Get Adobe Flash player

Corporate Presentation

STRATEGIC VISION AND OUTLOOK

1.5.4. CORPORATE OBJECTIVES

As part of the new strategy that will be led through the end of 2016, the following financial objectives have been set:

a improve the EBIT margin to more than 15%, from 9.3% in 2012;

a Increase return on capital employed, thanks to a less capital-intensive business model, to more than 18% from 14% in 2012;

a maintain the Group’s investment grade credit rating.

Together, meeting these three objectives will drive a clear structural improvement in the generation of operating free cash flow before disposals.

In addition, the P&L Performance objectives for 2016 have been set as follows:

a a more than 50% EBIT margin in the franchised and managed hotels;

a the sales & marketing fund at breakeven;

a Over the medium term, EBIT margins on the owned and leased hotels of:

-12% to 15% for owned hotels vs. 8.0% in 2012,

-8% to 10% for hotels leased under fixed-rent leases vs. 1.2% in 2012,

-8% to 10% for hotels leased under variable-rent leases vs. 5.3% in 2012.

Lastly, the following operating objectives are being pursued:

a a flow-through ratio of 50% in markets where revenue is increasing and a 40% reactivity rate in markets where it is contracting. This flow-through ratio will be reduced by 5 to 10 points by the 2013-2016 distribution investment plan;

a the opening of 35,000 rooms a year, including 30,000 through organic growth and around 5,000 through targeted acquisitions of local networks under franchise or management contracts;

a the structural reduction in maintenance capital expenditure through 2016, to around €200-250 million per year;

a the reduction in expansion capital expenditure, to around €100-150 million per year after 2017;

a a 50% reduction in the Group’s sensitivity to cycles compared with 2010.