatar from Lifestyle, Lifestyle was actually up 6%, which is in line with our expectations. Turning to network and portfolio, so I'll start with Premium, Midscale & Eco on the left side of the chart, so net unit growth was 1.9% for the PME division. That is in line with our guidance, which was circa 2%. Churn has slightly accelerated in that portfolio. And this is really a reflection of the decision that we took and that we shared with you actually at the CMD, that we would prune the portfolio gradually, particularly in ENAS Europe, North Africa. And this is to ensure that we have a consistent brand standard. Now on the positive side, and to note, the churn properties actually have a lower fee per room than the existing portfolio, and therefore should contribute to the increase in average fee per room, which is a KPI that we follow very closely and on which we've made very good progress. So the pipeline for PME was 172,000 rooms at the end of 2023, and that is up almost 4%. So a two-point differential between the growth of the pipeline and the growth of the network, which therefore gives us confidence in our ability to accelerate going forward. And finally, on the M&F revenue, so Management & Franchise revenue, this is the fee per room, we closed the year at €1,200 per room, that is above actually the high end of the guidance that we communicated and it is well above prior. So, I will now turn to Luxury & Lifestyle. Q4 was actually a very active quarter for Luxury & Lifestyle. We opened 4,500 rooms. That's almost 50% of our full-year opening. In terms of the network growth, the network grew at 5.5% for this division. And that's really driven by Ennismore, which had an impressive 18% growth, which is actually in line with what we had communicated, again at the CMD. Now some notable openings during the year, obviously the Raffles London at the Old War Office, but also some very large Rixos properties in Egypt. In 2023, Luxury growth from a network perspective was more modest. We took some portfolio actions to strengthen the brand positioning and consistency. But importantly, the pipeline growth significantly accelerated for Luxury & Lifestyle in the fourth quarter. Pipeline growth on an annual basis was up 6%, so slightly higher than the 4% growth I just referred to for PME. But importantly, if you look at quarter-over-quarter, so fourth quarter over third quarter, the pipeline grew 13% for Luxury & Lifestyle. And that really gives us confidence in our ability to accelerate the growth of that division, which we expect to be one of the benefits of having reorganized across two divisions with dedicated focus and dedicated team. And so, at Group level again, net unit growth 2.4%, in line with the 2% to 3% guidance that we had shared with you. Group M&F revenue is €1,600, again above the high end of our guidance and significantly above last year. And just in terms of breakdown conversions versus new openings. We continued to have a very strong ratio of conversions with 50% of the openings in 2023 that were actually conversion. So I'll turn now to the Group revenue. So Group revenue, slightly over €5 billion for the year. That's an 18% growth on a like-for-like basis and a 20% growth on a reported basis. And the difference between reported and like-for-like is FX and scope, as we integrated Paris society into our number last year and actually the two compensate each other. So I'll start with PM&E where revenue was up 17% for the year on a like-for-like basis. You can see here the components of that growth, Management & Franchise revenue grew at 27%, that is three points above the RevPAR growth for PM&E, so again good conversion. Growth in STO was below RevPAR growth. But this is really a reflection of the fact that we had very strong revenues in 2022 coming from the accommodation service agreement we had for the FIFA World Cup. And this impact actually was particularly noticeable in Q4, and you can see that if you look at our Q4 number. And Hotel Assets & Other is primarily the Australian and also variable leases in Turkey and Brazil. Turning to Luxury & Lifestyle where the revenue was up 22% on a like-for-like basis. You see here the very strong growth in Management & Franchise, 32%. That is actually 12 points above RevPAR growth. And this is really a reflection of the incentives. The vast majority of our portfolio is under management contract in Luxury & Lifestyle and we had a very strong performance of our hotels, obviously related to the RevPAR, which really boosted their margin and therefore our incentives. Service To Owners, actually revenue growth was fairly in line with RevPAR. And then Hotel Assets & Other on a reported basis is the result of the integration of Paris Society. So, zooming in on Management & Franchise revenue growth, 29%, so six points above RevPAR growth. And this is really boosted by incentives. You see here the growth across the division, which I just commented, and then by region. If we start with PM&E, all regions actually had very robust growth and all regions had growth above RevPAR. And in Luxury & Lifestyle, you can see very consistent growth across Luxury & Lifestyle, again very strongly driven by the growth in incentives. We had taken a somewhat prudent approach in our third quarter, given the risks that we potentially saw in Israel, that risk actually has not materialized, which allowed us to top up incentives in the fourth quarter. Turning to EBITDA, which is a record high for Accor at a €1,003 million, that is a growth year-over-year of 55% on a like-for-like basis and 49% on a reported basis. You can see here the growth in Premium, Midscale & Eco, which was an impressive 35%. With STO, so Service To Owner EBITDA, which is a positive €24 million. STO overall is positive. This was a strong commitment that we made and we delivered on that commitment. And it is positive not only overall, but it is also positive in each division, as you can see here. And finally, the Hotel Assets & Other EBITDA decrease is related to our Australian business. We had taken very strong price increase in Australia in 2022, anticipating the inflation and also leveraging the recovery. The inflation actually materialized in 2023 and therefore, we have a bit of an EBITDA decline in that region in 2023. If I look at Luxury & Lifestyle, EBITDA is up a very, very healthy 82% with 43% in M&F. There was a strong margin improvement in Luxury & Lifestyle. And Hotel Assets & Other is reflecting the integration of Paris Society. Now, one thing to keep in mind is as we reorganized the Group, we transferred some of our personnel from our corporate teams to our division team. And this really primarily impacted the PM&E division, which is why when you look at the margin for that business, it's actually slightly down in 2023 over 2022. And that's really related to that fact. If you look at the M&F margin for the Group overall, including the corporate team, the M&F margin plus holding is actually 62% in 2023, which is up four points above 2022, so very strong operating leverage of a very strong RevPAR. Now let me move to net profit. We just talked about the 55% net growth like-for-like in EBITDA and 49% reported, very strong growth in net profit as well. We closed the year with €633 million of net profit, which is a 57% growth year-over-year, obviously driven by the increase in EBITDA but also by a very favorable tax rate. You can see here our income tax for the year is only €39 million. In this number, we have a benefit of deferred taxes of €100 million, which was actually a good news because that means we're starting to recognize our deferred tax assets in France, as France is turning positive from a net income perspective. If you were to exclude, sorry, the impact of deferred taxes in both '22 and '23, it is still a very impressive 48% growth in net income. Just a couple of call-outs on those various lines. D&A increased, that's related to the consolidation of Paris Society as well as the rent from Paris Society. The share of profit/losses & associates grew from €33 million to €44 million. And this is really a reflection of the growth in Accor, which is also benefiting from the strong recovery in Europe. And we also had the revaluation of our portfolio in Cassada, which is our investment vehicle in Africa. On the non-rec, really de minimal activity. We had some positive impact from reversal of impairments of our brands as well as the gain on the sale-leaseback of Sequana. And we were able to offset the cost related to the implementation of the new organization. Net financial expense, here you see that the net financial expense actually increased by about €816 million [ph] year-over-year. When you look at the recurring free cash flow, which I'll just comment in a second, our cash interest payment actually came down in 2023. This is a reflection of the fact that we had some non-cash FX charges, which impacted our financial expense in the P&L. And income tax, I just called out. So all in all, a diluted earnings per share of €2.22, which is obviously very, very strong growth compared to 2022. Let's now turn to cash. So, we had a record recurring free cash flow generation in 2023, €596 million, almost €600 million. That is a 59% cash conversion, as I was commenting earlier. You can see here the drivers of this free cash flow. Obviously, EBITDA was the major contributor. Cost of net debt on a cash basis actually came down and this is a combination of the fact that we have higher cash balances on which we earn good interest, given the interest rate environment. Income tax driven essentially by the increase in profit before tax. Lease liabilities, which is lease payments, reflect the integration of Paris Society. And working capital and assets, so working capital was a positive €71 million for the year, which includes both the improvement that we made on collecting on our receivables, but also importantly, the fact that we had agreed with AccorInvest deferred payment plan on fees and AccorInvest actually is now completely current, has paid off all their outstanding debt, and there's about €52 million in that €71 million, which is related to that. And net debt increased from €1.7 billion to €2.1 billion, so about €400 million in the year. Just a couple of words on balance sheet and shareholder return. We have continued to strengthen our balance sheet. We have restored investment grade rating by S&P and Fitch, and this comes with a stable outlook. And that gives us greater market access and greater flexibility. And as we announced, this triggered the successful refinancing of our January 2019 hybrid of €500 million. We also secured a new RCF, revolving credit facility for a €1 billion, and that allows us to maintain a very healthy and robust liquidity and maturity profile. We are committed to maintain our investment grade rating, and we've actually improved our net financial leverage to below 3x in 2023. So strong balance sheet, positive, confident outlook going forward, strong results, that allowed us to resume an attractive shareholder return policy. And you can see here that in 2023, as I shared with you, we distributed and returned €676 million to shareholders. Now, that represents an 11% return, which is an all-time high, based on the January 1, '23 share price. Given the recurring free cash flow, you may recall that our dividend policy for ordinary dividend is to distribute 50% of our recurring free cash flow. So that translates into a proposed dividend, which we propose at the General Assembly of $1.18. And that's a 12% increase versus the dividend that we paid in 2023. And so to conclude, before I turn it back over to Sebastien, so you can -- you see here the guidance that we had communicated in our October call, the actual results, and then we have reminded you of the guidance that we gave on the midterm during the CMD. So in 2023, we exceeded our guidance very clearly and we crossed two key milestones by delivering, one, an EBITDA of €1 billion in 2023 and initiating the first phase of our share buyback program with a €400 million share buyback tranche, which we executed in the fourth quarter of 2023. So regarding '24 onwards, and consistent with our standard practice, we do not disclose at this point in time specific annual guidance. That being said, we are confident in our ability to deliver on our midterm perspectives, which again, you see here disclosed and which are the ones that we shared with you in the CMD. So 3% to 4% RevPAR, now 3% to 5%; M&F revenue growth, 6% to 10%; STO marginally positive, again, very strong commitment and Group EBITDA, 9% to 12% and again, cash conversion ratio above 55%. Again this is the midterm perspective 2023 to 2027 and share buyback program again €1.5 billion to €2 billion over that period. And I will now turn it back to Sebastien.

