FINANCIAL STATEMENTS 2003 contents 109 EOUIN GEN RESOLUTIONS COMPANY P BOARD REPORT MANAGEMENT ARENT 81 1 119 INFORMATION GOVERNANCE CORPORATE STATEMENTS FINANCIAL CONSOLIDATED 93 35 ERAL Board Report Management 34 32 29 26 23 22 21 17 Report oftheSupervisoryBoard Switch toIAS/IFRS Risk Factors Environmental Report Employee Information,HumanResources indicators Sensitivity Analysisfor2004 Significant EventssincetheBeginningof2004 Strategic Vision, InvestmentStrategyandOutlook 10 8 2 Analysis of2003Results Milestones Business Review management board report I 1

q BUSINESS REVIEW

With 158,000 people in 140 countries, is the European leader and a global operator in its two core businesses, and Services. It also operates in agencies, , and onboard train services.

q HOTELS

With 3,894 hotels and 453,403 rooms in 85 countries at December conference centers and Libertel hotels, located primarily in Paris. 31, 2003, Accor enjoys a unique position in the global hospitality Our unique positioning is also derived from the global presence of industry. our brands. The largest hospitality group in Europe, with a network Present across all market segments, Accor is a leading operator of 2,133 hotels and 230,954 rooms accounting for 51% of the in Upscale hotels (), in the midscale segment (, room base at December 31, 2003, Accor deploys its expertise and Suitehotel) and in economy , with the , everywhere around the world, with 1,246 hotels (30% of the room Etap , Formule 1, Red Roof and 6 chains. We also base) located in North America, 156 hotels (5%) in Latin America offer leisure and lodging at 200 establishments in 33 countries and Caribbean, 143 hotels (5%) in Africa and the Middle East, and with Accor Vacances, Coralia Club and Accor Thalassa. Other 216 hotels (9%) in Asia and the Pacific. hospitality brands include Parthenon flat hotels in , Atria

GEOGRAPHICAL BREAKDOWN OF THE HOTEL PORTFOLIO AT DECEMBER 31, 2003

France Europe North Latin America/ Africa Asia/ Total (excl. ) America Caribbean Middle East Pacific

Number Number Number Number Number Number Number Number Number Number Number Number Number Number Number of hotels of rooms of hotels of rooms of hotels of rooms of hotels of rooms of hotels of rooms of hotels of rooms of hotels of rooms of countries

Sofitel 38 6,730 48 9,106 11 3,542 19 2,791 31 6,282 32 7,858 179 36,309 52

Novotel 120 15,300 160 28,675 6 1,835 21 3,513 20 3,930 61 14,015 388 67,268 57

Mercure 287 26,627 264 35,768 82 10,340 37 5,623 56 7,881 726 86,239 45

Ibis 338 29,778 244 29,666 31 4,684 15 1,874 23 3,948 651 69,950 36

Etap Hotel 211 16,176 75 6,481 1 119 287 22,776 11

Formule 1 285 21,108 44 3,180 2 699 24 1,667 16 1,297 371 27,951 12

Red Roof Inns 349 38,209 349 38,209 1

Motel 6 880 92,468 880 92,468 2

Other 15 1,880 4 479 1 385 15 3,397 28 6,092 63 12,233 23

Total 1,294 117,599 839 113,355 1,246 136,054 156 22,412 143 22,892 216 41,091 3,894 453,403 85

Total in % 33% 26% 22% 25% 32% 30% 4% 5% 4% 5% 6% 9% 100% 100%

2 I management board report Number Number We Other countries Latin America/Caribbean North America Europe (excl.France) France GEOGRAPHICAL BREAKDOWNOFTHEHOTELPORTFOLIO BYTYPEOFOPERATION AT DECEMBER31,2003 our hoteloperatingstructures. Mostproperties are operateddirectly, thediversityof Another feature ofourunique positioningconcerns Other Red RoofInns Formule 1 Etap Hotel Ibis Mercure Novotel Sofitel BREAKDOWN OFTHEHOTELPORTFOLIO BYTYPEOFOPERATION AT DECEMBER31,2003 market segments,withappropriate operatingstructures foreach T T T T tli 3% 23 otal in% 23% otal in% tl902 otal tl902 otal

