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By Dominique Vidalon
PARIS (Reuters) - Accor (PA:ACCP), Europe's largest hotel group, forecast on Tuesday that its operating profit would rise this year thanks to cost cuts and stronger demand for hotel rooms in all regions except France.
The company, whose 14 hotel brands range from budget Ibis to luxury Sofitel, predicted 2014 operating profit of 575 million to 595 million euros (458-473 million pounds), compared with an adjusted operating profit of 521 million in 2013.
The world's fourth-largest hotel group behind InterContinental (L:IHG), Marriott (O:MAR) and Starwood (N:HOT) is undergoing a reorganisation initiated by private equity specialist Sebastien Bazin, who took over as chief executive a year ago.
"In spite of a complex situation in France, the group is engaged on positive trends...All conditions are there to push forward and deliver on our targets," Bazin told a conference call with journalists.
Accor has been hit by a variety of problems in its home market, which generates 35 percent of group sales, ranging from a rise in value added tax (VAT) to sluggish economic activity.
Business trends remained stable during the summer season with revenue per average room (RevPar) increasing in all regions except France, while initial indicators for August were also "encouraging". But France was expected to remain sluggish.
"We do not anticipate a significant improvement in France in the second half," Bazin said.
Bazin was speaking after Accor posted a 17.6 percent rise in first-half operating profit to 219 million euros, beating the average estimate in a Thomson Reuters I/B/E/S poll of 205 million. Analysts on average were expecting full-year operating profit of 597 million.
Bazin's first move at Accor has been to split the company into two divisions — HotelServices and HotelInvest — to separate its operating and franchising business from its real estate ownership activity in a bid to bolster profitability.
Accor also said that HotelInvest had bought a portfolio of 13 hotels in Britain from the Tritax investment fund for 89 million euros, which it will fund entirely through debt.
Net debt stood at 259 million euros at end-June, a 33 million increase year-on-year linked to acquisitions.
Accor's shares have risen 7 percent in the last two weeks, partially reversing declines in July, and are up close to 5 percent since the start of the year, outperforming a 1.8 percent rise in the European travel and leisure index <.SXTP> on hopes Bazin can improve the group's performance.
(Editing by James Regan)