By Mimosa Spencer 
Of DOW JONES NEWSWIRES

PARIS (Dow Jones)–French hotels company Accor SA (AC.FR) Wednesday increased its profit target for the year as third-quarter sales rose 9.9% on improved business in its more expensive hotels in Europe but cautioned its optimism for the rest of the year doesn’t extend into 2011.

Accor, which operates hotels ranging from high-end Sofitel to the U.S.-based economy chain Motel 6, posted sales up 9.9% to EUR1.58 billion in the three months ended Sept. 30, beating analysts’ estimates of EUR1.54 billion.

The quarterly growth was led by the company’s upscale and midscale hotels in Europe, which include the chains Novotel and Mercure, and posted a nearly 14% increase in revenue per available room, a common industry measure. Accor’s upscale and midscale hotels in France, its most important market, benefited from an improvement in occupancy rates and an increase in average room rates, up 3.6%, for the first time since the beginning of the year.

Accor cautioned, however, that it remains prudent about prospects for next year, citing still fragile European and American economies.

Accor Chief Executive Gilles Pelisson on Wednesday cited slow improvement at Motel 6 as a reason for caution about the U.S. economy, which could be a drag on European economies.

“To be honest, I don’t have any strong sign of a strong recovery in the U.S.,” Pelisson said.

Pelisson added that the company doesn’t have a clear view of future business in Europe into next year because clients are taking their time to book rooms.

Corporate clients currently place reservations for meetings and conventions around 40-45 days in advance, and individual clients reserve around 8-10 days ahead of their stays, Pelisson said.

Still, an improvement in occupancy rates so far this year has prompted the company to increase its earnings-before-interest-and-tax target for this year to between EUR400 million and EUR420 million from a previous range of EUR370 million to EUR390 million.

Accor last month withdrew plans to list its 49% stake in the French casino operator Groupe Lucien Barriere because of a lack of investor interest. Accor, which was looking to get around EUR298 million for the casino group, said it still plans to sell it soon as part of a debt-reduction program.

Investors shrugged off the delay of the casino disposal, and Accor shares have risen 9% in the past month, outpacing the Paris CAC 40 index, which rose around 1% over the same period.

Some investors see recent improvement in the hotels sector as cause for optimism. The sector suffered early in the crisis as businesses cut down on employee travel, and tends to lag other sectors when conditions improve.


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