ACCOR SERVICES A Success Story 1 October 21, 2008 Accor Services: - PowerPoint PPT Presentation

ACCOR SERVICES A Success Story 1 October 21, 2008

Accor Services: an ongoing success story � 40 years ago Creation of a very innovative concept, “Ticket Restaurant” � 2000-2008 More products, more innovation in the prepaid market � Beyond 2008 Prepaid market entering a new phase New opportunities for Accor Services A business in transformation, offering strong value-creation potential 2

Accor Services KPIs � Growth and sustainability Issue Volume � Revenue: 11% CAGR 1996-2007 � PBT: 14% CAGR 1996-2007 � Profitability X 2.5 €11.4bn � EBITDAR margin: 42% � PBT / Issue volume ratio: 3% €4.6bn � Cash generation � Negative WC of €1.9 bn 1996 2007 � Steady CF generation: €400m p.a. � Variation of negative WC: +€150m p.a . CAGR 1996-2007: 8.7% � Limited capital requirement � €20-25m capex p.a. Resilience to economic cycles 3

A Win-Win Business Model For More Than 40 Years In the Prepaid Benefits Market

Prepaid benefits: a win-win business model GOVERNMENTS & UNIONS Implementation Promotion of tax framework of prepaid to develop tax-driven prepaid solutions solutions MERCHANTS CORPORATE CLIENTS Prepaid services Refund Filtered Acceptance Network BtoB Market offering claims 1 million Accor Services affiliates 430,000 companies at the heart (design, (restaurants, supermarkets, etc.) of the relationship management) Use CORPORATE EMPLOYEES Distribution End Users 30 million users 5

Win-win solutions for corporate clients Example: Meal Vouchers in France (Ticket Restaurant) SIMPLE AND HEALTHY ALTERNATIVE TO CANTEENS, PARTICULARLY FOR SMEs � 54% of polled company managers consider meal EMPLOYER COST SAVINGS vouchers as a means to improve employee eating habits x Employer costs SOURCE OF EMPLOYEE RETENTION Company contribution 1,000 1,000 � For 93% of polled company managers, their employees: Payroll taxes (50%) 0 500 � Attach great value to the meal vouchers system Total cost to employer 1,000 1,500 � Enjoy increased purchasing power through the system � Should consider meal vouchers as an additional part of their total compensation package 33% payroll cost savings � 63% of polled company managers consider meal for the employer vouchers as a key negotiating argument when hiring new employees Source: Ernst & Young Study conducted for the Source: IPSOS Survey based on 400 French managers in Commission Nationale des Titres-Restaurant, May 2006 companies using meal vouchers, September 2008) 6

Win-win solution for corporate employees Example: Meal Vouchers in France (Ticket Restaurant) POSITIVE IMPACT ON EMPLOYEE HEALTH � For 57% of polled employees, INCREASED PURCHASING POWER meal vouchers help them to have a x sound, balanced diet and to reduce Employee income stress by enabling a lunch break Income received by the employee 1,000 1,000 “Food at Work” by Christopher Wanjek Taxable portion (at 20%) 0 (200) STRONGLY APPRECIATED BENEFIT Income tax (10% marginal rate) 0 (100) � 90% of polled employees attach great value to the meal vouchers system Total employee benefit 1,000 700 � 76% of polled employees consider meal vouchers as an additional part of their compensation 43% more income � 71% of polled employees consider meal vouchers as a key differentiation factor vs. other companies for the employee Source: IPSOS Survey based on 800 French employees using meal Source: Ernst & Young study conducted for the vouchers, September 2008) Commission Nationale des Titres-Restaurant, May 2006 7

Win-win solution for merchants Example: Meal Vouchers in France (Ticket Restaurant) Annual volume of meals served in INCREASED REVENUE French restaurants by type of payment � For 57% of polled restaurants, meal vouchers represent a significant portion of their revenue Luncheon LOYAL CUSTOMERS Vouchers Other 15% � For 81% of polled restaurants, clients paying through meal vouchers come back regularly SECURE PAYMENT 85% Source: IPSOS Survey based on 400 French restaurants accepting meal vouchers, September 2008) 15% of meals served annually in French restaurants are paid for with luncheon vouchers * * Based on number of meals paid for with luncheon vouchers/ total number of meals served per year. Source: Ernst & Young study conducted for the Commission Nationale des Titres-Restaurant, May 2006 8

Win-win solution for governments & unions Example: Meal Vouchers in France (Ticket Restaurant) MORE JOBS CREATED, LESS INFORMAL ECONOMY, MORE PURCHASING POWER Loss of tax revenue FRENCH BUDGET Additional tax revenue €(1,387)m €1,377m Payroll Tax 784 (Job creation) (1,387) Tax exemption ( Income and Payroll) VAT & 593 Income Tax (Increase in consumption) No Impact on Public Budget Source: Ernst & Young study conducted for the Commission Nationale des Titres-Restaurant, May 2006 9

