Accor SA

PAR:AC

Earnings Call Transcript 2020-Q3

[Operator]

Hello, and welcome to the Accor Analyst Call Q3. My name is Jess, and I'll be your coordinator for today's event. [Operator Instructions] I will now hand you over to your host, Jean-Jacques Morin, Deputy CEO, to begin today's call. Thank you.

[Jean-Jacques Morin]

Thank you. Good evening, good morning, ladies and gentlemen. Thank you for joining us to review our Q3 2020 revenue. As a preliminary remark, Accor traditionally discusses guidance for the full year EBITDA during this Q3 call. Today, the group's ability to assess the impact of COVID-19 on its full year financials continues to be very limited. As a consequence, we will not discuss such a guidance. But without further delay, let me move to Page 3, which provides you with an overview of the Q3 highlights. So Q3 marked a clear improvement over Q2, which was the trough of the crisis. It was driven by the end of full lockdowns and closed borders and also by a satisfactory summer season, notably in Europe, where domestic travel was sustained. In terms of business update, RevPAR improved by 20 percentage points from minus 88 in Q2 to minus 63 in Q3. Occupancy was up by 20 percentage points from a low 15% in Q2 to 35% in Q3. 90% of our portfolio was open as of the end of September. If you go to the second column, which discuss system growth, the Q3 system growth was solid. 7,800 rooms were opened during the quarter, which drove the last 12 months net organic system growth to be at 3.3%. And talking of the pipeline, we ended up at 208,000 rooms, which is up 2,000 rooms compared to the end of June with a good level of new projects. All of that translated into the following financial performance. The group revenue followed the RevPAR and was down minus 64%, and the management and franchise revenue was by itself down 72%. So that's on the highlights. So let's go a little bit more in detail. And we start with -- on Page 4, a slide, which is called recovery driven by domestic travel. What you have here is you have an illustration of the business environment, and the top part of the chart are industry statistics from the UNWTO and also the IATA, so the travel airline institute. And at the bottom of the table, you've got the Accor figures. So complete or partially closed border remain a strong obstacle to the recovery of international, no surprise, which is critical for key gateways such as Paris and London and more broadly for upscale and luxury hotel. At the end of hotel -- at the end of August, sorry, border restrictions were still in place in 73% of the countries worldwide. As a consequence, international air traffic has not been recovering as far as domestic traffic, which you see very well on the right part of the table. The translation of that into the Accor world is the fact that the number of open hotels has more than doubled to reach 90% at the end of September from a low 38% in April, that's the chart that you've got on the left part. And the RevPAR, which improved to a level of minus 63% at the end of September to be compared to minus 92% at the end of April. So that's some macro indication on recovery globally. But if you go and look at the regional view of it, and we are on Slide 5, you see that starting -- you see that the starting point is Europe where you can notice that Europe has recovered much faster than the other geographies, everything being equal. The minus 57% RevPAR in Q3 was driven by a strong summer season. And this despite a muted MICE segment, MICE being industry conference, trade show exhibition kind of business. Should rebound what happened in Europe by country, France posted a minus 45% RevPAR in Q3. It was notably driven by the Provence, which is at minus 28% and had a good summer season. Whereas in Paris, the same number was minus 72%, which was affected by the lack of international travelers. Germany was not as good, and it ended up at minus 61%. And again, here, no real surprises. The country is skewed to our no business travel. And this despite an earlier lockdown relaxation. Last but not least, the U.K. posted a minus 80% RevPAR in Q3. And again, here, this is due to London reliance on international travel. London is quite big for us. And also in generic term, more stringent restriction in the U.K. that are taken versus what you would see in other continental Europe countries over summer. If you move to the situation in Asia Pacific, the RevPAR was down minus 59% in Q3, enjoying some continuous improvement. We provided on the graph some details on Greater China, which is recovering much faster than the rest of the region. And they end up with RevPAR for Q3 at minus 29%. The recovery for China is driven by sanitary measures that have been implemented with extreme rigor and the fact that China was also at the forefront of pandemic wave and is a large country. So that should pave the way for the rest of the world in terms of recovery, sorry, [ scenetics ]. In Asia, you've got also a significant part of the business, which is Australia. And Australia posted minus 63% RevPAR. And that number is driven by the restriction that you've got on international travel. There is no international travel to Australia. And also on top of that, the fact that even in interstate, there is -- within the country, there is limitation that have been put in place. And so essentially, the business is driven by some leisure and quarantine business. The rest of Asia, like Thailand, Vietnam, Indonesia, which is very heavily depending on international travel, is very much affected up to the tune of minus 75% to minus 80% RevPAR. Now once we've done Europe and we've done Asia Pacific, we've got about 80% of what we do. And there is a table that we provide, which is the rest of the world. So Middle East and Africa posted a minus 70% RevPAR in Q3. This is due obviously to border restrictions, but also because they have a large exposure to upscale on luxury. On top of that, if you take the case of Saudi, which is a key country in Middle East and Africa for us, the Hajj pilgrimage, so the religious pilgrimage, which usually would gather 2 million pilgrims, was reduced to about 1,000 people. They were not given permission to go and do the pilgrimage. So that obviously didn't help. And North America and South America were falling by more than 80% over Q3. So that's for the overview of what happened by geography. Just some words on developments, and I am on Slide 6. The net system growth was 3.3%, as I said before, and this is in line with our expectation. We opened 8,000 rooms, which is a figure which is comparable to what we did last year at the same time or what we did in Q1 of this year.Asia Pacific accounted for a bit more than half of the opening, which is a bit