Accor SA

PAR:AC

Earnings Call Transcript 2019-Q3

[Operator]

Accor Q3 release conference call. I now hand over to Mr. Jean-Jacques Morin, Deputy CEO. Sir, please go ahead.

[Jean-Jacques Morin]

Good evening, ladies and gentlemen. Thanks for being with us, Sebastien Valentin and myself, to review our Q3 2019 revenue.Just as a reminder before we go into any slide, the financials are reported under IFRS 5 since our publication last July, which means that the Orbis asset contribution in Eastern Europe is considered as a discontinued operation.So let's move to Page 3, which will provide you another view of the achievements of Accor over the quarter. First off, on the left column, the business momentum. The system-wide RevPAR grew by 0.7% over the quarter on the back of 5.9% growth in Q3 2018. The quarter was in line with our expectation, with an exception which was Asia Pacific. Europe showed resilience driven notably by a solid RevPAR in France that we are going to detail. And as far as Asia Pac is concerned, this was essentially an effect coming from the China situation. And again, here we will detail that in the rest of the presentation.Moving to the second bucket, which is the system growth. Our system continues to grow steadily. In an asset-light model, the sustained net system growth is a key ingredient of the group's fee growth. And this, even if economy condition weighed on RevPAR. So our performance was fueled by the powerful brand equity that we have today, with our brands being more and more attractive, and this is notably true for the newest brand like [ Trib ] or Tribe or [Greek ], sorry, or acquired brands like Mövenpick.The second element that show the performance was supportive financing condition so with most of the countries in the world.In terms of the derived financial performance, we see the revenue grow by 4.1% on a like-for-like basis to a bit more to EUR 1 billion, EUR 1.049 billion, despite this relatively moderate RevPAR of 0.7%. This confirms the relevance of the asset-light business model.I'm moving now to Slide 4, which is the classical slide that we provide on the network and the pipeline breakdown. We are on track to reach 5,000 hotels by the end of the year. The organic expansions continue to strengthen the footprint, notably in Asia Pac, which is 31% of our portfolio of hotel and 50% of our pipeline as of the end of September. By year-end, we expect a net system growth around 5%, and there will be some significant openings in Q4 of large hotel in the luxury segment.I'm moving now to Page 5, where you see, in fact, the trend evolution of the group RevPAR. The Q3 RevPAR is at 0.7%, which reflects a comparative picture. Europe, Middle East, North America and South America were well in line with our expectation. Asia Pacific was deteriorating.If we break down that global performance by region, I'll detail in the next slide Europe and Asia Pac, which is the bulk of our performance -- the bulk of our business, 80% of our business, but if we go and do a tour of the other geography, we saw South America RevPAR grow by 10.2% over the quarter. And you see there the continued recovery of Brazil as a country despite, by the way, a very high comp because last year, at the same time, the RevPAR was also to the tune of 11%. There, we took advantage of our leading position in that geography to drive price up in the context of low new supply growth.Moving to North America. In North America, the RevPAR remained positive in Q3, slightly positive at 0.3%. And the market was globally muted. In fact, if we exclude the effect of the Humberto hurricane in Bermuda, the RevPAR was at 0.7%, i.e., broadly in line with market performance.Moving to Middle East and Africa. Middle East and Africa, the RevPAR grew by 0.7% in Q3. We benefited here again from the strategic leadership that we've got in the [ oli ] cities and clearly did outperform the indices in this region.Breaking it down by segments. You see on the right part of the table that midscale and economy are in line. The RevPAR in luxury was a negative 0.4%, and this is coming from essentially the 2 regions of Asia Pacific and North America. China alone accounts for 40% of the Asia Pacific lux network.I am moving now to Europe and Asia Pacific, and I am on Slide 6. Europe, the RevPAR was a 1.2% number, which is -- needs to be put in perspective of a very high comp last year. We were at 7% in Q3 2018. Overall, the RevPAR growth benefited from pricing power in the region. France posted a 2.3% RevPAR growth in Q3. Both Paris and the province reported positive growth. And all of that, as I said before, on the back of high comps.Germany was a negative 4.6% RevPAR in Q3, and this is essentially due to an unfavorable calendar fair, a fair of calendar events. And that should not be the case in Q4.As far as the U.K. is concerned, we posted 0.4% RevPAR growth in Q3. And we saw there the continuation of recent trends, with London being up at 1.6% and the provinces being affected by corporate demand and the Brexit, and being down by minus 0.9%.Eastern Europe was a positive 6.6%, and we are doing very good here since many years, and notably this year in Hungary. And as far as Spain is concerned, here again we posted a very nice 9% RevPAR growth in Q3, which is both the translation of economic recovery but also some ramp-up of hotels like the Fairmont and the Pullman in Barcelona.If we now turn to Asia Pac, the RevPAR are being negative in Q1, positive in Q2 and turned back into negative territory to the tune of 1.1% in Q3. And this is essentially due to China.Greater China posted negative 6.7% RevPAR growth, and this is 2 effects combined: one is the ongoing trade war between