Prepaid benefits: win-win solution for all stakeholders GOVERNMENTS & UNIONS CORPORATE CLIENTS LOWER EMPLOYER COSTS MORE JOBS CREATED, SOURCE OF EMPLOYEE RETENTION LESS INFORMAL ECONOMY, BETTER PRODUCTIVITY FOR COMPANIES MORE PURCHASING POWER, NO IMPACT ON PUBLIC BUDGET 33% payroll cost savings LOWER GOVERNMENT HEALTH SPENDING for the employer WIN-WIN SOLUTION MERCHANTS CORPORATE EMPLOYEES INCREASED REVENUE INCREASED PURCHASING POWER LOYAL CUSTOMERS POSITIVE IMPACT ON HEALTH SECURE PAYMENT 43% more income for the employee 10

Prepaid Benefits 4 Sources of Revenue

Prepaid benefits: 4 sources of revenue for profitability #1 - Commission rate from corporate clients Commission rate* = 1.9% Refund claim Refund claim Prepaid Services Offering Prepaid Services Offering (Design, Management) The company pays MERCHANTS MERCHANTS CORPORATE CLIENTS CORPORATE CLIENTS 101.9% of face value to Accor Filtered acceptance network Filtered acceptance network BtoB Market BtoB Market 1 million affiliates of Accor Services 1 million affiliates of Accor Services 430,000 companies 430,000 companies (restaurant owners, supermarkets,etc) (restaurant owners, supermarkets,etc) *Average commission rate = revenue/issue volume Use Use Distribution Distribution CORPORATE EMPLOYEES CORPORATE EMPLOYEES Final Users End Users 30 million users 30 million users Ticket Restaurant (France): issue volume by client size and sector Retailers Other 0-10 employees 15% (<5% each) 15% Science/Technology 35% >200 15% 43% 10-50 22% 11% Finance / Insurance 6% 10% 19% Building 8% Industry 50-200 IT/Com 60% of issue volume coming from companies Issue volume well balanced with fewer than 200 employees by sector 12

From corporate clients to corporate employees Refundclaim PrepaidServices Offering (Design, Management) MERCHANTS CORPORATE CLIENTS Filtered acceptance network BtoB Market 1 million affiliates of Accor Services 430,000 companies (restaurant owners, supermarkets,etc ) Employer subsidies 50 to 60% of face value Use Distribution CORPORATE EMPLOYEES End Users with no payroll taxes 30 million users Employee purchases the meal voucher at a discount (40 to 50% of face value) and can use it in affiliated restaurants 13

Prepaid benefits: 4 sources of revenue for profitability #2 � Merchant fees Refund claim PrepaidServices Offering (Design, Management) Merchant Fee* = 3.1% MERCHANTS CORPORATE CLIENTS Filtered acceptance network BtoB Market 1 million affiliates of Accor Services 430,000 companies Vouchers are redeemed (restaurant owners, supermarkets,etc ) by Accor at 96.9% of face value Use Distribution CORPORATE EMPLOYEES End Users *Average merchant fee = revenue/issue volume 30 million users Merchant fees depend on the acceptance network 14

Prepaid benefits: 4 sources of revenue for profitability #3 � Financial income #4 � Expired and lost benefits Prepaid Services Offering Refund claim (Design and Management) receivables 4-week Average Revenue/Issue Volume: Financial income MERCHANTS CORPORATE CLIENTS (average 8 to 8.5-week float) = 0.8% Filtered Acceptance Network BtoB Market 1 million Accor Services affiliates 430,000 companies (restaurants, supermarkets, etc) Expired/lost prepaid benefits = 0.4% 12-week float CORPORATE EMPLOYEES Use Distribution End Users 30 million users 15

Prepaid benefits: 4 sources of revenue for profitability Average revenue/issue volume � Large portfolio of corporate clients: commission rate 1.9% + 3.1% � Large filtered acceptance network: merchant fees + � Financial income (average 8,5-week float) 0.8% + 0.4% � Expired / lost prepaid benefits Prepaid Benefits: 6.3 % Steady revenue/issue volume rate (6%-6.5%) over the past 10 years Prepaid Related Services (equivalent issue Volume) 0.8 % 87m€ 16 (2007 Figures)

Key Growth Drivers in the Prepaid Benefits Market

In mature markets For 40 years, favorable socio-demographic factors have driven sustainable growth in the prepaid benefits market � Increasing employee purchasing power Percentage of people living in cities* with tax-efficient products Mature 74% 79% � Fighting against informal economy countries 53% 49% 57% Worldwide � Growing urbanization 29% � Higher proportion of women in work 1950 2007 2025(e) � Longer working lives � More individual needs Favorable environment to develop value-added prepaid benefits *Source: United Nations Department of Economic and Social Affairs/Population Division 18