believe thatsupportingourglobalbrandpresence across all Number Number of hotels of hotels Number Number 334 125 385 232 220 120 25 33 97 77 54 67 28 we esdMngdFranchised Managed Leased Owned Franchised Managed Leased Owned 7 39,233 14,782 31,721 25,645 11,871 16,289 13,242 93,904 93,904 4,132 4,036 1,363 5,657 5,427 9,873 4,537 21% 21% of rooms of rooms Number Number 1,553 1,553 40% 40% 652 440 367 491 154 135 265 202 154 22 72 13 95 44 of hotels of hotels Number Number 188,942 188,942 75,786 56,375 43,720 55,817 17,637 10,555 33,071 28,108 23,679 3,748 9,313 1,862 8,361 9,852 42% 42% of rooms of rooms Number Number 12% 12% 475 475 238 198 94 49 88 39 57 79 92 6 1 1 8 operated undermanagementcontractsand20%are franchised. with 63%ofrooms beingowned orleased,whileanother17%are hotel portfoliocapableofmitigatingcyclicalexposure. product andcountryriskprofile, iscriticaltomaintaining abalanced 78,059 78,059 12,733 16,283 47,927 24,640 19,874 1,387 7,576 8,436 8,291 8,110 of hotels of hotels 17% 17% Number Number 103 699 59 25% 25% 156 107 964 964 254 225 454 209 272 of rooms of rooms 98 15 15 28 16 75 Number Number 4 management board report 10,947 92,498 92,498 19,648 34,622 33,722 15,527 13,842 28,064 8,059 8,701 1,004 1,799 5,637 2,707 20% 20% 717 of hotels of hotels Number Number 100% 100% 3,894 ,9 5,0 100% 453,403 3,894 1,246 1,294 880 287 349 371 156 179 839 651 359 388 726 63 T T otal otal of rooms of rooms 453,403 136,054 117,599 113,355 Number Number 12,233 92,468 22,776 38,209 27,951 22,412 36,309 69,950 63,983 67,268 86,239 100% 100% in %ofnumber in %ofnumber Breakdown Breakdown 100% of hotels of hotels 20% 30% 26% 15% 25% 14% 15% 19% 3% 5% 9% 6% 5% 8% I 3

of rooms q MANAGEMENT BOARDof rooms REPORT of rooms of rooms A portfolio structure to meet demand for Midscale and Economic lodging

As our prestige hotel brand, SOFITEL is positioned as the Europe’s largest economy hotel network, IBIS offers a full range of ambassador of the French art de vivre around the world. It is now 24-hour services and innovative food solutions that vary depending a truly international network, in the world’s leading cities as well as on the region and the season. 80% of Ibis hotels have received in outstanding tourist destinations. From paragons of ultramodern ISO 9001 certification for their round-the-clock services. architecture and designs to legendary palaces, each hotel projects CUSTOMERS: 55% BUSINESS – 45% LEISURE its own personality. The brand’s reputation has also been enhanced by the chain’s many gourmet restaurants. CUSTOMERS: 60% BUSINESS – 40% LEISURE Located mainly in the Midwest, Northeast and South of the United States, RED ROOF INNS are a highly standardized product, delivering consistent quality at affordable prices. NOVOTEL is the standard in highly comfortable midscale lodging, CUSTOMERS: 55% BUSINESS – 45% LEISURE with an international network of contemporary hotels offering the same service quality around the world to business and leisure customers. A pioneer in the family segment, Novotel allows children to stay for free in their parents’ rooms. ETAP HOTEL provides cost-effective lodging for business and CUSTOMERS: 65% BUSINESS – 35% LEISURE leisure customers, mainly in Europe. Featuring single, double and triple rooms, all with bath, the chain’s hotels are located in large metropolitan areas, usually in city centers, along major roadways or near airports. Europe’s second biggest integrated hotel chain, MERCURE CUSTOMERS: 60% BUSINESS – 40% LEISURE features traditional establishments whose decoration and atmosphere reflect the culture of their city or region. The brand is also known for its “Grands Vins Mercure” wine list. Upscale: 8% Present across the United States and Canada, CUSTOMERS: 55% BUSINESS – 45% LEISURE MOTEL 6 is known for providing value for money in low-cost lodging. It is ranked number one in the economy hotel segment by D.K. Shifflet & Associates, the leading US travel/ market research and consulting firm. CUSTOMERS: 30% BUSINESS 70% LEISURE Midscale: 37%

Economy: 55%

As a % of total rooms at December 31, 2003

The most recent addition to the Accor family, the ten SUITEHOTEL The benchmark in truly low-cost hotels, FORMULE 1 offers offer a new lodging concept, comprised of functional, modular, functional rooms with basic comforts for up to three people. 30-sq. m suites. CUSTOMERS: 55% BUSINESS – 45% LEISURE CUSTOMERS: 78% BUSINESS – 22% LEISURE

