Accor is withdrawing a dividend payment of €280 million for financial 2019 in the wake of the coronavirus pandemic.
The company said, today, more than half its branded hotels worldwide are closed, with the figure likely to rise to over two thirds in the coming weeks.
The COVID-19 outbreak “has resulted in a virtual standstill of travel, dining, and entertainment, which is vastly affecting our industry”, Accor added.
The abrupt deterioration in the situation has prompted the group to take “drastic actions” across its global operations
The company has implemented a travel ban for staff, a hiring freeze and reduced schedules and/or furloughed three-quarters of its head office team.
Sébastien Bazin, chief executive of Accor, commented: “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.”
The hospitality giant is also reviewed recurring investment plans for 2020, resulting in a likely €60 million reduction in capital spending.
After consulting with its main shareholders – which include JinJiang International, Qatar Investment Authority, Kingdom Holding Company, and Harris Associates – Accor also unveiled plans to allocate 25 percent of the planned dividend (€70 million) to the launch of the ‘ALL Heartist Fund’.
The fund will pay for any COVID-19-related hospital expenses for any of Accor’s 300,000 staff who do not have social security or medical insurance.
On a case by case basis, it will also seek to support furloughed employees or partners suffering great financial distress.
“Through this impactful gesture, we wish to express our solidarity and gratitude to all those demonstrating courage and selflessness during this crisis,” Bazin said.
In the long-term, Accor said it could rely on a strong balance sheet to weather the storm.
With more than €2.5 billion in cash on hand and an undrawn revolving credit facility of €1.2 billion, the company said it had a strong balance sheet.
“While much uncertainty remains on the duration of this crisis, the group expects a severe impact on its 2020 performance but remains bullish on the long-term perspective of the hospitality industry, for Accor, its employees, its owners, and shareholders,” concluded a statement.