higher than what you would see usually. And as part of Asia Pacific, the China region that was discussed in -- before has been helping very much the performance of Huazhu, which has been opening in Q3 about 2,700 homes, which means that bottom line, 35% of the group openings are coming from Huazhu. Our pipeline benefited from new signings to reach 2,008 -- 208,000, sorry, whom at the end of September, which is about the number that we had at the end of December 2019. Last but not least, over Q3, churn was a bit above 2%, but still very much controlled. That's for the development. If you go and look at the revenue and look at it for the segments which are ours, and I am on Slide 7, you can see that [ our per ] revenue was EUR 329 million. And basically, there is not much difference between the like-for-like and the reported number besides the fact that we sold the Movenpick lease portfolio at the beginning of the year. As for hotel service, the revenue was down minus 69% on the back of 63% RevPAR. So very much on line. I'll detail a bit further the M&F fees and give you some more detail on the next page. And as far as the other component of hotel services, which is service to owner, the number was 153 million, and it was down like-for-like by minus 67%. So very much in the same ballpark in terms of variations. Moving to the next segment, which is hotel assets and other. The revenue was down a number, which is a bit better, 57%. And that was driven notably by the Strata activity, i.e., the management [ letting right ] that we've got in Australia, which was more resilient and benefited, in fact, from strong leisure demand on the Gold and the Sunshine Coast. So along the reef barrier, if you will. And so that's the business that went well over that period. If people couldn't go into any other country, they've been benefiting for the nice part of Australia, which is that part of the country that is the reef barrier. As for the new businesses, revenue was down minus 44%. And what you see here is exactly what we saw in H1, i.e., the travel-related activities as luxury, private rental, onetime stay are not -- are more affected just like the RevPAR, which is not the case of other activities, which are less linked to RevPAR, like D-EDGE, which provide digital services. Moving to the next page, which is management and franchise revenue, which is down 70% on a like-for-like basis, 2 points. I mean, first half, the revenue of 71 -- 72% is, in fact, on the back of a RevPAR of minus 53%. And really, what we saw here is that there was an improvement of the activity during summer, and notably of quarantine business, and notably in Asia Pacific, which allowed to recognize some incentive in places like Singapore or in places like Australia. And this is why you've got a reduced distortion versus RevPAR. And by region, frankly, it's all very much consistent, i.e., the variation that you've got on M&F is very much the variation that you've got on the RevPAR. We take the opportunity of this presentation to cover briefly a press release that you may have seen issued this morning regarding the issuance of a partnership with BNP Paribas, and all of that being part of the larger initiative called Accor Live Limitless. In 2019, we launched the ALL, Accor Live Limitless, program with the objective to increase Accor brand awareness, loyalty and partnership. The COVID-19 went on top of that, but we stayed the course, and we stayed making progresses as best as we can. And so the right part of that table tells you that we signed, in fact, on the 22nd of October a partnership with BNP Paribas, which complements the one that we had with Visa, Visa being the payment scheme in that partnership. And so we will issue co-branded card in Europe, starting with France, in early 2021. That's essentially what this is about. So just to remind everybody of why it is important, cardholder would use those cards for day-to-day purchases. As they will spend, they will earn points. And at those points, they will be able to burn across the entire Accor ecosystem and its partners. So it's basically increasing the liquidity and the volume of loyalty points, which translates in a sustained incremental revenue stream for Accor. So it's a first step, but it's a good illustration of what we wanted to do, and this Accor augmented hospitality strategy. On the left part of the slide, we took this opportunity to also show you perception as the survey that was conducted by Kantar. And you will see from those statistics that premium and lifestyle come as being strong characteristic of the ALL brand, which is exactly what we wanted to reach. And so all of that is going in the right direction, granted that it would be much more lovely to have also the right level of RevPAR. I'll conclude that presentation with a few key takeaways, and I am on Slide 10. So Q3 marked a clear improvement over Q2, which was the trough of the crisis, and the summer season helped a lot, and notably in Europe. Europe is about 50% of what we do, as you may recall. From a liquidity perspective, our core position remains solid, and we have more than EUR 4 billion of liquidity as of the end of September. And that gives us, in fact, the comfort to do what's right for the business. As far as the operational performance, which is not the subject of the call, but we thought it was important to provide you some high-level update here, we do confirm the sensitivity we have provided back in August when we did the H1 release, i.e., an EBITDA sensitivity to 1 point of RevPAR, which is below EUR 20 million, and the monthly cash burn, around EUR 80 million. Last but not least, the EUR 200 million recurring cost saving that we, again, had announced back at the end of August is on track. And we will provide you a more comprehensive update on that when we do the year-end publication next February. So as the global environment remains challenging, and we've -- I mean I can say a bit better, no visibility, very limited visibility, look at what's happening right now in France, as an example, we strongly believe that discipline, adaptability and cost control are of paramount importance and the fact that we use that crisis to accelerate the transformation of the organization and the structure to enhance performance and also put the right focus on what we do in terms of segments. And we are going to keep continuing optimizing value creation for hotels with new additional sources of revenue and the strengthened loyalty program. I just went through that. And all of that will make us in a better position when the upcoming recovery will come, and the upcoming recovery will come at one point in time, for sure. So thank you very much for your attention. And the floor is yours for questions.

