UPDATE: Accor Swings To Profit, Sees Growth In Hotels Sector

Accor SA (AC.FR) Wednesday swung to a full-year profit after getting a boost from the spin-off of its vouchers business and as hotel bookings picked up.

Net profit for 2010 was EUR3.6 billion, up from a EUR282 million loss in 2009, mainly due to a capital gain of over EUR4 billion from the sale of Edenred (EDEN.FR) which became a separately-listed company in June last year.

In the previous year, profit was hit by restructuring costs, impairment charges and lower sales.

The group, which owns hotels ranging from the upscale Sofitel chain to the U.S.-based Motel6 low-budget brand, said it expects the hotel sector recovery to continue this year, chiefly from rising occupancy rates and with some improvement expected in room prices, said Finance Director Sophie Stabile on a conference call with reporters.

Still, regions where the turnaround has been slower, such as Italy, Spain, the Middle East and Africa, will likely remain "difficult," she said.

The hotels sector, one of the first to see business drop off during the economic slump, has begun to pick up as tourism increases and companies lift bans on business travel.

U.K.-based rival InterContinental Hotels Group PLC (IHG) last week said it expects a continued recovery in the sector this year.

Accor's new CEO Denis Hennequin, a former McDonald's Corp. (MCD) executive recruited for his expertise in extending the fast-food chain's franchise stores in Europe, said the company will focus on cultivating the reputation of its hotels brands to encourage franchisees to pay higher fees.

Stripped of its highly-valuable vouchers division, which funded the group's hotel expansion, the company is switching to a model that emphasizes franchises and management contracts, selling off property owned outright and reducing the proportion of hotels paying fixed rent, making it less vulnerable to economic swings.

Accor last month reported annual sales of EUR5.95 billion, up 7.1% on a like-for-like basis that strips out exchange rates and disposals.

Hennequin Wednesday said he is not a "maniac" about acquisitions, citing the company's potential to grow organically, but said he would not rule them out.

Analysts said the earnings report met expectations and held few surprises.

"Results sound good as Accor benefited from hotels' cyclical upturn and asset disposals," noted Exane BNP Paribas in a research note. Shares have risen nearly 8% over past three months, in line with the CAC-40 index, up nearly 9% over the same period.

At 1653 GMT, Accor shares traded down 3.7% to EUR33.91, underperforming the CAC-40, which was down 0.9%.

-By Mimosa Spencer, Dow Jones Newswires; +33 1 40 17 1773; mimosa.spencer@dowjones.com

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