Sebastien Bazin: [Indiscernible] Martine. So we're going to go to something which is a bit different or rather different, which are the extra financial performances that is being disclosed in the Annual Report last year and which is 15% of the compensation salary for most of the leadership of this Company, including myself. And those 15% has been broken down in four different KPIs. We've missed some of them, we have achieved some others, but in full clarity, that was discussed and approved and audited yesterday at a Board meeting. So on the first one, single-use plastic is all the different single-use disposable items that you can find in your room. We've missed. We actually missed by 0.6 of a percent. It was 79.4%. As of today, I can tell you, we're way ahead of 80% and we had benefited from an extra 20 days, we probably would have achieved it. But the cut-off date was the 31st of December. Be it 79% or 81%, I cannot tell you, it's a hell of an achievement. And many of you have been complaining on not having a plastic bottle of water on your table bed, but those have been eliminated just to be a true participant in respecting the planet. And it goes on many, many hundreds of different items that you no longer see in the room, so progressing. And that includes, by the way, all the managed property, owned property, leased properties and of course franchise properties. And that's all across the 120 countries of Accor. So we got there, but we had to finish a job because by definition, you need to go to 100% and 80% plus is simply not enough. Food waste, we started by a simple KPI, which we never had before is can we please measure what is the food waste of each single hotel in the network of Accor. In 2023 compensation, we started with the first 300 hotels. Why? Because those 8% of the Group, which is 300 hotels, represent 40% of the F&B revenues of Accor. So they are the most representative hotels. And we did get to 90% with measurements, with the different tools, technology, some of it are AI driven on ability to measure. And you're going to see for the next three years ahead, we've been doing an undertaking. You'll see it in the general assembly, no longer for 300 but for 800, and no longer on only ability to measure, but ability to go down. And so the next target on the LTIP, the long-term incentive plan, for the Group is to go down by more than 20% food waste on those selected 800 hotels for the next three years. That's going to be tough job to do, but we need to do it. Carbon emission, that is by far the most difficult to tackle. It's a question first of measurement. It's a question of understanding where is your energy coming from. Many of you know that I guess part of the carbon emission is due to, are you using fossil energy, hydro, renewable energy, nuclear energy? How do you measure it? And of course, between an Ibis hotel, it's probably one-fifth of the carbon emission of a Raffles hotel. And it depends where you sit with geography. So it's an enormous task. We signed a deal with Schroder [ph], which is the largest company putting around disposal tool, which is a very sophisticated tool that we included in something called GAIA 2.0, which I don't need to bother you with, but we felt we could do over 12 months 85% of the hotels having the tools. We only achieved 60%, only because the tools was not readily available in so many countries, and many of those tools needed to be explained and probably not as user friendly as we would have expected. So I'm not blaming anybody. I'm just saying we need to get there. We need to be at 80%, 85%, and you noticed it four years or five years ago, we'd made an undertaking to the outside world on reducing carbon emission by 46% by 2030 and Net Zero by 2050. Very, very difficult to do, but this is a task we have in front of us. But let's start with measurement with a tool in place, and then we'll basically deploy and execute upon it. Diversity, inclusion, very different KPI. It's a question of, could we please get to a much better gender parity in between male and female? I think when I started, there was below 33%. And every year passing, we've been going to end of the year 42% in management position in the Group being female as opposed to male, and we probably should continue the job to hopefully go to 50-50, if we could. On executing on different priorities for different units of Accor. I'm going to speak on behalf of Jean-Jacques, which is never that good, which is why many of you are probably missing Jean-Jacques. So don't you worry. He's here on the front row and in probably five minutes he's going to be here on the stage in between the two of us defending his turf, which is PM&E. And I really wish and I want him to be amongst the three of us responding to your Q&A. Don't ever forget that. I guess he's not only the CEO of Premium, Midscale & Economy, but he's also the Deputy CEO of the Group. So Jean-Jacques, you're going to be coming and joining me in both those hats with me. But in terms of work has been done on PM&E and I would say the same thing for Lux Lifestyle, I'm extremely proud of having accomplished the last 12 months. And certainly because it was a new organization on the 1st of January, they've done a lot in only 12 months and probably far greater than expected myself. So, when it comes to brands, the first thing Jean-Jacques really put together is, could we please have clarity on brand standard? There was 10s and dozens of different standards depending on Ibis versus Novotel versus Mercure, that was a mess. And it was a question of, if there is too many standards then you don't achieve any of them. And plus you're totally lost on how to prioritize, thank you -- how to get one versus the other. And that's being done with all the marketing department and the brand CEOs, and it's being marvelously done. On the market, we had a question, Jean-Jacques and I, on can we please get better, stronger when it comes to Premium. We've been focusing probably a bit too much on Ibis, Novotel, Mercure, and certainly not enough on Movenpick, on Swiss Hotel and on Pullman. And you'll see what has been signed the last 12 months is probably 4x what we signed the last five years. Only a question of focus in terms of priority and certainly in terms of value, you saw the numbers on the slide and we passed on it where the openings of 2023, the network is €1,200 fee per room. Remember, in the Capital Markets Day, we talked to you that PM&E should be between €1,000 to €1,100 fee per room. We already exceeded in 2023 and going even to exceed it in the next years ahead. That has a lot to do with the mix, having a greater proportion of premium vis-a-vis economy. And of course, part of it is how much franchise, how much manage, you'll have the benefit of asking Jean-Jacques in a minute. On the revenue management side, you remember, we went big the last two years with Salesforce, with Adobe, on trying to get the proper tools that many of our competitors are using. And we have today 50% of those tools being in cloud, basically in place on the cloud, on the network of Jean-Jacques. Luxury Lifestyle, it's very similar in terms of achievement, very different in terms of how to achieve it and what were the priorities. The first one was a question of, where do we have the