[Operator]

[Operator Instructions] So the first question comes from the line of Jamie Rollo from Morgan Stanley.

[Jamie David William Rollo, Managing Director]

Three questions, please. First is a geeky one. But the drop in revenue for services to owners, that decline of 69%, that's not too different to the drop in the second quarter, but the RevPAR drop is obviously much less, which could have implications to the bottom line. I'm just thinking about how should we model that. Is that more linked to M&F revenue rather than RevPAR? Secondly, on signings, I think we can work backwards, but it looks like you signed around 10,000 rooms in the third quarter net of any pipeline attrition. So are you -- I mean that's quite normal for Accor, but are you seeing any slowdown in development or interest looking forward? And then finally, if possible, it'd be quite helpful to break down the EUR 80 million cash burn between the relevant items in operating working capital, CapEx and interest.

[Jean-Jacques Morin]

Yes. On the second question, no, there is really nothing that you can take from the number, except the fact that there is some inertia in all the work that we've done, and we are benefiting from that inertia in the development. What the big question is, is what are the next months going to be? Today, candidly, it's still very sustained. And we provided to you a guidance of somewhere between 2% to 3% for net system growth, and we should be more or less at a number which is around those 2% plus. So that's really where we are currently. Question is going to be where is the world heading? And if there is no stronger recovery of the economy, you will certainly see a number of net openings, which is going to be impacted by that, with as the counterpart, the fact that we may be able to gain an addition in our network conversions. And so it's something that you should mechanically see going forward because up to now, we've not seen a lot of distressed hotel. In our network, there is no distressed hotel, but you would think that with what's happening in this time, you should see more distressed hotels. And at that point in time, when you have those distressed hotels, you should see some people looking for big brother, if you will. So that's, I think, what you would see. Okay. In terms of the cash burn -- let me take the STO. In fact, the STO decreases with RevPAR. So -- and this is particularly true in the U.S. So I don't know if this is your point, in fact, Jamie, but you would think or you would see that the STO is building like that. And it's still a bit true in the U.S. where you have a minus 70% on the top of my head on STO. And then in terms of cash burn, the problem with the cash burn and the difficulty with the cash burn is exactly the one that you raised, which is there is a portion of it, which is working capital. And the working capital is the portion, which is much tougher to assess. So I think on this one, we'll probably give you more visibility on this one when we have the full year. But at this juncture, I don't want to go there.

[Operator]

The next question comes from the line of Jarrod Castle from UBS.

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

Three as well. You did touch on partnership revenue. So just any further color in terms of if there's anything else in the pipeline, which you see, I guess, in the next 6 months being converted? Secondly, can you give a little bit of color on the closures? I think the answer is no, but is some of it due to failures? Is some of it due to you saying to owners, we don't want you using the brands anymore? And/or is it kind of owners coming to you and saying, we're going elsewhere? And then any update on Travelodge and the situation there or any opportunities that you are seeing at the moment?

