French hotel group Accor launches fund to assist employees

To stem the fallout of the Covid-19 outbreak that has claimed over 60,000 lives and impacted more than 1.1 million people worldwide, French hotel group Accord unveiled its “ALL Heartist Fund” to assist its employees and offer support to partners, it announced on April 2.

“After consulting with the group’s main shareholders, JinJiang International, Qatar Investment Authority, Kingdom Holding Company and Harris Associates, Accor has decided to allocate 25 per cent of the planned dividend $75.6m (€70m) to the launch of the “ALL Heartist Fund”, a Covid-19 special purpose vehicle. This fund will typically assist – the group’s 300,000 employees, pledging to pay for their Covid-19-related hospital expenses, for those who do not have social security or medical insurance; on a case by case basis, furloughed employees suffering great financial distress; on a case by case basis, individual partners facing financial difficulty. In addition, the group will further deploy its solidarity initiatives to support frontline healthcare professionals and non-profit organisations,” a statement by the company read.

“In light of the urgency and the scale of the situation, we have decided to act in an immediate and meaningful way,” said Sebastien Bazin, chairman and CEO of Accor, who also committed to forego 25 per cent of his compensation during the crisis. The cash equivalent will be added to the fund.

“We wish to express our solidarity and gratitude to all those demonstrating courage and selflessness during this crisis.

“As our industry is going through tough times, we have to make tough decisions, but Accor has a strong balance sheet which will enable it to withstand this crisis and emerge with strength during the recovery period. I am confident that Accor will soon rediscover the road to growth,” he added.

The company’s mitigation measures, in the light of the Covid-19 outbreak, began as early as February, and included:

• Travel ban, hiring freeze, reduced schedules and /or furloughing for 75 per cent of global head office teams for Q2 2020, resulting in a minimum $64.8m (€60m) reduction in general and administrative expenses for 2020.
• Reviewed recurring investment plan for 2020 resulting in a $64.8m (€60m) reduction in capital expenditures.

The group is also streamlining additional costs such as sales, marketing and information technology.

Accor attributed its cash on hand worth more than $2.7bn (€2.5bn) to its asset-light transformation and cash preservation strategy. It has an undrawn revolving credit facility of $1.3bn (€1.2bn).