U.S. and China, which doesn't find resolution -- or has not found resolution over Q3; and the second effect is what happened over summer in Hong Kong, with Hong Kong RevPAR alone being at minus 32%.This affected obviously Chinese outbound travel and globally the business across Asia Pacific, which is quite visible in places like Thailand and Indonesia, where the outbound flow of Chinese is significant. The second thing we would like to highlight, talking of China, is what we have already discussed in previous quarter, which is the situation of Australia, did not really improve. We still have a minus 1.6% RevPAR growth. And this is largely due to this China trade war tension spillover effect, as China is the #1 trading partner of Australia. And then the other thing is the continued situation of the hotel industry in Australia, with Sydney, for example, being at its lowest level since 2009 in term of occupancy. The silver lining is that we did perform much better than the market.Moving to a more global view of the Q3 revenue for all the segments of the group as the -- and I am on Page 7. So on Page 7, the Accor revenue reached EUR 1.049 billion over Q3, i.e., 4.1% like-for-like growth. The reported growth is to the tune of 10.9%. The variance being explained by perimeter effect, with the acquisition of Mövenpick last September to the tune of 5.2% and a positive foreign exchange effect of 1.6% driven by a stronger dollar.As far as HotelServices is concerned, the revenue was up 6.5%. The reported growth was 11.8% and again, for the same reason than what I just discussed for the group, i.e., currency and perimeter. I'll detail the HotelServices management and franchise on the next page.As far as Hotel Assets & Others is concerned, the revenue was a negative 0.7% on a like-for-like basis. The reported growth was 11.8%, but this is the acquisition of Mövenpick. And the performance is overall on the back of a 1.9% RevPAR growth. Here again, we've got a very different picture. We've got to one side Brazil, the Brazil situation, where the RevPAR is plus 13% and accounts for a bit less than 20% of the Hotel Assets revenue, which is offsetting the situation that we've got in Australia. And Australia accounts nowadays for 50% of the Hotel Asset & Other, and this is notably because of the acquisition of Mantra.As far as New Business is concerned, the revenue was up 3% on a like-for-like basis. If you again were to exclude onefinestay and John Paul, which are the 2 focus points of the recovery plan, the revenue is growing by 16%.I am moving now to Page 8. So on Page 8, you see here the analysis of the Management & Franchise revenue by region, which includes this trademark, incentive and some additional services like procurement. What you see here is the Q3 that stands at EUR 272 million, i.e., is up 5.2% in terms of RevPAR development and some one-off items.On a per-segment basis, which is the right part of the table, you see the steady growth of luxury in our Management & Franchise mix after the acquisition of Mövenpick. And it demonstrates, if need be, our clear strategy to be present in that segment since 2016.If you move to the left part of the table, which is a deep dive per region. In Europe, the M&F posted a solid 4.8% like-for-like growth. You -- this is beat on the 1.2% RevPAR growth and then the organic system growth, the typical development organic system growth. In Asia Pacific, the M&F posted a strong 9.1% and so here, you've got the RevPAR, plus, in fact, the 4.7% net system growth of Asia Pacific when I exclude Huazhu. And on top of that, you had some one-off, some termination fees, one in Australia and some ramp-up of properties, just like the one we discussed in the H1 call of Fairmont in Singapore.If you move to Middle East and Africa, the revenue posted an increase of 4.7%, so again, a nice number. The RevPAR there was the 0.7% that we had discussed before. And to that, you also have to add some termination fees in Saudi. In North America, the M&F was very much in line with the RevPAR. And in South America, the M&F was a positive 9.5%. And again here, we saw a significant RevPAR growth in the region.If I look at the summary of this performance for the quarter, and I am moving to Page 9, I think we've been tested for the first time, and the revenue performance demonstrates well the validity of the asset-light business model, which is why this was active as it offers low capital intensity and strong cash generation. Even if economic condition weighed on RevPAR, as we saw this quarter, the fee growth is supported by a strong development pipeline. And that reflects, in fact, the powerful brand equity of the company.In the current context, China remains uncertain even though we may see some silver lining, as you may have read, seen, there is a tentative trade truce that was announced earlier, this so-called Phase 1, and we need to see how this develop.In that frame, and because of what I just said, we now hold the range of the guidance we provided in July to EUR 820 million, up to EUR 840 million EBITDA guidance for the financial year '19.Just maybe to step back a minute from the pure financial performance, one of the Accor priority has been to become sure of supplies and as part of that, has been the disposal process of the Orbis real estate portfolio, which I am very happy to report as being exactly on plan. The completion of this deal will free up capital to be redeployed and as cash yields are close to nothing in the current market condition. The capital allocation will include incremental return to shareholder, which is financially accretive.Thank you for your attention. And the floor is now yours for questions.