[Jean-Jacques Morin]

On Travelodge, in fact, the discussions are ongoing. Some of you who may follow the file know that they're supposed to come to some kind of a decision before Christmas. So I think we should hear more, but this is progressing as well as it can in terms of negotiation. I think that's on Travelodge. On the partnership, the other thing that is being discussed, a key element of what is in partnership is airlines. So the discussion with airlines, as you may guess, are not progressing as easily as you would have planned 1 year ago because they have their own problems. So really, what we're going to be focused is on things like partnership cards, which are linked to banks because, as I was mentioning, the BNP agreement is mostly an agreement for Europe. And so we are working on the same thing but for other continents. And then you have also some discussion in other type of services like rental car. But today, the key focus is around, in fact, credit card, if you will, co-branded card, which has turned out to be a good stream of revenue when you can secure them because it's a stream of revenue for the long run. I think that's what I would say on this one. And in terms of -- the 2% in itself is not a number which is much different than what we've been seeing before. So there is really nothing special to read into that. There is not something which occurs, which is linked to, for example, an increased number of failure. We don't see that. And again, I said that earlier, up to now, there is a very limited number of the fact of asset owner that come and come to us for strong financial problems, asking us for help. We don't see that. I'm not saying that it is not something that we will see, but today, we don't see that. And I think it has probably to do with the fact that many of these people have been helped significantly by initiatives taken by government, whether this is on personal costs or whether this is on bridge loans. So the question is going to be when are those subsidies coming down and when they are coming down, will you have at that point in time, a business level, which is sustained enough that you can basically cross the bridge, if you will. And so that's really the question mark around those. But there is nothing special in the closure related to business, which are impaired.

[Operator]

The next question comes from the line of Leo Carrington from Credit Suisse.

[Leo Carrington, Research Analyst]

I have a couple of questions. First on if you could elaborate on the variation between like-for-like and RevPAR for managed and franchise revenues. I guess this is at the moment, exclusively, the incentive fees. Can you just help us with the mechanics of these in the quarter? And also when we look out to 2021, how we would expect performance versus RevPAR and if there would be any differences by region as well? And then the second question is around the demand outlook, but particularly on the corporate side, if you've got any sort of point you can share with us from the kind of rate negotiations for 2021 and broader kind of MICE negotiations as well.

[Jean-Jacques Morin]

Yes. On the difference, I mean, you said it. I mean the key deviation or variance is coming from incentive. What we saw, and I alluded to that, is the fact that over Q3, we had some hotels that have been doing very well in terms of incentives. I mean you may recall that we had discussed in H1 the fact that incentive was significantly down from what it used to be. It used to be something like 30% to 35% of our total fees. And so it has been reducing significantly. And here, what has been happening is that some hotels have performed extremely well, and notably because of the quarantine business, if you want to believe it. And this is notably true in Asia where, in fact, the procedures were very stringent in places like Australia and places like Singapore. And so they basically book hotels. They take all the hotels, and they are using the hotels as they see fit in order to put people that they want to quarantine. And so that's one example of why despite having conditions around the business, which are not so good, we ended up having some amount of incentive, granted that the incentive is still a small amount. And we talk about very small amount. And so we're not going to be at 35% of the total fees that you're on, which is going to be incentive. So that's the key deviation. Your other question was on corporate. So on corporate rate, we -- it's early in the negotiations, right? It's very early in the negotiations because part of those negotiations, and notably, one of the good negotiations that we would have is the one around the airline, is that the key question is what volume are you providing? And then depending on what volume you provide, I'll tell you what rate I can do. So this is going on like that. Could you expect that there will be some pricing pressure around those corporate rates, the answer is absolutely. But then we're not going to commit around prices that are not substantiated by business volume that we can feel comfortable about. So this is what is ongoing there on the airline group. So we'll know more in the coming months -- weeks.

[Operator]

The next question comes from the line of Andre Juillard from Deutsche Bank.

[Andre Juillard, Research Analyst]

So 3 questions, if I may. The first one is related to the headquarter disposal. Could you give us an update on what is going on? And do you have some clarification on the potential disposal? The second one is about AccorInvest and the rumors, which came out on the French press about the potential right issue that could be done. Could you also give us some more color about that and your potential implication? And last, about the new sources of revenues. Could you also give us some more color about what is put in place and what it could represent in the future?