4 I management board report akCmayNme f Number of Numberof Source: MKGConsultingFebruary2004,European Union(15countries) 5H Numberofrooms 4 3B 2 1 Company Rank HOSPITALITY COMPANIES, BYSIZE Italy. Numberofhotels strengthening ourpositions intheUnitedKingdom,Spainand Germany (7%),PortugalandHungary(5%),are actively share), Poland(17%),Belgium (10%),theNetherlands(9%), leader inanumberofcountries,includingFrance(18%market and 230,954rooms across thecontinent.We are themarket Accor isEurope’s leadinghospitalitycompany, with2,133hotels franchise agreements. established intheUSmarketandtheyprefer tooperatethrough Our competitorsshare two characteristics:theyare allwell Source: Accor, Companydata,February2004 5 4 3 2 1C Company Rank HOSPITALITY COMPANIES, BYSIZEWORLDWIDE Accor ranksfourthworldwide,basedontotalnumberofrooms. Markets andCompetition hie464373,722 453,403 60,529 208,223 68,704 858 2,003 445 520,000 490,564 Louvre /Envergure 4,664 3,894 Intercontinental Accor 3,300 2,718 Choice Accor Intercontinental s etr ,7 68,229 1,071 est Western nat653536,097 6,513 endant lo nentoa 3 50,541 238 ilton International oesrooms hotels akCanNme f Numberof Numberof Chain Rank INTEGRATED HOTELCHAINS,BYSIZE EU market. Five Accorbrandsrankamongthetoptenin15-nation 0SadcHtl 1 20,939 116 Source: MKGConsultingFebruar ScandicHotels 10 9Et8C 7 6NH5H 4N 3 2 1 oml 2 24,112 327 40,133 55,020 49,956 265 551 455 Formule 1 Mercure Ibis maie3923,356 379 ampanile lo 2 29,602 122 ilton vtl2237,614 252 ovotel pHtl2322,299 283 ap Hotel management board report y 2004, Europeany 2004, Union (15countries) oesrooms hotels 9 27,952 199 I 5

q MANAGEMENT BOARD REPORT q SERVICES – Employee savings plans that enable small and medium-sized companies to offer employees a corporate savings plan (Tesorus). Accor is a leading worldwide issuer of service vouchers with our – Employee training solutions, comprising training program flagship Ticket product. Present in 34 countries with consulting, organization, management and marketing services 14 million users, Accor Services counted 300,000 corporate and (Foragora, Académie). institutional customers and 765,000 affiliates at December 31, 2003. Accor Services’ innovative solutions are designed to support new lifestyles with products that meet legitimate employee aspirations Requesting Marketing for greater comfort and well-being, while enhancing the productivity refund the Services of their organizations. They are built on the Ticket Restaurant meal voucher model, which was created in the late sixties to enable employers who did not have a staff restaurant to offer employees Refund Payment a subsidized lunch. This principle has since been extended to a Service providers Customers broad array of services, which are structured to meet three key 765,000 affiliated 300,000 customers objectives: establishments

• Facilitate life’s essentials, with a line of products covering basic employee needs, which enable companies and institutions to meet their social responsibilities in the following areas: Using the Users Distributing – Employee benefits, with meal and grocery vouchers and cards Services the Services 14 million users (Ticket Restaurant, Ticket Alimentaçaõ) and transportation vouchers (Ticket Transporte). – Expense management, primarily for car fleets (Ticket Car) and uniform cleaning (Clean Way). – Compliance services, to support workplace health, safety and The service voucher principle works as follows. Companies or medical programs (Eyecare Vouchers). institutions purchase vouchers from Accor at face value plus a service – Facilities management (Accueil Partenaires). commission. They then distribute them to employees, who sometimes – The management of social programs for local authorities contribute a portion of the face value, within prescribed limits. In (Ticket Service, Service Card). many countries, employers also benefit from a tax rebate, whose amount varies according to local legislation (€4.60 per day and per • Enhance well-being with services that help employees align employee in France at December 31, 2003). The employee spends personal fulfillment and professional performance, by supporting the vouchers at face value at affiliated restaurants or merchants, their well-being and improving their productivity: which redeem the vouchers for the face value in local currency less – Family assistance services to take care of children or a refund commission. Between the time Accor is paid the value of the dependent relatives (Childcare Vouchers, WorkLife Benefits). vouchers sold and the time it repays the affiliate, the funds are invested – Practical assistance services to make employees’ lives easier, and generate interest income, which, in addition to the service and such as dry cleaning, domestic work, taking care of administrative refund fees, constitutes the business’ revenue. formalities and legal advice (Bien-Etre à la Carte, Ticket Emploi Domicile). Service vouchers have demonstrated their economic and social – Personal assistance services to provide employees with advice usefulness in both developed and emerging markets. and psychological support (EAR, Davidson Trahaire). Since 1995, Accor Services has been transitioning the vouchers from • Increase performance, with a variety of services designed to paper to magnetic strip or microchip cards, which are easier to use, stimulate organizational performance by motivating and retaining more secure and less costly to manage. At year-end 2003, there employees, distributors and customers: were more than one million and a half users of Accor Services cards – Relationship marketing: Accentiv’ designs and manages loyalty in around ten countries, including Brazil, Argentina, France, Sweden programs (based on magnetic strip and smart cards), reward and Italy. programs (Compliments gift vouchers, gift catalogues and trips) and incentive events (Market Place).