[Operator]

[Operator Instructions] We have one such question from [ Mrs. Emily Arnett ] from Morgan Stanley -- [ Amy ] sorry.

[Jamie David William Rollo, Managing Director]

It's Jamie Rollo from, I think, from Morgan Stanley. Jean-Jacques, you didn't mention the 3% RevPAR guidance, so could you just touch on what that might be now, please? And what you're expecting in Q4?

[Jean-Jacques Morin]

Yes. In fact, implicitly, I do mention it because, in fact, I talk of Asia Pacific because of what happened around the summer in Asia Pacific. We -- if I were to give a number on what is the expectation for the year, we are probably more to the tune of 2%.

[Jamie David William Rollo, Managing Director]

Okay. And the midpoint of the EBITDA guidance is only down by EUR 5 million, so what's the offsetting factor for that? Because 1% on RevPAR's more like sort of double that for you, I think?

[Jean-Jacques Morin]

Yes. I mean 1 point of RevPAR in the kind of RevPAR that we discuss is probably somewhere between EUR 7 million to EUR 8 million. And so we basically are dropping it by EUR 10 million, if you want to look at it this way. And after that, it's nothing much more precise than that.

[Jamie David William Rollo, Managing Director]

And then on Asia, you said China's 40% in your rooms. What share of revenue is China? And also could you help us understand how the sort of -- how big the incentive fees are there, and whether that could sort of provide some negative operational gearing?

[Jean-Jacques Morin]

Yes. In fact, just the 40% is related to luxury. I was just explaining the negative luxury RevPAR. And so the portion of the luxury rooms that we work in Asia Pacific is 40% in China. So that's what I wanted to calibrate here. To answer your question on the business review, China is only to the tune of 5% of what we do business-wise as a percent. And yes, there is not much that you should expect, per se, on incentives. It's already included in the guidance I provide. When I now hold the guidance to the EUR 820 million to EUR 840 million, there is no significant surprise to be expected there. It's -- we don't have exactly the same pattern that the one that you may see with some of our competition.

[Jamie David William Rollo, Managing Director]

Okay. And last one, if I may, just on the incremental cash return from Orbis. Could you help us understand any quantum there? How much is going to be retained by the company for acquisitions, for example?