[Jean-Jacques Morin]

Yes. I mean on the Sequana, the tower sale, I mean, this is an ongoing process. As you know, we've been putting the tower as an asset held for sale in our accounts. So there are negotiations. There are right now people that we are discussing with and trying to find the best term for the company. So this is an ongoing process, and we'll keep you updated once this transaction progresses and is finalized. In terms of AccorInvest. So yes, there has been some rumor. I think the best people that can answer you on what's happening in AccorInvest are our AccorInvest people obviously. But being a 30% shareholder of AccorInvest, I think the one thing that I would tell you is that we're going to act as a rational equity investor. It's an important part of what we do. It's 25% of what we do. And so we just want to make sure that the solution is fine to the situation that AccorInvest is facing. And the situation that AccorInvest is facing is no different than the situation that many of the people who are asset-heavy are feeling with the current crisis, i.e., an operating leverage, which is much higher and then situation in terms of cash pressure, which is much higher. And so there is strong story shareholders in AccorInvest. So I'm sure that between that, the banks and the governments will find the right mix of a solution. So that's on AccorInvest. On sources of revenue, what we had mentioned on the target that we've been quantifying was EUR 100 million coming from all these programs and partnerships, if you will. So the number is a good number, and it is substantiated by a lot of parallel initiatives to get there. I mean, significant one were the 2 I mentioned before, i.e., the airline and the banks. And so all of that was before COVID. So as I was saying, on the banks, there is a way by which you can progress, and we've proven it with this Visa partnership. On the airline, the airline right now have got their own problems. So this discussion is probably, I would say, delayed to the point that they have resolved and they have -- they are in the situation into which they can deal with those kind of partnership. And so it will come, but it will come in a delayed manner. That's what I would say to be candid here. And there are other things that we can look, and I was mentioning car rentals. I mean it's another good one. And so there are discussions right now with car rental companies. I mean I'm sure, Andre, that you will understand that the COVID crisis has taken its toll. I mean it is really painful today to do a business for some corporations. But what matters here is that in terms of income, we are not changing the cap. So we are staying on the same course. And so we will find our path towards what we think was important for the business in a way which takes into account different circumstances.

[Andre Juillard, Research Analyst]

Okay. Just to come back on Sequana and AccorInvest, the discussions you have at the moment could be taken before the year-end? Or are we more talking about '21?

[Jean-Jacques Morin]

I -- it could, but I don't know that it will. No because as every negotiation, you would -- you always want those negotiations to be as fast as possible. But like on Sequana, let me give you an example. We do have some offers, yes. But there are some of those offers that I don't want to take now. I would prefer to look a little bit more and wait and see whether some of the other investors who are working on the site are ready to give me something which is better. There is a tendency with what the world is for every investor to look for the good deal, the bargain deal. And we are not a for seller. I mean we don't have a liquidity problem here, right? We have all what we need in order to do what's right. And that's also why I was making that conclusion on the fact that we've got the comfort to do what's right for the business, which is not the case when you are in a liquidity crunch. And so that's also why I'm not more precise on this one. But would we sell Sequana, the answer is yes. It's just going to be depending on what is the right time and the right price.

[Operator]

The next question comes from the line of Jaafar Mestari from Exane.

[Jaafar Mestari, Analyst]

I have 2 questions, please. So the first one is really just a follow-up on AccorInvest. I don't want to be contrasting your tone in your comments, but if I remember correctly, in August, you sounded a lot more relaxed on AccorInvest. And in particular, you mentioned they got a covenant holiday, they got assets that they can monetize. So I'm just curious whether it's just a natural progression and a company that's looking more into the future and thinking maybe actually I need to fix the balance sheet or if anything has changed? And only from public information, some investors will have picked up that you mentioned yourself just now that AccorInvest has a number of solid shareholders. One of them, Colony NorthStar, seems to be divesting of hotels and investing more in digital assets, for example, that's one new-ish thing I would pick up on. So if you could comment on why you're a lot more open now to that scenario compared to where you were in August. And second question on the payments card that you announced this morning. Is there anything more you can say on the fee model there? I'm not an expert at all, but it looks like what some other global brands are doing is effectively newly issued credit cards to their partners. Whereas, if I understand correctly, your model looks like just a new payment app on your existing current account. So can this fetch the sort of fees that you've previously benchmarked yourself against from global players? Can this such EUR 100 million in fees once it's fully rolled out globally?

[Jean-Jacques Morin]