6 I management board report Accor andColonyCapitalowningrespectively 34%and15%.The hold along-term51%stakeinthenewGroupe LucienBarrière, with the transactioniscompleted,Barrière Desseignefamilywill (SHCD), AccorCasinosandtheirrespective subsidiaries.Once Lucien Barrière (SHCLB),Société desHôtelsetCasinodeDeauville the casinoandhotelassetsofSociétéHôtelière delaChaîne with theBarrière Desseigne familyinJanuary2004tocombine European markets,amemorandumofunderstanding*wassigned company’s commitmenttodeepeningitspresence instrategic Chamonix, Besançon,CassisandLeTouquet. Inlinewiththe Cannes Mandelieu,Saint-Raphaël,Sainte-Maxime,Carnac, 2003, includingLeRuhlinNiceandthecasinosBordeaux, and operatedbyAccor, managed21casinosatDecember31, Accor Casinos,asubsidiaryequallyownedwithColonyCapital Casinos service provider. merged withProtravel tocreate oneoftheFrance’s leadingtravel market’s potentialforgrowth overthemediumterm.In2003,it emerging corporateneeds,whileleveragingthetravel Market leadershipisenablingCarlsonWagonlit Travel toanticipate – – driven by: step inthetravelchain.Today, thecompany’s growth isbeing and control theirtravelexpensesbyoffering expertise at every Carlson Wagonlit Travel enablescompaniesofallsizestooptimize ranked travelmanagementspecialistinallitsstrategicmarkets, following onfrom thebusinessagreement signedin1994. Afront- travel servicesbusinessandUS-basedCarlsonCompanies, joint venture wascreated inJanuary1997bythemerger ofour services through its50%interest inCarlsonWagonlit Travel. The Accor isoneoftheworld’s leadingproviders oftravelmanagement T q ravel Agencies graphics display, andtravelerprofile management. electronic booking,hotelsolutions, travelexpensereporting and travelers easyaccesstoafullrangeofonlineservices,including New technologies,withaB2Bportaloffering managersand organizational solutionsacross theirglobaloperations. the managementoftheirtravelexpensesanddeployIT which provides consultingservicestohelpcompaniesimprove High value-addedservicesdelivered bytheSolutionsGroup, OTHER BUSINESSES on theChamps-ElyséesinParis. luxury hotelsandalarge numberofrestaurants, includingFouquet’s Biarritz. Itwillmanageapproximately 5,000slotmachines,14 above andproperties inDeauville,Enghien,LaBaule,Montreux and new companywilloperate37casinos,includingthosementioned of ajointventure withBritain’s Compass. Italy through theGemeazCusin subsidiaryandinBrazilaspart The Restaurantsbusinessalsoincludesmanagedfoodservicesin selected . actively developed,withtheinstallationofCaféLenôtre unitsin Synergies betweenLenôtre and ourhotelrestaurants are being more than30,000recipes. elected theWorld’s BestSommelierin2000,andaportfolioof Ouvrier deFrancestatus,anexecutivewinesteward whowas every yearandcurrently boastselevenemployeesawarded Meilleur company trainsnearly3,000foodserviceprofessionals initsschool a CaféLenôtre andaculinaryartsboutique.Inaddition,the which in2003wastransformedintoacookingschoolforamateurs, at theStadedeFrancesportsstadium,andPavillonl’Elysée prestigious PréCatalanrestaurant, thePanoramiquerestaurant and Tunisia. InFrance,itmanagesninegourmetboutiques,the Arabia, SouthKorea, theUnitedStates,Japan,Kuwait,Morocco gourmet boutiquesineightcountries,includingGermany, Saudi provides premium cateringservicesandmanagesachain of40 the Lenôtre subsidiary. Asourworldfamousluxurybrand,Lenôtre Accor isactiveinallsegmentsofthegourmetfoodindustrythrough Restaurants announcing thisagreement ispresented onpage21ofthisreport. notably approval bycompetitionauthorities.Thefulltextofthepress release *The memorandumofunderstandingissubjecttocertainconditionsprecedent, international overnight trains. overnight international services forsleepingandcouchettecarsonnational and vendingmachines.Italsoprovides reception and escort snack bar, in-seatanddiningcarservices,refreshment trolleys throughout theirjourney, withonboard hotelandfood services, Portugal), thecompanycares forcustomersaround theclock countries (Austria,Belgium,France,Italy, theNetherlandsand via theCompagniedesWagons-Lits subsidiary. Present insix Accor isaleadingEuropean provider ofonboard trainservices, Onboard Train Services management board report I 7