[Jean-Jacques Morin]

Yes, on quantum, I mean I won't give you the quantum of what is the cash that will be returned from Orbis because that would give you an idea of -- well, I don't want to provide information that can be used against me in the negotiation that I'm having with the various parties. So if I give you a too precise number, then I'll do that. But you know that the gross asset value was to the tune of EUR 1.1 billion, to which you need to deduct the headquarter cost, to which you need to deduct taxation associated with the transaction, to which you need to deduct whatever you may agree on, in term of discount, if you were to agree to any discount. So that's really how the math would flow there. And I think what I'll -- what I wanted to just clarify in that call is that in the capital allocation, there will be incremental return to shareholder because there was some confusion in some of the things that I said the previous time, and I wanted to be clarifying that.

[Operator]

Your next question is from Mr. Jarrod Castle from UBS.

[Jarrod Castle, MD, Head of the Travel & Leisure Sector and Co]

A couple for me. Just following up Jamie's question. I guess if you are talking 2% for the full year, is that kind of what you're seeing in Q4 at the moment? Is there any early indications that you can give us?And then kind of related to that, it does look like the volume grows there, but the RevPAR is slowing. Do you think this is some kind of synchronized slowdown, as some kind of world commentators have been speaking about? And then lastly, any comments about Mantra and Mövenpick in terms of how those processes are going?

[Jean-Jacques Morin]

Yes. I mean Jarrod, on the question of the RevPAR, I think the key variance or the key difference versus what we were anticipating before is Asia Pacific. So if you look at the number at the end of the quarter, we are closer to 2%. So that's also why, everything being equal, we believe that the 2% for the year-end is a good number. In term of Mantra and Mövenpick, it's obviously project that we've got running. I think I said that before. And so we've got some marketing going on and some discussion with investors on those 2 files, and so we'll give you update as we progress on those. But you can be assured that becoming a pure asset-light player is a key priority for Accor and the one I discussed and the one that I mentioned is Orbis, as it is the most advanced.

[Jarrod Castle, MD, Head of the Travel & Leisure Sector and Co]

Okay. And maybe just one more. Any update on partnership revenues, how that's progressing?

[Jean-Jacques Morin]

Yes. This is progressing, Jarrod. I think this is now something that we would like to cover as part of the marketing plan update in the year-end presentation, when we present the result for the full year '19. So you will get a full update on all of that in February. But obviously, this is something onto which there is significant amount of focus and energy being spent daily.

[Operator]

We have another question from Mrs. Vicki Stern from Barclays.

[Victoria Jane Lee Stern, MD & Equity Analyst]

Just a few. I think your exit rate for this year then sort of implies a level slightly below that 3%. As you're sitting here today looking into next year, and obviously, there's a lot of uncertainties out there, particularly, clearly, in Asia, but sort of anything you want to call out in terms of starting point and expectations for next year? Any reason to think it might get better than the sort of 0.5% exit? Any calendar comments, anything around that, please?

[Jean-Jacques Morin]

I'd love to get that crystal ball, Vicki. I'd love to get that crystal ball. I mean I got surprised already in 1 quarter for the quarter, which was what happened in Asia. So it's not an easy job that you're asking for here. We are obviously working with our teams at building that budget for next year, I am getting some numbers. You've seen what is existing in the press. And we are not yet done with our internal process, so I wouldn't give you some numbers there because it's too early.

[Victoria Jane Lee Stern, MD & Equity Analyst]

Fair enough. I suppose one that may be slightly easier to predict, then. Any thoughts around net unit growth for next year? Is 5% still a good working assumption as we look into 2020?

[Jean-Jacques Morin]

Yes. I think so. I think so. I think so. We are really -- the fact that we enriched the portfolio brand has, in fact, giving us some opportunities in term of developments that were not existing when we were much more modest, I should say.And so I think we should see, with time, that effect is canceling. So this takes time to get everything running at full speed. But the 5% is definitely a very good number from Asia. And this one is easier to forecast or to call. Because it's much less depending on a crisis here or a crisis there. And so that's also why you can sense and see in my tone that I am much more comfortable calling out that number.

