Accor said on Wednesday it would pay a bonus dividend and buy back shares after 2007 net profit jumped 76 percent but it disappointed some investors by postponing a property deal and with comments about the economy.
The world's largest hotel group by market value said operating profit before tax and non-recurring items - its favoured measure - rose to 907 million euros from 727 million euros in 2006, in line with recent guidance.
But the company said an economic slowdown was hurting its U.S. motel business, pushed back plans to sell off some Sofitel and Pullman hotels and said it was holding back some cash for acquisitions or in case the U.S. downturn spread to Europe.
"At the current stock price, the group's valuation remains at low levels but the slippage in the property sales is a short term negative," CM-CIC analyst Annick Thevenon said in a research note.
Accor shares closed lower by 4.2 percent lower at 50.95 euros.
Tough Times
All hotel groups have seen their shares sold off since summer 2007 because of fears about the vulnerability of their profits to the economic cycle. Accor has suffered less than its peers because of its focus on Europe and Asia.
Accor said net profit rose 76.2 percent to 883 million euros, lifted by capital gains. Earnings before interest, tax, depreciation, amortisation and rents -- a key hotel-industry measure -- rose 11.4 percent to 2.321 billion euros.
Accor said it proposed raising its ordinary dividend 14 percent to 1.65 euros a share, a bonus dividend of 1.50 euros per share and a further 400 million euros share buyback.
Chief Executive Officer Gilles Pelisson said the payout plans were prudent given uncertainty over whether the U.S. slowdown would spread, and left Accor margin to manoeuvre in case rivals or private equity funds - who have leapt on hotel assets in recent years - got into trouble.
"Given the uncertainties in financial markets and over the economy it seemed to us preferable to say it would not be intelligent today to distribute everything...We prefer to be prudent," Pelisson said.
Pelisson said Accor's European hotel business had begun the year "positively." "We don't see signs of a slowdown," he said.
In contrast, January was a poor month for its U.S. Motel 6 business and February was flat.
In a statement, the company affirmed, however, that steps it has taken to sell off hotels and move them to fixed or variable lease management contracts meant it was "more resilient to economic cycles" than in the past.
Pelisson said Accor had no plans to sell off its stake in French casino group Luciene Barriere, which he said was looking at expanding into online gaming and elsewhere in Europe.