right footprint, what are we missing in terms of geography and what do we need in terms of flagship in different capital cities of the world. And when you have better focus, greater accountability from the four CEOs, we've made a huge leeway on really knocking on the doors of all the unbranded hotels, hotels to be converted, where they could benefit from either Sofitel, Raffles, Orient Express and others. So you'll see that in the numbers ahead of you. Guest experience, F&B, you know that when it comes to Lifestyle, it's almost half of the revenues of a lifestyle hotel comes from bars and restaurant. For the Luxury side, it's probably at least 35% compared to 25%-ish for PM&E. So an enormous emphasis on concept, on menus, on the way you serve them and of course, the quality of what you're serving to people for them to come back and very much address the local community, by the way. 80% of that focus has been who are those people living around you, less so on the people staying in your room. When it comes to the brand promise, expertise focus, you'll see in the next six months a marketing campaign on Raffles, you'll see it on Fairmont and you're going to see a very significant one on Sofitel, which has been missing in terms of promise, content and profound DNA of those brands. And on development strategy, it's booming. It's certainly booming as expected for Lifestyle. You remember, he was very high single-digit, the 15% to 20% growth for Lifestyle. Slow year for 2023 for the Lux element of Lux lifestyle, which is Sofitel, Fairmont, Raffles, which we knew much better ahead because it was just time to focus, sign and then to open. So that's where we are on the two. Again, I'll go probably the next slide because that's going to give me a chance to talk about it. You heard from Martine and you probably read this morning on the 2023 results, I cannot tell you how happy I am personally. When you achieved a 20% growth in sales, we knew the RevPAR would probably be helping our way, whether we knew it'd be above 20%, we had a hint of it, but it was a much better fourth quarter than we expected to achieve the 23%. Did we ever know a year ago that we will do €1 billion EBITDA? The answer is no, and a very simple no. And being able to pass the €1 billion benchmark, which Accor has never done on a similar perimeter, it's an element of pride, not only for me, but for the entire organization of Accor being able to get to that number. And it tells you quite a bit on how we know how to transform revenues into profit, which people have been discounting maybe in the past. But the new organization is really focused simply on this. If you get revenues, you get profit and if you get profit, then you allocate the profit and a lot of it back to the shareholders, while you continue investing in the brand and different tools. So great results, probably better than expected. And confirming, as Martine just told you, that not only have they been great but they're going to be even greater in 2024. And you know what? They're going to be even greater in 2025. This is the good news about the Capital Markets Day. We told you in that [indiscernible] that I guess we're going to go on a 9% to 12% EBITDA growth onwards between '23, '24, '25, '26, '27. I'm only confirming to you that, that will be the case. When it comes to the new organization, it's fully implemented. I would have guessed that it would have taken us 18 months to get the organization in place. I think it took us nine months. By late summer last year, everybody was in charge, knew what they had to tackle and of course got the performances we wanted. So accountability, focus, agility, responsibility, that was a good decision to split the Group in two different organizations. We're never going to go back, and we're very happy in terms for Martine, for me, for Jean-Jacques, in terms of our own understanding on what we need to continue pursuing in the Group. In terms of record value of signings, are we a bit disappointed on the 2.4% net unit growth? Yes. Did we know it's going to be a tough environment because of interest rate, lack of availability of financing? Yes, of course we knew it. But what we wanted to give to you, and I know I've been insisting upon it like a broken record for the last four years is even though it is not probably as strong as one could have wished, it is far better in terms of absolute dollars that I thought because I just told you, the €1,200 fee per room for PM&E, the €3,800 fee per room for Lux Lifestyle makes the absolute dollars far more important than the percentage of net unit growth. That's my mantra, is we need to get even higher than €1,200 and we need to be even higher than €3,800 and we are, all the signing ahead of us are better than the €1,200 and €3,800, which means that the absolute dollars of new openings is getting better and better every year passing. On the solid start of the year, it's been only a month and a half, but it's a month and a half where we don't see major slowdown in the activity of Accor when you compare the fourth quarter to the first quarter of this year, which is remarkable. And of course, I just want to be precise with you, it does differ tremendously on which geography you're talking about. Some of the geography are clearly slowing down. Some others are very strong and probably even stronger than we expected. And then, on the growth and the confidence for the Capital Markets Day, you heard me just two seconds ago, we made the choice of announcing 12 months ago, even 10 months ago, of what is likely to be the case for '23, '27 onward. We knew by doing it that we cannot deceive anyone. The mere fact that 2023 is better than expected shows that we're going in the right direction. And just to stop on the €400 million share buyback, you remember us saying that we're going to do a €3 billion return to shareholders over that five-year spectrum. And one, the question when asked, I said, why don't you split it in half, €1.5 billion should be into share buyback and €1.5 billion should be in the form of dividend. And I can only reiterate to you that when you do it, €1.5 billion, which was meant to be done over five years, look at the last eight months, the Capital Markets Day, by the time we're probably going to be meeting the Capital Markets Day first year anniversary, we probably would have done half of the 1.5 billion share buyback which was meant to be done over five years, you add up the €400 million done in October, November, you end up the €400 million that we're launching today, half of it realized in less than 12 months from the time we talked to you about it. So this is the way we feel we master this Group very well, and we have the best ever people to run it. And I'm not talking about me, I'm talking to many people in this room and many leaders of this Company. They are the best of the best and certainly the nicest. Let's go to the Q&A. Monsieur Jean-Jacques Morin, can you come on stage, please? So now, it's your moment, it's the Q&A session. And question will be addressed to either the three of us, and then we'll see how do we tackle it. So, who wants to go -- we don't see anything, by the way? So if somebody raised their hands, I have no idea whether you do or whether you don't, because I don't see anything.

