Accor S.A. - Continued Expansion in the Late 1980s

Continued Expansion in the Late 1980s

By 1986 Accor's revenues had reached around $2 billion, with net profits of $32 million. Novotel, with hotels in 31 countries, remained the most profitable while Sofitel faced stiff competition in the luxury hotel market, particularly from American properties. Nevertheless, Accor expanded at a far swifter rate than its international rivals, becoming the largest operator in Europe. It led the market in France and West Germany, and expanded in the medium and economy range in Spain, Italy, and Britain with its $75 million investment budget. The company's European base provided three-quarters of its revenue, with more than half coming from hotels and the rest from its foodservices.

In 1985 Accor took control of Britain's Luncheon Voucher, the company that invented meal tickets, which companies distributed to their employees as a benefit. Accor overhauled the company's communications and management systems and restored its market presence through a new sales drive. By 1987 Accor was the world leader in restaurant vouchers for employees and was exploring similar voucher programs for child care and groceries.

In 1987 Accor exploited another growing market: homes for the elderly. The company's Hotelia homes provided 24-hour medical and nursing care, as well as more traditional hotel services. In addition, Accor created the successful Parthénon chain of residential hotels in Brazil, and initiated a large-scale reorganization to better cope with its diversification of products and growth. Accor was restructured according to product, so each chain had its own general management, though the company was still committed to decentralization and expected management to act autonomously. Pelisson and Dubrule maintained a flexible, dynamic structure and remained accessible to their expanding management teams.

The following year, in 1988, Accor invested in France Quick, ranked second in the French fast-food market, and launched the Free Time fast-food chain. With several partners Accor then invested in Cipal-Parc Astérix, a theme park north of Paris, based on a Gallic cartoon character, and expressed interest in providing catering and lodging for the then-projected EuroDisney amusement park. Accor's rapid growth was not without its setbacks, however, as it made a failed bid for the Hilton Hotels empire and an unsuccessful merger with Club Méditerranée.

As the restructuring took hold, Accor revenues improved with 1989 profits up 30 percent from 1988, on sales of $3.6 billion. Accor enjoyed 12 percent earnings-per-share increases annually from 1983 to 1989. Steady growth allowed the company to sell equity, including a $340 million issue in January 1990.