[Victoria Jane Lee Stern, MD & Equity Analyst]

Okay. And yes, just the last one around New Businesses. You obviously called out again the growth there, excluding John Paul and onefinestay. Just sort of where are you at on those 2 businesses, and your thought process around them?

[Jean-Jacques Morin]

Yes. I think we are in line with what we said we would do. We said that we would be turning to profitability or to something positive in Q4, and you saw that we are already extremely close of that at the end of H1. So this process of revamping, restructuring, optimizing is ongoing. And then as you can see also from the numbers, and that's why I exclude John Paul and onefinestay, on the other hand, the other opportunities that we've been working on and developing are fruitful. And so they are both growing in term of numbers but also growing with positive returns. So we'll give you more detail on that when we are publishing the result for financial year '19, but this is again per plan. That's what I would say.

[Operator]

Next question, from Mr. Julien Richer from Kepler Cheuvreux.

[Julien Richer, Equity Research Analyst]

Most of my questions have been answered, but I would like to ask a follow-up on pipeline development. I understood your point of having more brand, but have you seen any, maybe more difficulties when discussing with owners to sign new openings going forward? Is it more difficult today than it was in the past? Or has it -- no change at all?

[Jean-Jacques Morin]

I mean Julien, I wouldn't teach you anything here. Depending on the environment in which you operate, I mean [ BET ] is more or less easy to grow and develop. What's happening here, which is really helpful for the industry, is that with the money being so cheap, you see that a lot of people who are pursuing a lot of real estate opportunities. And this has not fundamentally changed at this juncture. So when I look at my stats and I look at the signing, i.e., what I am filling up my pipeline with, I am, I think, a level this year. I have never signed as many hotels to be sure as I have signed before. After that, I need to turn those hotel into a reality, okay? But just on the basis, trying to be a little bit factual at answering your point, I mean those brands are really helping. I mean take -- I was quoting -- when I discussed that point and the brand equity, I was quoting Mövenpick. I mean we basically had, I'll make it an easy number, 50 hotels, when we purchased Mövenpick and we've 14 more today in the pipeline, so it's quite significant in 1 year -- in less than 1 year.

[Julien Richer, Equity Research Analyst]

And maybe could you please remind us, the mix between new build and transformation in your pipeline model?

[Jean-Jacques Morin]

It's kind of consistent. It's 70-30.

[Operator]

Your next question is from Mr. Richard Clarke from Bernstein.

[Richard J. Clarke, Research Analyst]

So I have 3 questions. I'll ask them in turn. So just the first one, you sounded like what had caught you by surprise with APAC. So you were expecting the slowdown in Europe. If I remember back to Q1 when people were questioning your ability to hit the 3%, it seemed like you're quite positive on developments in Germany was going to accelerate. So just wondering, what's changed in Europe? What was expected? Or are you expecting a big acceleration now in Q4 to get back to those sort of levels?

[Jean-Jacques Morin]

No, I do not. In fact, candidly, Europe was in line with our models. There was no surprise in that thing. What is really different is what do you compare to. And we knew that last year Europe had been -- or some parts of Europe had been firing on all cylinders. I mean remember we had a Q3 in Paris which was to the tune of 13% RevPAR last year because of one-off events, just like the Ryder Cup, and then there was also some things like the football World Cup, that helped. So all of that are one-off events that created a very high basis. But the one thing, and you may recall, I already highlighted that when we had the H1 call, Asia Pacific is a much tougher place to predict because who can predict how, in fact, the trade war between 2 major nation of the world can go, especially with very strong personalities and political implication of those discussions. And my assumption was that -- if you may recall, that it would slightly improve with time and the story is turning different. The story is that it has been deteriorating. And on top of that, you have the fact that Hong Kong has certainly not helped. And so Hong Kong has been an accelerating compounding factor to that situation. So that's really what has changed.