Q - Andre Juillard: Good morning. Andre Juillard from Deutsche Bank.

Sebastien Bazin: I can hear you. I don't see. But we can hear you.

Andre Juillard: Good. Two questions, if I may. You've been talking about India and development. This is probably a country which have not been very well developed by any of the leaders in the industry. So what is your plan for this country? Do you plan to do more or less the same thing that you've done in China or differently, directly? So happy to have your views on that. Second question about AccorInvest. You've not been talking about it, but where are you in the refinancing? And when could we expect a final disposal for that? Thank you.

Sebastien Bazin: So I'll do the first one, and if Martine allows me, we'll give the second one, AccorInvest, to Jean-Jacques since you are a Board member of AccorInvest and both Martine and I are not. You probably are the best informed. When it comes to India, there's two India. There is the tourism market within India, which is not as strong as the tourism market within China even though it has a greater population. It’s -- it is very difficult to display in India. We have less than 50 hotels in India and we have almost 700 hotels in China. And we started, by the way, at the same time, something like 40 years ago, and we never managed to deploy in India. A lot has to do with administration. It takes six years between the time you have figured out you have a site to open the hotel. It takes probably three years than any other countries but India. So, it's twice longer with the risk, which is higher on execution. So difficult, but it's a pity because somebody will crack it. And we have almost 800 hotels in France, which is a tiny, tiny country compared to India. So, one could say easily that Accor should have hundreds of hotels in India. So we're circling around it, because it's submerged. We want to be a participant. We know this country very well. We have the best partner ever in India called Rahul Bhatia, Indigo Airline, the largest airline operator in India, well above 50% market share. Rahul and Accor has been partner for 25 years. So, we never spent so much time -- the last 12 months on could we crack that model. So hopefully, we're going to be much better the next five years than we've been in the last 25 years. But there's a second India, which I've just talked to you about, which is really be a caterer and the recipient for the tens of millions of Indians traveling away from India, as I told you, going East and West. And on that one, we are super well prepared. And most of it because the largest airline I told you, is Indigo and which has been our partner for 25 years, so through Indigo Airlines, we have all the information data to irrigate the brands of Accor in the Middle East and in Asia. So, that's where we stand. I really hope in five years from today, I'll tell you that we can have well above couple of hundred or 300 hotels in India because it is possible, but difficult. On AccorInvest?

Jean-Jacques Morin: Hello, can you hear me?

Sebastien Bazin: Yes, go ahead.

Jean-Jacques Morin: First off, good morning to everybody, delighted to be back here. There are a few things in life that you can't really escape when you like them. But on AccorInvest, it's not much different than what we had been talking to you about before, Andre. The AccorInvest performance is extremely good. Just like our performance is good, the AccorInvest performance is extremely good. They are way better than what they used to be in term of profit generation versus 2019. I think that's one element. Now, what you refer to is they've got to deal with the refinancing of a significant amount of debt on their balance sheet, and this is in the press, and so they are working on it. This is going to be resolved in the coming months. This is progressing, not very worried about that because the underlying business is good and the shareholders of AccorInvest are all very strong institution, companies, person, so not much of a worry about that. But what it means to the second part of your question is that, as long as we've not resolved that, then we'll keep the stake, right, because we first need to deal with refinancing. And once the refinancing is dealt with us acting as a rational investor, then we can move to the second phase of the plan, which has always been and has never changed that in the long run, we will not own the AccorInvest stake, the minority stake that we've got on our balance sheet, which is to the tune of 30% for the last four years. That's the answer, my dear Andre.

Andre Juillard: Thank you very much and congratulations for these results. I should have started with that.

Jean-Jacques Morin: Historical results, as you said.

Sebastien Bazin: Merci, Andre. Marginally better. We have people again be on the phone, no?

Operator: Yes, we do have questions from our telephone. [Operator Instructions] We will take our first questions from Jamie Rollo from Morgan Stanley. Your line is open. Please go ahead.

Jamie Rollo: Thank you very much. Good morning. Three questions, if I may, please. First, I appreciate you're not giving formal guidance yet, but during the discussion of the medium-term target, Sebastian, I think you said you're confident of the 9% to 12% EBITDA growth this year. Could you just confirm that, please? Secondly, on the hotel assets performance in PM&E, quite a weak margin performance in the second half. You talk about cost inflation in Australia and some variable leases in Turkey and Brazil. Could you please just give us a little bit more detail as to what's going on and whether you think profits can move forwards in that division this year? And then finally, on net unit growth, you said you were a little bit disappointed. Clearly, churn was a bit higher than usual last year. But where do you think this year can come out within the 3% to 5% medium-term target, low end or high end of that? Thank you.

Sebastien Bazin: I guess I'll start and we'll have Martine actually playing with me on. Jamie, I did say purposely that I'm confirming every KPI, the Capital Markets Day I've been telling you we've been achieving them all in the first year, which was 2023. So, I do confirm that every year passing in '24 and in '25 and in '26, we should meet the 9% to 12% RevPAR, which mean we should meet the 6% to 10% fee growth per annum and transform it into this 9% to 12%. So, we're not shying away from it. It may happen that some year is going to be better than the 9% to 12% and some year could be a little bit lower than the 9% to 12%. But I'm confirming that for the next 12 months ahead, we are shooting for any of those items. And when it comes to the net unit growth on 3% to 5%, I leave it to you, Martine, on where we should be.

Martine Gerow: In the net unit growth?

Sebastien Bazin: Yes.

Martine Gerow: Yes. I think, Jamie, thanks for your question. What we commented was, those are obviously mid-term guidance. And our expectation was that on the RevPAR, we would probably be towards the high end of the guidance. And then now, we would probably be towards the lower end of the guidance, just because of the time it's going to take to convert the acceleration of the pipeline into actual openings. And maybe I can take the question on…

Sebastien Bazin: No, that's fine.

Martine Gerow: HA & Others, Hotel Assets & Others.

Sebastien Bazin: Sure. Just to confirm, Jamie, because I know I said it twice, the broken record, even if we were to be on the lower end on a 3.5%, we are in the upper end of the absolute dollars because of a higher fee per room that we expected. And that's what's more relevant for me and I cannot insist enough on this one. Go ahead. Sorry.