Yes. I mean the EUR 100 million, Jaafar, as you certainly will realize, it's not only coming from this deal. So it's a sum of deals that are going to make the EUR 100 million. And again, remember, the EUR 100 million in itself may look like a big number. But as I know, what some of our competitions are able to do in those fields, and it's not EUR 100 million. It's hundreds of millions, turnout to say billions. And so I think there is the potential here with the specificities that are the specificities of the -- of our markets. I mean some markets are -- like the U.S. market is obviously much more favorable to those kind of schemes than European markets to start with the fact that interchange fees are much higher in the States than they are in Europe, as an example. But also culturally, people are much more living on credit. So I think that's one element on the Visa and the payment card. Now the model in itself, to answer your question, I mean, Visa is making some money just like they would make on any card. And what you do is that you have a model by which they would revert to you part of the money that they make on the basis of the card fees that they're able to earn on the issuance of the card and also part of the percentage -- a percentage, sorry, of the spend that they do through the card that they have been issuing with you. So it's a very standard way of doing those things. And so that's how it would work. It's a sharing of what they make, and we agree upfront on what is the percentage that we will have and what they will make on the card issue. So that's on the Visa scheme and how the mechanics work. In terms of economics, you're right in what you say. I did mention the covenant holiday. And by the way, the covenant holiday is in place and will be in place. They just have to renegotiate the next phase of the covenant holiday, which is what they are doing now. And I had mentioned asset to monetize, and this is true, they have a significant portfolio that they can monetize. I mean one is in Latin America, and the other one is in Australia. But now these 2 assets are significant in terms of numbers. I mean it's more -- it's triple digit in terms of the revenue that you could make by selling those. So that's why I'm saying that they have some means by which they could act. After that, the question that you have here again is, do you want to be a for seller and sell part of what you think is worth x at a number, which is x minus 0 because the market is not there and it's not sustaining, in fact, the valuation that you could have expected a couple of months ago. So I think that's why everything is being looked at, but some things that you could do, you don't want to do, if you find something which is not there. So last, but not least, I think you live in Europe. You know what's happening in Europe. I think you may even live in the U.K., Jaafar, no, don't you?

[Jaafar Mestari, Analyst]

Yes.

[Jean-Jacques Morin]

So you know exactly the beauty of spending the 14 days quarantine when you go from London to Paris and take a train. And so it's a real pain in the neck. And so what's happening is the AccorInvest portfolio is essentially European besides the 2 that I mentioned that you could sell. And so -- and there is more than 2, by the way, that's the 2 main. And so in fact, on Europe, I mean, the prospects are tougher. There is no doubt that the prospects in Europe are tougher, and they have been starting to be tougher at the end of August. And the fact that when you project yourself, you look at it and you say, yes, maybe I need to be thinking about other ways of, as you say, fixing your financials. So I think that's another element to take into account. And as far as the investor, yes, I know about Colony, I know about what I read in the press. Again, here, I don't have that sense from the discussion of the people we interfere with. But in the end, it is something that will find its way. And as you know, the [indiscernible] very, I would say, strong and significant investors of the world to being funds -- governmental funds, so pretty strong and some being French insurance company, as you know. So I think you've got [indiscernible] of investor, which many companies would love to have.

[Operator]

The next question comes from the line of Sabrina Blanc from Societe Generale.

[Sabrina Blanc, Equity Analyst]

I have 2 questions, if I may. The first one is regarding the cost saving plan. You said that things are ongoing, but could we have some color? And again, which type of RevPAR sensitivity could we expect following this cost saving? And the second question mark is regarding the initiatives that have been further announced in terms of coworking and so on. I would like to understand if, firstly, if that requires some investment from your part. And secondly, is this type of initiative that you have put, for example, in the new businesses and which finally had a limited impact?

[Jean-Jacques Morin]

Yes. Okay. So on the cost savings, as I said, when I was talking of it, I mean, we'll give you a comprehensive update when we do the February call. I mean, in July, what we provided you is the framework, i.e., the top-down approach on where we think we want to head. We are in the mine right now, looking at all the details and working out the detailed organization changes that we need to go do. This is going to take us some months. But by February, we will have a good view, and then we will give you a comprehensive update on what are the effect on all the other KPIs. But the ballpark that you have is what we will do and is what we are targeting. I think that's on this one. And your other question was?

[Sabrina Blanc, Equity Analyst]

On coworking.

[Jean-Jacques Morin]

Yes. On coworking. On coworking, sorry. On coworking, I mean, the idea there is to use, in fact, hotels and -- that are already existing. So to some extent, the investment that is required on this one is limited because what you would do there is you would use as much as you can the space that are already existing, the assets that are already existing, find a mechanism by which you can remunerate everybody. And from there on, what you basically are doing is making a better usage of your asset. And finally, to some extent, answering a need that you've got today even more after the COVID crisis than before of people looking for a place into which they can work, which is not exactly an office that may not exist anymore, but it's not exactly there on either and is equipped with what you need, video conference, Internet and some services around that. And so that's how this thing would work.

[Operator]

The next question comes from the line of Vicki Stern from Barclays.