[Richard J. Clarke, Research Analyst]

Just on the luxury side, where you pointed out that luxury is underperforming. You mainly put that down to China. But I notice in Europe, luxury has also underperformed in the segment. Are you -- is that down to China? Or is that a tariff effect that's coming in there?

[Jean-Jacques Morin]

No. I mean the larger explanation is Asia Pacific. If you go and do the analysis, the second effect is Middle East and Africa, before Europe. And the third effect, the smallest one in terms of luxury base is Europe. So you're right in the question that you're asking. There, in Q3, from the specific question that you're asking which is Europe, we had extremely high comparable, and the extremely high comparable was to the tune of 12% and it's because, in fact, you had some hotel like The Bosphorus that ramped up. There was this Turkish crisis that kind of turned around. And so with the depreciation of the money, you may recall that we had extremely good result in Q3 last year in that part of the world. And so that's creating a basis, Turkey being part of Europe, by the way, just to be crisp on that comment too, and so that's one. And the second one is Russia. So in Russia, we have a couple of -- we have a very nice Mövenpick, a Swiss hotel, sorry, in Moscow. And so it was incredible rates that we were able to get last year because of the football games. Extremely higher. And so all of that has been percolating the business. But I wouldn't say that this is much more than that, in the case of Europe.

[Richard J. Clarke, Research Analyst]

Okay. And then last, just on AccorInvest. I think we've had the other potential disposals ticked off, but I think you can sell down another 5% in the agreement. So any update on plans to do that? And then what you'll be left with, the 30%. Any plans there to try and dispose of that, or try and instigate get an IPO?

[Jean-Jacques Morin]

Yes. The 5% is something that we are working on, so that I can tell you. And as far as the 30%, it is much more complicated as you may -- because as you may recall, this is per agreement, i.e., per the legal agreement that we signed when we did the transaction, something that we've got to keep for a period of 5 years. So then it means that you need to reenter in much more complex discussions in order to revamp or rediscuss or recreate additional agreement. But the short answer is that we will sell it. It is just that we may have to wait some years.

[Operator]

Your next question is from Mr. Andre Juillard from Deutsche Bank.

[Andre Juillard, Research Analyst]

A few question on my side. I know that we are a little bit early in the negotiation or renegotiation season of the price here for 2020, but maybe could you give us a little bit more color on the first feedback you can have on that side? I also wanted to have some more color about Brexit, regarding the fact that there is a deal on the table? And the trend you are seeing in Germany, where economy is slowing down quite hardly. So what is your view on these 2 countries especially?

[Jean-Jacques Morin]

Yes. In term of the prices, I mean you provided yourself the answer, Andre, it's too early. We are just in the midst of that. It's something that we can we really discuss later on in the year, but it's too early. In term of the Brexit, yes, I saw the news, as we all saw it. I mean it's a step forward. It's as we all read, it needs to be confirmed because it needs to go through various approval, whether in the U.K. or at European level. But what -- if you look at our performance in the U.K., I mean in 2017, we had a RevPAR growth of 4.7 -- 4.6%, in fact, when that was the year of the Brexit. And then the year after, we had RevPAR for the year which was 2.9%. And then after that, the year-to-date number is still a positive 1% on the top of all the numbers that I've been providing before. So I would say that the Brexit for us has been not such a bad story because we benefited from inbound in London, where we are quite strong and have luxury properties. And the part which is suffering today from the Brexit, is in fact the province, where the RevPAR negative. And we see that very well when you look at the statistics from the industry. And so what we may think is that once the Brexit stabilize, some of the corporate expenditure decision that were affecting the province would kind of stabilize, turn around, and then there will be a positive business spirit. So there is hope coming from the Brexit stabilizing. In fact, corporate expenditure in the U.K. and helping turning around that situation in province. That's how I would look at it. After that, there may be other things happening, currency and such. But again, I would say just like for the RevPAR of next year, I would love to have that crystal ball. I would be a rich man. In term of Germany, I think the German situation, I mean really what happened in the quarter was this. In same as -- or same as a fair calendar, which depending in which quarter you are, makes your quarter either negative or very positive. And we got that. I think where you have a point and again, to be going your way, it is true that in the fair that occurred, the fact that the German economy is not doing as well as what could have been obviously better, in fact, Germany is not doing good, has been making, in fact, the occupation of the people. And I'm talking not only the motor show. Germany is an exporter of cars. I mean when the Chinese are not buying the luxury Germany's car, suddenly, at the Frankfurt Motor Show, you have much less people coming. And so we probably had an attendance which was down to the tune of 30%, and that did affect our result. A lot of the fairs that we go through are not only business-related fairs, but are also to be fair in the calendar of Germany. So I'm not discounting your point on the fact that the German economy needs to be watched. Today, I don't see it, but it needs to be watched.