Jean-Jacques Morin: And Jimmy, there is also, as you know, a timing element into how the net unit growth will continue to grow, as was explained by Martine and Sebastien. We're still working on the brand standard, the brand equity, and ensuring that as part of the work that we do to ensure the quality of the brand promises, we also cleanse the portfolio, the pruning of the portfolio. And so, that element means that there will be more churn in 2024 than what you had historically. But this is no different than what we had said before, and this is within the guideline that was provided at the Capital Markets Day. So, we do what's right from the shoot in order to ensure that the brand promise is at the level it should be in the medium term.

Martine Gerow: And to your question on Hotel Assets & Others in PM&E, so this is related to the Australia business and in some sense the timing of the price increase versus when the actual inflation took place. Our expectation is that that business will not continue on that path but will stabilize.

Sebastien Bazin: You want to defend your turf on PM&E?

Jean-Jacques Morin: No, I like it when people say things because then it's not me who's responsible.

Sebastien Bazin: No, the answer of Martine is exactly right. The answer of Martine is exactly right. We are not fully back, Jimmy, to the level of profitability, notably on Mantra, because, as you know, that is mostly Mantra of 2019 in percentages, but who will be back, I guess this year.

Jamie Rollo: Thank you very much.

Sebastien Bazin: Thanks.

Operator: Thank you. We will take our next questions from Richard Clarke from Bernstein. Your line is open. Please go ahead.

Richard Clarke: Hi, good morning. Thanks for taking my questions. And three if I may. Just firstly, on the buyback program, I noticed the language is to be launched in 2024. Just wondering why that's not been launched already, what the exact timing on that is. And related to that, you have about €1.2 billion on your balance sheet now. I think the buyback and the dividend should easily be covered by free cash flow. So, is there some other use of cash? Do you need that amount of cash on your balance sheet? Or could there be more buybacks during the year? And then I guess question three, if you like, hit your guidance, got to a €1 billion of EBITDA. I guess the cynic would say you needed about a €49 million profit in Service To Owners, which looks like on Slide 16 was above where you expected it to be. Maybe just some extra color there, is that you clawing back COVID losses? Is that sales of additional services? And is that about the level you're expecting going forward, or was 2023 a kind of bumpy year for Service To Owners?

Sebastien Bazin: Richard, on the first question, the reason why it says to be launched is because we needed the blessing of Accor Board of Directors on being able to announce it. And probably he was written a day before yesterday morning. So, it is being launched probably as of today or tomorrow morning. So, we're not pushing it back in three weeks from now. So, it's just cementing between before and after the authorization of the Board and then, of course, the ability for us to communicate it firmly to you guys. Whether we can do more? It's -- cash-wise, yes; prudent wise, probably no. We've been saying with the rating agency and many of our consistencies, I guess, that €1.5 billion is roughly €300 million to €500 million a year. We are between the €300 million to €500 million a year. Could we revise it coming summer? Of course, we could. Do we envisage to do much more than €400 million as of these days? The answer is no for 2024. But again, it's going to depend if we have a much better year than we will expect it. But it's a question of rigor, prudence and being in conformity with what we said. The key word for me is stability. So the minute we deliver on each of the KPIs that we gave you on the Capital Market Day, quarter-after-quarter, year-after-year, I think that would be a home run. So it doesn't mean we cannot overachieve and do more, but let's first focus on delivering in stability. The EBITDA still…

Martine Gerow: I think the question on -- so on STO. So our commitment is to be marginally positive. So marginally -- €50 million is marginally positive. I mean this year, we -- because of the reorganization and the time it took to put in place, even though it was faster than we anticipated, therefore, we didn't step up our marketing spend as I'd say, as we expected from a timing perspective. I'm not going to give specific guidance on 2024, but again, marginally positive is a commitment we made, and we'll keep to that commitment. And I will leave it at that. Just on the share buyback program, we -- so we expect to launch it in the first quarter.

Jean-Jacques Morin: And maybe just as a complement -- more operational complement on STO, I think one of the thing that you may recall from the Capital Market Day is what Alix was presenting to you -- Alix Boulnois was presenting to you on other things that we are pushing through in order to further strengthen our direct business and the loyalty program. And in fact, if you look at the growth of the revenue, it's about 20% I'll tell you, make it simple. But then at the same time, the odd.com has grown 10 points more, so more like 30%. And if you look at the loyal customer enrollment, we are more to the 40% tune. And if you look at the business volume that goes through the application, we are more to the tune of 50%. And so what I'm trying also to say here is the numbers do reflect some operational focus that are delivering little by little into the P&L. And that's very good news.

Richard Clarke: Okay. Thank you very much.

Sebastien Bazin: Thanks Richard.

Operator: Thank you. We will take our next question from Vicki Stern from Barclays. Your line is open. Please go ahead.

Vicki Stern: Yes, good morning. Just coming back on the churn point with regards to the net unit growth. Are you able to quantify how material you'd expect that to be, the exits in 2024? And is that sort of the programs done in '23 and '24 that sort of elevated level of churn? Or is that something we should expect to continue? When would that come to an end? Second one, I'm fairly confident you won't answer, but I'll try, is on the operating flow-through from RevPAR. I think we will have in mind something like a €10 million or €11 million of incremental EBITDA from one point of RevPAR, but any kind of color you can put around that would be helpful? And then just finally, on the RevPAR outlook, obviously, Sebastien, you sound rather confident there as all your peers have done as well. Some of the data that's come through recently have been a touch weaker across a bunch of markets, U.S., France, U.K., just to call out a few. Just any reflection on the slightly weaker performance just so far year-to-date? And any sort of comments around sort of cracks anywhere at all? Thanks.

Sebastien Bazin: Sure. On the churn, I'll give it to -- the churn is mostly into PME, because of AccorInvest and because of our portfolio adjustment. So I'll -- it is clearly for me, '23, '24 and very little onward in '25, but that I'll let Jean-Jacques give you probably the bracket of what we know could be the churn, which of course, is included in the lower part of the guidance of 3% to 5%. Sounds, right?

Jean-Jacques Morin: Absolutely, Sebastien. I think most of the effort will occur, is occurring now, will be occurring -- continue next year because it does take some time. But you may recall the PUR PROJET that we presented in the Capital Market Day. We had said that we wanted that to be on a couple of years. I think in those days, it was more like four years. And we are trying to really reduce it by pushing the actions to be, as swiftly as possible, implemented in order for us to move to the next phase. So to make it simple, you may recall the number of 400 hotels out of the total portfolio of 6,000 hotels which are to be dealt with. And on those 400 hotels today, today, Vicki, we probably have already 70% of them, which are either dealt with or have a plan to be on how we resolve the quality issue that we see. And so this year, the churn will be high. But again, we are going to be, in term of net unit growth, within the market that we had described to you because on the other hand, the signing and the openings will be strong. And I think you'll see a marginal effect again the year after, and that will be it.

Sebastien Bazin: You're pretty good on not answering the question.