[Victoria Jane Lee Stern, MD & Equity Analyst]

A few questions. Just coming back on hotel or AccorInvest. So you talked about potential asset sales. Just to check within the management contract agreements, are there any sort of change of ownership clauses we'd need to be aware of? Or are those contracts pretty rock-solid no matter who the ultimate owner of the assets are? Just secondly, around cost cuts. Obviously, you talked about the EUR 200 million plan previously, and you said you'll come back on that in February. But just, I mean, if the recovery does come through more slowly, are there additional levers you think you could pull that would go beyond that? And then finally, just around owner to stress. I think you sort of commented on the fact that, clearly, there's a lot of support in the system right now with furloughs, et cetera. So just on extent things are kind of delayed on that front. But you also touched on, obviously, it's highly unpredictable in terms of forecasting now working capital. Are you -- in your discussions today, are you seeing any incremental need to offer sort of more support, be it sort of fee postponement, anything like that to your owners?

[Jean-Jacques Morin]

The last question, what -- can you repeat just what you just said, the last one?

[Victoria Jane Lee Stern, MD & Equity Analyst]

Yes. Any needs -- sort of you talked about previously the need to offer kind of deferrals on fees of your owners. Just where are we at on that, the sort of latest round of discussions? And how we should think then about the implications on working capital?

[Jean-Jacques Morin]

Yes. Sure, sure. I mean, on the deferral fees, I mean, there is no difference versus what I told you back at the end of H1. And it's also linked to the comment I was making on the fact that we don't have a lot of companies today, which are owning assets and come to us saying that they are bankrupt. And so they are -- or they're in significant financial distress. And so because of that, we have not been giving many deferral on fees, except for significant partners. AccorInvest, for example, is one partner, which is a significant partner to who we've given some help, but we don't do that because we're not in the business of financing the asset, and we can't do that. And so on this one, that's our stance. And what you would hope is exactly what I described before, i.e., the support that they get is going to be well-timed in such a way that they never cross the redline. I think that's the answer to your last question. On the exit clause, there is really nothing you should be aware of. And on the cost savings, I think we've done -- the one that we announced back in July are a little bit of a different nature of the one that we've done up to the beginning of the crisis. At the beginning of the crisis, we did the typical things, i.e., you stop traveling, you basically look at your marketing expenses and reduce them significantly. You don't hire, you force people into vacation, you try to take subsidies. This is all what I will call the short-term type of initiative in order to deal with an emergency situation. What we do with the project that we call internally we said, by the way, is something which is deeper on which we are basically doing a zero-based budgeting. And so the zero-based budgeting is something into which you really think deeply on how everybody works in the organization and rethink some of the processes end-to-end. And that's why it takes some time because it's really a rethinking of everybody's role and responsibility, if you will, and it's wider [ than what I am considering ]. It also includes the system that needs to go with that. And the EUR 200 million number that we quoted is a very significant number because you may recall that it meant that about 20% of the people that support, in fact, the headquarter would be let go. So it's not a small number. So I think this is what I would say here. If the crisis was to continue, Vicki, we can always continue the measures that we have been putting in place in April, May and June for reducing the costs. But the one that we launched in this -- that we launched, sorry, this summer is of a different tenor. It's much more deep.

[Operator]

The next question comes from the line of Richard Clarke from Bernstein.

[Richard J. Clarke, Research Analyst]

Just a couple of questions on Slide 4, if I may. It looks like a fairly modest falloff between August and September. Just wondering whether you could comment on what that maybe looked like for Europe. And then any commentary on how that's trended into the first couple of weeks of October? And whether the 90% of hotels open is still standing today or whether that's an end of September number. And then just coming back to your press release this morning about the BNP card. My read on that, it looked like you'd had some fairly healthy growth in your loyalty members actually since, I think, since half year -- the half year results. Am I reading that correctly? And anything you could say about the loyalty contribution, if you managed to increase that through the crisis?

[Jean-Jacques Morin]

Yes. The number of loyal customers did increase. I mean, we've got, since the beginning of the year, a number of loyal customer now, which is closer to 70 million, and it used to be a bit north of 60 million. So we have increased the number of loyal customers, which, by the way, I found great results taken into account the world in which we live, granted that, again, here in terms of revenue associated with all of that, the numbers. And so it's -- it is impacted by the COVID crisis in terms of absolute revenue euro attached to the number of loyal customers. So this has been, I would say, going well. And then your other question was on what? Sorry.

[Richard J. Clarke, Research Analyst]

Just basically, what does the bottom right chart look like on Slide 4 about the RevPAR, the monthly RevPAR? What that look like -- what does it look like in sort of October?