[Operator]

Your next question is from Mr. Jamie Rollo from Morgan Stanley.

[Jamie David William Rollo, Managing Director]

I've just got a quick couple of follow-ups, please. Could you confirm that the full EUR 55 million on the digital plan's going to be spent this year? And also secondly, your release mentions a new employee share ownership plan. Has that anything to do with the executive co-investment scheme, what I think it was? Is that an entirely separate thing?

[Jean-Jacques Morin]

No. The EUR 55 million, you may recall that we were a little bit behind on the EUR 55 million, so we're going to -- probably going to end up being a little bit behind by Iran on that MIP, just because of project phasing and how things are coming out. I am not like fully sure about that, but if I just look at the transcript, so we are entering the Iran, so I think that's one point. And the share plan has nothing to do with the co-investment plan for management.

[Operator]

Next question from Mrs. Monique Pollard from Citi.

[Monique Pollard, Vice President]

A couple of questions from me, if I can. The first one was just on Hong Kong because the master franchise agreement with Huazhu doesn't cover that. What is your exposure to Hong Kong, in that Asia Pac region?

[Jean-Jacques Morin]

Yes. In Hong Kong, we've got 6 hotels. And these are good hotels in the sense that they are large hotels, and we've got a very nice Pullman that you may have seen. So 6 hotels, but good hotels.

[Monique Pollard, Vice President]

Okay. And so what was the sort of -- the drag from Hong Kong in that Asia Pac RevPAR? Because I guess that's the bit that will continue, at least until the protests finish.

[Jean-Jacques Morin]

If you -- we reported a 6.7% negative RevPAR for Greater China, which is the sum of China and Hong Kong. In Hong Kong, I mentioned about 30% RevPAR, a negative RevPAR, which, in fact, is 32% if you want to be precise. And the China number was a minus 3%, minus 3.1%. If you look at what is getting published on China, the 3% is very much in line with what you would expect. And so you've got what you would expect in China, compounded by the effect of Hong Kong.

[Monique Pollard, Vice President]

Okay. Yes, understood. And then what I don't understand was the pace of the Huazhu rooms growth development. So obviously, as you said, the China outlook is weak. Do you think there could be any knock-on effect on the pace at which Huazhu's opening your Accor-branded rooms in China and so any risk to the rooms growth from the development on their side?

[Jean-Jacques Morin]

No. We don't really, candidly that. In fact, the number of rooms that were opened in the quarter was very much in line with the number of rooms that was opened in Q2, which is very much in line with the number of rooms that was opened in Q1. Because as you may know, as you may guess, we follow that very closely. So I wouldn't say that. And in fact, I think we probably need to look at the Huazhu's results, when they will be published and get maybe a different view on how Huazhu is performing, but this is not now my story.

[Monique Pollard, Vice President]

Okay. Yes, understood. And then the final question was just on incentive fees in the quarter. Because if I look at that, your Management & Franchise like-for-like up 5.2%, you had RevPAR growth of 0.7% and then your organic rooms growth at Huazhu, just under 4%. So you got a bit of benefit there. Obviously, you flagged the opening in Asia Pac, but was there also strong incentive fees in the quarter?