Jean-Jacques Morin: I am in operations nowadays.

Martine Gerow: So Vicki, maybe on your -- on the operating leverage. So I think the €10 million to €11 million that you referred to was actually flow-through that we had during the COVID period, which obviously was very unusual in the fact that the business converted much, much -- at a much higher rate just because the cost base, obviously, couldn't keep up with the fast recovery. We -- more recently, I think what we've shared with the analyst community is more of a €7 million to €8 million per points of RevPAR in a normalized environment. And on the RevPAR, and maybe Sebastien can comment as well, as Sebastien shared with you, the month of January is solid. We have geographies that are growing at a higher rate, some geographies at a lower rate. But thus far, it's in line with our expectations. And the nice thing about Accor is that we have a very diverse portfolio with relatively low exposure to the U.S. and much higher exposure to Middle East and Southeast Asia, which remain very dynamic regions.

Sebastien Bazin: Well, it Vicki and I -- it's -- I want to say something which is not odd, but it's factual. At the exact same time last year, did we have the same confidence of achieving the 20% RevPAR or plus? The answer is no. We didn't know the impact of inflation. We had no idea whether it's going to have a harsh landing in the U.S. We were one year in the war in Ukraine and Russia. We, of course, didn't know of October 7 happening. It's hard to say, but the clarity of what we have for the next 12 months for us here is far better and more solid than the same clarity we had last year. So even though data may show a bit weaker, just remember yourself, the data of 12 months ago, that was far worse than what we have experienced is today, and even though all of us achieved great performances in 2023. So there is no reason to be kind of actually pessimistic on our ability to achieve the Capital Market Day. And then again, '25, probably going to be even easier than '24 because of the churn being behind us and because of an even greater control of the metrics on how to turn profit into EBITDA. Your question is super valid, whether it's €10 million or €11 million, whether it's €7 million or €8 million, for Martine, it's certainly in between that bracket, which is the ultimate target.

Jean-Jacques Morin: And Sebastien commented in his presentation about the things that we've done. And notably, there is a bucket which is operational excellence onto which you saw the move to cloud and you saw the challenge of the revenue management system. All of that will be a function of time, i.e., year-after-year, the benefit will crystallize and be stronger. And we're still in the phase into which all those things get implemented. So on the day that we have 100% of the properties on the new revenue management system, definitely, we have a better impact to the bottom line than on the day that we started. And the plan on that project is to be 80% to 90% done by 2025. As an illustration of why this thing will continue to grow and be more, I would say, solid with time passing. So that's illustration.

Sebastien Bazin: It's true actually. We still haven't seen the financial magic touch of Jean-Jacques Morin on PME. We've seen the magic touch on reorg, leadership, priorities, KPIs, not the financial magic touch as of yet.

Jean-Jacques Morin: Did the churn -- so the churn.

Sebastien Bazin: Okay.

Martine Gerow: Thank you.

Sebastien Bazin: Thank you, Vicki.

Operator: Thank you. We will move to the next questions from Jarrod Castle from UBS. Your line is open. Please go ahead.

Jarrod Castle: Thanks very much. And morning everyone. Maybe two financial questions and then one kind of just looking a bit ahead. Just firstly, I mean you've obviously faced a lot of geopolitical headwinds. Do you have any idea how much potential EBITDA it has actually taken off your number when you look at the last two years? Or how much of a headwind do you think it's been to your performance? Secondly, you've obviously recognized a relatively large deferred tax asset in France. I was just wondering what is the scope to recognize any other tax losses that you haven't, not just in France but across the group? And then lastly, just looking to, I guess, one of your more future initiatives, you've got this cruise launch or the Orient Express Silenseas. I'm wondering if any bookings are already coming through? And how big do you see this side of your business maybe over the next five, 10 years? Thank you.

Sebastien Bazin: On -- Jarrod, I was thinking when you were talking on what is geopolitical impact EBITDA for the last couple of years, it's actually very tough to assess. I'd probably say between €20 million and €50 million on the missing clientele we had from the Eastern Europe, impact of China not coming back and you probably don't see it enough. The reason why the flat capacity was not restored for the Chinese travelers to be away -- to be able to go away from China has a lot to do with the Ukraine-Russian war. It's because you can no longer fly over Russia from China. So for any airline, it's two and a half hours longer flight when you take customers from China to the West and Europe. So -- which is why we didn't put that much capacity back because it's a more costly exercise. So that has an impact of having missed those Chinese customers over the last two and a half years. So it could be a wrong estimate, but it's probably, as I said to you, €20 million to €50 million. That being said, I'll be very candid with you. October -- November 7 -- some months after October 7, we were in shamble and perplexity when it comes to Egypt, and what would be the activity of the winter in Egypt, notably Sharm El Sheikh. I can only tell you Sharm El Sheikh is booked, fully booked, has been super strong, and it's a couple of hundred kilometers away from Israel. So we might have missed €5 million there, but we didn't miss the €20 million we would have expected to miss. So it's a very difficult question. The only answer to your question is agility. Accor's diversity today is so extraordinary that when one country goes south, another country is benefiting from it. And you have seen Middle East booming and they've been booming because they've been welcoming in a very safe environment where people didn't go elsewhere. So it's -- the best asset of Accor is the extraordinary diversity between the 40% Europe, 30% Asia Pacific, to 10% Americas and then the other 10% being in other -- the rest of the world. So it's -- now, this is the best buffer we have. Deferred liability, and I'll go back on cruise.

Martine Gerow: I'll take that question if you don't mind. So on DTA, I think you'd heard -- so as I mentioned, we recognized about €100 million of deferred tax asset in France. That is a very unusual amount. You should not expect that amount to carry forward. That being said, we have significant still net operating losses. We can't recognize them in every geography. Last year, we had about a slightly under €40 million benefit from deferred -- sorry, in '22 from a deferred tax asset. So clearly not €100 million going forward, but won't be zero as well because we still have NOLs. And as the business continues to grow and profits continue to increase, we should be able to recognize some deferred taxes going forward.

Sebastien Bazin: And for Orient Express, we haven't taken any booking yet, even though we have some assurance on boat being delivered in March 2026. So first paying guest will be in June 2026. We're going to be opening the booking probably either early summer or late summer 2024, so 6 months from today. In terms of impact, OE cruise to cost lifestyle, probably to be 10% of luxury lifestyle EBITDA by mid-'27 because you're going to get the best revenues, only one boat in '26 for half a season and the other boat comes in '27. So you're going to have kind of a full year of operation probably by end of '27. So between 10% and 15% of lux lifestyle EBITDA will come from Orient Express. The one thing that we know is Ritz-Carlton is enjoying a wonderful environment today on the boat they launched a year ago. And the second one will be in the water in the next months ahead, and the performances are way ahead and better and stronger than were expected at the time of launch. So certainly reassuring that whether it's Four Seasons, Aman Resort and Orient Express in the same -- it's a different segment. Our segment is two notches above Ritz-Carlton because of a lesser cabin, but true comfort on the vertical, on the demand, on pricing, and on profitability.