[Jean-Jacques Morin]

Yes. The number of hotel opened, by the way, has not changed today. It's still around the 90%. So the number was the end of September. But if you were to look at it today, it's still that number. It's 91%, to be precise. What you need to monitor here, Richard, is what are going to be the consequences of all the measures taken. Like again, today, the French government took additional measures to put in red zone, more department, much more department, that will have an effect. So I think you need to look at Europe, and notably France in Europe, because I know France better as a place where the numbers are not going to improve in Q4 versus Q3, everything being equal. And again, as I said, there is no visibility whatsoever. Everyday changes. But if I just look spot at what's happening, it's not going in the right direction. That is for sure. So I think that's what you should be seeing at the beginning of October, and you should expect. In terms of the number of September, you're right to point out that there is a little bit of a slowdown. And this is coming that -- from the fact that August was extremely boosted by vacation and leisure. I mean, what has been rebounding since the beginning of this crisis, as I've been saying, is the leisure and the domestic. And we took full benefit of that with [ some tiers ] well opened in July and August. Then at the end of August is when everybody came back from vacation and started again to put measures, whether it is the U.K., whether it is France, whether it is Germany, whether it is Belgium. You can see that in many jurisdictions, and that has an effect on the business, and that has even more an effect on the business that starting September and for the rest of the year, the part of the business, which is stronger, is the business. So you've got leisure, which is stronger over summer because it's summer vacation. And then from September on, what should take over is business. And notably in business, things like conventions, people meeting for deals and these kind of things. And today, we don't see that. Today, the MICE business, as I said, in my speech was -- is muted -- was muted. I mean, there was 2,000 events, and most of them were either canceled or postponed. That's really where we stand in terms of that part of the business. And so this is affecting the business portion of the numbers, which is about 2/3 of what we do. And you see that in the little spike that we -- you highlighted in the September curve.

[Richard J. Clarke, Research Analyst]

If I can just ask one quick follow-up. A few people have asked today about some of these new revenue sources that you're attacking like coworking and car rental. Under franchise agreements, normally, the fee is just on room revenue, can you capture a fee on these other revenue streams as well?

[Jean-Jacques Morin]

Yes, it would be obviously much easier if you are on the management type of model. That's for sure. You're right. And remember that probably 75% of what we do is managed. So the first point of focus will be managed.

[Operator]

There are currently no questions in the queue. [Operator Instructions] Another question has come through, and this comes from the line of Simon LeChipre from MainFirst.

[Simon LeChipre, Analyst]

Just 2 questions, please. Regarding sbe, where do you stand in the asset restructuring process? And secondly, on new businesses, where do you stand in terms of the review of the portfolio and especially what about Jean Paul?

[Jean-Jacques Morin]

Yes. In terms of -- I'll take new businesses first. New businesses, we have had a lot of discussion with many people. The -- what's happening with new businesses is that it's back to the comment I was making before on Sequana. People today want to do deals. But as they think that you are in a weaker situation, they try to take advantage of the situation in order to get, I would say, a bargain deal. And so in many of the discussions that we had started, we've been slowing them down up to a point where, in fact, the proposal or the offers that we get are, in fact, more reasonable in terms of what we think the value is. And so you have a lot of those deals, which today are standing on the back burner, and we are waiting for a better time. So I think that's what you have on new businesses. I'm not saying that this is true for all of them. I'm just saying that if people are coming up to us with offers that don't make sense, we're not going to sell them or selling them. It's just like [ Moor Park ]. On sbe, it's moving ahead. So they are working on that restructuring, and so you should have more news in the coming months.

[Operator]

There are no further questions in the queue, so I will hand back over to your host for any closing remarks.

[Jean-Jacques Morin]

No, I think there is a question that we got from somebody that cannot connect by phone. Somebody is telling me there is a question that we got from somebody that -- and the question is, would it be possible to ask this to management? How would the core balance sheet balance the risk between achieving investment-grade rating versus so many opportunities that may arise in this crisis, will achieving the investment-grade rating take presence? I mean, I'll say it very clearly. Today, the focus of the company is on making work what we started and improving it for the rebound. And so that's why the focus, key focus, of the company is around the reset project and making sure that we use that crisis as an opportunity to do what is right. And what I mean by that is that the mindset of people and the capability of people to work on those kind of initiatives is today much stronger, much bigger than what it used because people are understanding that they need to do something, and they have, to some extent, the time and the bandwidth to go and work on things that they wouldn't do in a world into which business is growing day after day at a significant pace. And so I think we want to use that opportunity to do that cleansing, and that's the #1 priority today. Okay. No more questions?

[Operator]

No further questions in the queue.

[Jean-Jacques Morin]

Okay. So thank you, everybody, for taking the time, and we'll talk to you for the year-end results. Bye-bye.

[Operator]

Thank you for joining today's call. You may now disconnect your lines.