[Jean-Jacques Morin]

I think, again, I get that question every call. So it more or less works. It does not necessarily work exactly for each quarter and exactly for each geography. But this quarter is not too bad, because this quarter, in fact, you've got rough cut, 1% RevPAR. You've got rough cut, 5% at system growth for the last 12 months, to which we subscribe 1 point, which is more or less the effect of Huazhu and we subtract it because it's not generating fees. So the 1% plus the 4% is equal to the 5%. And the management fees overall is to the tune of 5%. So we are not too far off here. After that, and you heard me when I was commenting by geography, then depending on what's happening in given geography, you may have this destruction, which are much more significant as a percent, but not so much significant in term of value. And I'm talking here notably of what happened in this quarter with 2 terminations. I mean these terminations were some terminations. They were done for the right reason, i.e., us not being happy with some standard in one given property or an owner deciding that he wanted to do something totally different with his property which we can't really control. And when you get that, then you have a onetime revenue, which is discussing any percentage that you may compute on the one given quarter. But not everything in the Management & Franchise revenue is linked to RevPAR, that is for sure. Because you've got things that we have in the Management & Franchise that I alluded to when I talked about procurement when I was making the talking points on that slide. And so you will always have some disturbances. But over time, you should be more or less there. And I am happy to take the detailed computation with you on the side, Monique, I mean I'm happy to do that. But I think that it will be too tedious for the call.

[Operator]

Next question is from Mr. Geoffrey d'Halluin from Bank of America Merrill Lynch.

[Geoffrey d'Halluin, Director & Research Analyst]

This is Geoffrey d'Halluin from Bank of America Merrill Lynch. Three questions, please. The first one is on the fourth quarter of the year, shall we need to be aware of any big events or big comps for any of your big countries, in the fourth quarter of the year, which might affect the RevPAR change? My second question is related to the buyback. Because I guess you said, following the disposal of AccorInvest, you would buy back about 10% of your share's capital. So you've done 7.5% so far, but you also said it's going to be over a 2-years period. So just would like get your thoughts on when can we expect to have the remaining 2.5% and a new plan launch? And the last question is regarding the loyalty program investment. So I guess you've said during the call, you would expect the EUR 55 million impact on 2019 should be slightly lower than December, just to confirm if I get this point. And do you still expect about EUR 45 million negative in 2020 on EBITDA?

[Jean-Jacques Morin]

Okay. So on the RevPAR, no, there is nothing special that comes into my mind besides the one that I already said, which is that Germany was a very negative number in the quarter and will turn back to positive in the next quarter. So that is for sure because it's essentially linked to the calendar. Besides that, the one thing that I don't know what may happen is Brexit, but nobody knows. And there is no reason for why you wouldn't have anyway some bit of inertia. And then again, I'm taking as an assumption that Asia Pacific is not further deteriorating. So I am not taking a stance by which the situation in Asia Pacific would continue to go down. And so I think these are the key elements in the RevPAR outlook. In terms of the buyback, what we'll do there? We've done 75% of the plan, as you highlighted. I think what we'll do is that we'll reannounce something once we're done with all this, and that will be the completion of that program for sure, and then an extension of that program for something else. So -- for another run, I'm sorry. So that's what we will do there. And in term of the EUR 55 million, yes, I mean the EUR 45 million, the number for the after, which is year 2020, is the same, i.e., if you have -- let's make it simple. If you were to save EUR 5 million for whatever reason in the one given year, those EUR 5 million, you probably will get next year, because the program in itself has not changed, we are still targeting the same thing. I'm just alluding to some start-up phasing effect of some of the expenses that you may have in any project that lasts over 2 to 3 years. It's a pretty significant endeavor, the project with many, many flow in order to complete it. You were asking me about the partnership. I mean it's not one partnership that we negotiate. It's several partnership. Several partnership in several industry, in several geography. And so there is significant project management happening here. So I think that's how I will answer that question on the marketing plan.

[Operator]

We have no other questions. [Operator Instructions] We have no other questions, sir.

[Jean-Jacques Morin]

Okay. So let me thank everybody who attended the call today, for listening, for asking questions, and we look forward to talking to you for the year-end result in February. So thank you very much. Good day. Good evening.

[Operator]

Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.