Jarrod Castle: Thanks very much.

Sebastien Bazin: Thanks a lot Jarrod.

Operator: Thank you. [Operator Instructions]. We'll take our next question from Jaafar Mestari from BNP Paribas Exane. Your line is open. Please go ahead.

Jaafar Mestari: Hi, good morning. I've got a couple, if that's okay. First one is just a follow-up on the Middle East. You said you recognized incentives more aggressively in Q4 after being a bit cautious. But you have to do that basically the years over. So what has been generated as profit has been generated. How will you approach this into Q1 and Q2? Will you still start the year slightly more cautiously and then you can catch up in Q3, Q4? Or do you think that caution was over-conservative? And then lastly, just an open-ended one really on the benefits of the new organization. You're quoting some pretty impressive numbers in terms of signings, in terms of unit fees. Can you help us with some concrete examples of how that's achieved? Who's someone who's in the group today who wasn't here in 2019 and who's absolutely killing it in terms of signing? So what's one brand that you've had for years, but somehow today, it has a large erosion, it wasn't quite being put in front of so many owners in 2019? Just trying to understand the specifics because we have seen some excellent pipeline numbers in the past, but also sometimes the actual openings may have disappointed. It doesn't look like you're expecting any disappointment this time.

Sebastien Bazin: You want to go on the first question, Martine, for you?

Martine Gerow: Sure. So the way we recognize incentives is actually more of a -- more on a forward-looking basis within the month because you can have volatility in terms of forecast on hotel gross operating profit. So we take a view, which is actually a view on the year, and therefore, we can have some volatility depending upon the view we take or how the business is performing. And in the third quarter, obviously, we were at the start of the crisis. We weren't sure exactly how this was going to impact us. And so we took a bit of a cautious view. So you will still have some of that volatility going forward, probably less so, because we are, again, beyond the higher end of the recovery, but you should expect some volatility going forward, depending on how the activity is performing or what is happening in the world.

Sebastien Bazin: I'll start with the second question, and then I'll leave it to Jean-Jacques on PME and certainly on premium. On -- one of the concrete examples that we have is on probably Sofitel, Sofitel, MGallery & Emblems organization under the leadership of Maud Bailly. She is a terrific CEO, Markus Keller two, is a very, very good operator and Xavier Grange, the Head of Development coming from Marriott, by the way, is also extremely good. The -- they've been signing Sofitel in Europe, where we probably haven't been signing any Sofitel the last five years, and they've been signing. I'll give you the -- probably, I probably should not because it was signed last week, but I think it's disclosed. They've been signing a very, very nice Sofitel Legend in Prague, which we've been chasing for a long time. And so with the Legend as a brand, they haven't signed any for the last five years. So the pace of MGallery, the pace of signing for Sofitel is probably 3x a bit better in '23, '24 that we had the previous every year for the last five years. So it's a question of different teams. Xavier Grange has a much bigger depth in terms of developers around him; most of them hired from the outside, by the way, and most of them are taken away from competitors joining Sofitel and joining MGallery because they believe in the brand, they believe into the autonomy, they believe in the new organization. And there's some sexiness about Accor in terms of actually, why not play that adventure. You have the same thing on lifestyle. We never had so much signing with Gaurav and Sharan the last 12 months, far better than we expected, certainly a couple of years ago. So it's a question of autonomy. It's a question of leadership. It's a question of personality. It's really a question of they know exactly what they have to deliver. So I don't know why it took me so long to make that organization different. That's probably the relevant question.

Jean-Jacques Morin: And just as an illustration, trying to be a bit more concrete. If you look at the signing of PME in terms of number of rooms or in term of number of hotels, in 2023, we have a lower number of hotels, a lower number of rooms than in 2018 or 2019. So we do sign less hotels, less rooms, slightly less, okay? Not a big less, 5%, something like that. But if you look at the signing, those same signing in values, you are 35% above, 35%. And that's exactly the translation of the strategy, which is to focus. What does it mean? It means that in Europe, for many, many, many years, where we've always been good is that doing a mid-scale and eco, we have Ibises, we have Novotel all over the places, right? But we never really developed the Movenpick neither the Pullman, right? And we're starting to do that. In Asia, on the other hand, we've been much better at developing those brands. For example, one-third of our network in Pullman today is in China. And what we've said is let's continue and push that. And so part of the increase in value is, in fact, the fact that the premium is 150% higher in 2023 than it was in 2019. And part of the 150% increase is the fact that we went and turned to Japan. And we saw there a market that we could capture. And we captured it, and that's in the signing. And suddenly, we've got much more, in fact, fees to come because we entered into the right market in Asia on premium. That's an illustration. That's an example. I'm not saying that this is making up the number, but I'm saying that this is a perfect illustration of what we do. In fact, it's a Daiwa portfolio. It's about 6,000 rooms, and it's a very, very nice premium opportunity that we took over all the competitors. And so we just need to continue to get the people to see the value in brands like Pullman, Swissotel, Movenpick and push for it. That's focus. That's why we get to decisions.

Jaafar Mestari: Thank you. So helpful. Thanks.

Sebastien Bazin: We have four minutes to go. So I don't know whether we have a last question on not. If not, I'll invite people in the assembly here to share a coffee with me. I need a coffee.

Operator: We do have a question. Now, we will take our next question from our participant, Jaina Mistry from Jefferies. Your line is open. Please go ahead.

Jaina Mistry: Hi, thank you for taking my question. I'll keep them quick, please, it's almost time. My first question is on Europe. I think we saw quite a nice tailwind from American tourists coming to Europe last year. What's your view on that tailwind into 2024? Should it continue? Do you expect it to be bigger, the tailwind from the U.S. tourists into Europe? My second question is around net unit growth. Based on what you see in the pipeline today, do you think luxury and lifestyle can reach 8% to 10% net unit growth in 2024? And then lastly, I just wanted to ask about the Olympics. Can you talk about the effects that the Olympics should have on the business this year? Was there any benefit last year? How should we expect the shape of growth from the Olympics to pan out this year? And is there any impact on STO and marketing that we should be expecting? Thank you.

Sebastien Bazin: For someone who wants to ask only one question, you managed to ask four or five of them. The first question, I have no idea what you talked about, so I'll leave it to Martine. On the CIS tailwind, fourth quarter...

Martine Gerow: I think if I heard you well, Jaina, I think your question was about the fact that we benefited from strong American incoming traffic into Europe and whether we would expect that to continue in 2024? I think that was your question.

Jaina Mistry: Precisely.

Sebastien Bazin: Precisely. Okay. We do expect it. Yes, we had a lot of Americans coming in 2023, actually greater than we expected. We're probably going to have the same number coming in 2024. Many of them have booked for the Olympics and many of them want to go back to the French Riviera and Greece, Italy, Spain, as they have done the last two years. So no -- nothing to be worried about when it comes to international U.S. clientele coming to Europe. On the net unit growth, on the 8% to 10% for lux lifestyle, you have a point. It's -- we are going to be achieving it for sure when it comes to Ennismore. And because they've been starting that new organization three years ahead of us, as being autonomous and basically running themselves under the tutorship of Accor, but they've been having the benefit of 24 months passing, which is only 12 months for Fairmont, Raffles and Sofitel. So certainly better in Ennismore and probably maybe not there yet for luxury in 2024. Too soon for me to tell you where we would be lower or ahead of that 8% to 10% only because we benefit from a lot of so-called internally instant noodles. Instant noodle is when you take away a brand from a competitor and you can reopen that hotel within three months. And of course, those opportunities exists, but you cannot measure them because with every month passing, you benefit from one opportunity and it could be sizable or not in different jurisdictions. And of course, some of our competitors also take some hotels away from us. So it's too soon for me to tell you, except I just told you. Ennismore, certainly better. And lux, challenged. Olympics, we have the numbers for you. It's fairly marginal. For France, it's 2% better in terms of revenues. Olympics give us a 2% additional revenues. But it's only for, as you know, kind of actually three weeks, and it's booked for the first five days, but it's lesser booked on the shoulder seasons of the Olympics. And for the group, the Olympics is 0.5%. So it's anecdotal.

Martine Gerow: And so just to follow-on Sebastien, so you know the Olympic timing, right? So you should expect, hopefully, a bit of an uplift during the Olympic, which is the third quarter, but probably a bit of an offset during the period preceding the Olympic, which is the second quarter. And with respect to your question on STO, yes, we have factored in a sponsoring effort for the Olympic game since we are one of the important -- one of the key partners, but that does not impede our ability to stick to our commitment, which is STO marginally positive in 2024 and beyond.

Sebastien Bazin: So at the request of Jean-Jacques Morin, because I was looking for coffee four minutes ago, and he said, Sebastien, there's probably other people who want to ask a question, why don't you let them speak? So be my guest for adding another one or two questions, and then we'll rush out. But I don't know whether there is any left.

Operator: Sure. We will take our next question from Estelle Weingrod from JPM. Your line is open. Please go ahead.

Estelle Weingrod: Hi, good morning everyone, and thanks for adding some questions to the queue. Just maybe a couple of quick ones. The first one is on Australia. So I know you covered earlier, and it seems to be a bit normalized now, we're talking -- I think you mentioned low single-digit percentage point RevPAR growth. How should we look at RevPAR growth in this region in '24? Can it become a bit more like close to zero, negative? Just want to see better the latest trends there. And a quick one on Paris. It was a bit softer in December on tougher comps. I mean, obviously, it's going to get better in Q3 closer to the Olympics. But just to confirm that the momentum post December and January onwards has picked up a little. That's it for me. Thank you.

Jean-Jacques Morin: On Australia, briefly, what will help, and I said that the numbers would improve in 2024 is also the fact that a large portion of the people that travel to Australia are Chinese. And so that flow of Chinese has not fully recovered over 2023. It's probably -- it's by far the largest inbound population of people going to Australia. And so the same way that you see around all of Asia, the Chinese not being at the level of 2019 in terms of outbound, you see that very specifically in places which are the ones where we do most business, which is Thailand, which is Cambodia, which is Australia. And so that's the upside that you will have on Australia.

Sebastien Bazin: On Paris? Is that a slowdown in January?

Martine Gerow: So on Paris, what we see is, in January, Paris was soft, but we see an uptick as we go into February. And we had actually planned for that softness in January as well. So nothing that is different from our expectations.

Estelle Weingrod: Okay. Thank you very much.

Sebastien Bazin: Okay. Last one. [Foreign Language]. So last question.

Operator: So we will take our final question from Alex Brignall from Redburn Atlantic. Your line is open. Please go ahead.

Alex Brignall: Good morning. Thank you very much for taking the question. Just let's call it one, but maybe two parts to it. So on churn, you're running a much higher churn obviously than a lot of your peers. Some of the U.S. ones running with very low levels of churn. Perhaps you could just talk or opine on some of the risks that would come if you did keep a lower churn, and therefore, the benefits that, in the fullness of time, you'll have in having that higher churn? And then the second one on -- again, a lot of your peers are announcing kind of low financially contributing partnership deals where they take a sort of smaller percentage for sales made on their websites. Obviously, bolsters NUG, but there's not a significant contribution. I wonder if there are any deals that you have looked at of that nature or also any kind of mass conversion deals that you have considered to help net unit growth? Thank you.

Sebastien Bazin: I'll get back to -- I'll leave the floor to Jean-Jacques on churn again. I just want to confirm something which is worth noting. The increased level of churn for 2023, 2024 is a question of conjuncture. It is due to the new organization, due to AccorInvest having to implement a 1.3 plus asset sale program, which we knew about at the time we've done the booster, which was the AccorInvest to put together, which we have to let them go on de-flagging some of the assets, which has been incorporated into all the numbers of our Accor. We knew it was coming. They were delayed because of coming. They are executing upon it in '23, '24. So all of that is absolutely fine and understood and mastered. And two is on some of the brands where PME's organization are being deciding to voluntarily basically reduce the numbers of flag on what's so-called being detractors for the brand and basically saying that again those are very, very low contributor in terms of fees, and it should not be staying in terms of part of the portfolio, which is why when I'm telling you, low contributing in terms of fees, in the net unit growth, you see a couple of hundred hotel room departing, but you don't see how little that hotel was contributing. So which is why I'm going back to you and saying, forget about the net unit growth percentage because it means nothing, not a thing. What people should be focusing on is what is the fee per room of those you open and remaining in the portfolio, because those are relevant in terms of dollars, because you don't know when we're churning 1%, what that 1% was yielding for maybe €2 million of fees, where you guys would have expected, it was much more than €2 million of fees. So sorry to make your job tougher, but that's voluntary churn for '23 and '24.

Jean-Jacques Morin: Yes. And by the way, just if you were to do that analysis on the churn and comparing us to the U.S. peers, and you are looking at years like 2016, 2017, 2018, 2019, you would see that we were not like significantly different or at least much less different. In the meantime, there was the COVID and in the COVID, the churn was what it was. And then there was these deliberate actions, decision of management that Sebastien was mentioning. So I think there is here a part of the explanation, which is a pure management decision to do what's right.

Sebastien Bazin: And we don't do -- it could happen, by the way. We've done it on Banyan Tree and some kind of a partnership agreement on fees to be shared, depending where the hotel was to be up, and we're doing a bit on China, but it's very, very marginal. So we're not today undertaking any large partnership with another network where we could be of help on distribution and other services. It may come. But as we speak, that's not into the estimate of 2024. And conversion, we're still going to be high. I think we are the lowest in the world in terms of converting, which is above 50%. So conversion from one brand to the other will still remain high for 2024.

Sebastien Bazin: With this, have a lovely weekend. It's only Thursday. And if you want to see us, we'll be in London tonight and New York on Monday and Boston on Tuesday, and Chicago on Wednesday and Toronto on Thursday and Mexico on Friday. Ciao everyone, thank you so much.

Martine Gerow: Thank you, everyone.