q MANAGEMENT BOARD REPORT MILESTONES

1967 1988 1995 Paul Dubrule and Gérard Pélisson 100 new hotels and 250 restaurants Eurest is sold to Compass, making create SIEH. are opened during the year, for Accor the largest shareholder in the First Novotel hotel opens in Lille. an average of one opening a day. world’s leading food services company. 1974 1989 Expansion of the service vouchers First Ibis hotel opens in Bordeaux. Formule 1 expands outside France, business helps to double the market in with two properties in Belgium. three years, to 10 million users a day. Acquisition of Courtepaille. Alliance formed with Disposal of 80% of the concession 1975 Groupe Lucien Barrière to develop restaurants business. hotel- complexes. Acquisition of Mercure. Introduction of an extensive training 1990 and communication program to 1976 improve environmental protection. Acquisition of the Motel 6 chain Hotel operations are launched in the United States, comprising in Brazil. 1996 550 properties. With its global Accor becomes the market leader brands, Accor becomes the world’s 1980 in the Asia-Pacific region, with 144 leading hospitality group, in terms Acquisition of Sofitel (43 hotels hotels in 16 countries and 56 projects of hotels directly-owned or managed and two seawater spas). under construction. (excluding franchises). Management of the Ibis, Etap Hotel 1981 1991 and Formule 1 chains is consolidated Initial public offering of SIEH within Sphere International. Successful public offer for shares on the Paris Bourse. Compagnie Internationale des Launch of the Compliment Card in 1982 Wagons-Lits et du Tourisme, which partnership with American Express. is active in hotels (Pullman, PLM, Acquisition of Jacques Borel Altea, Arcade), car rental (Europcar), 1997 International, European leader in onboard train services (Wagons-Lits), Accor changes its corporate managed food services (Générale travel agencies (Wagonlit Travel), governance system. Paul Dubrule and de Restauration) and concession managed food services (Eurest) and Gérard Pélisson become Co-Chairmen restaurants (Café Route, L’Arche), highway restaurants (Relais Autoroute). of the Supervisory Board, while and world leader in the issuance of Creation of Etap Hotel. Jean-Marc Espalioux is appointed meal vouchers (Ticket Restaurant), Chairman of the Management Board. with 165 million vouchers a year 1993 The “Accor 2000” project is distributed in 8 countries. Accor Asia Pacific Corp. is created launched in a commitment to 1983 by the merger of Accor’s Asia-Pacific revitalizing growth and deploying businesses with Quality Pacific Corp. breakthrough technology. Creation of Accor following the merger of Novotel SIEH Group Interest acquired in the Pannonia Carlson and Wagonlit Travel merge and Jacques Borel International. chain (24 hotels), as part of Hungary’s to form Carlson Wagonlit Travel, privatization program. owned equally by Accor and Carlson 1985 Companies. Creation of Formule 1, a new 1994 Public offer made for all outstanding hospitality concept based on Partnership between Carlson and shares of Accor Asia Pacific Corp. particularly innovative construction Wagonlit Travel in Acquisition of a majority interest in and management techniques. services. SPIC, renamed Accor Casinos. Creation of Accor Academy, France’s first corporate university for service activities. Acquisition of Lenôtre, which owns and manages deluxe caterer boutiques, gourmet restaurants and a cooking school.

8 I management board report of hotels Number France Telecom andothers. Express, CréditLyonnais, Danone, National Railways),American with AirFrance,SNCF(French Express andCréditLyonnais. partnership withAirFrance,American 2000 1999 1998 are openedduringtheyear. in Sydney is present atthe National OlympicsCommittee, issold. International in theUnitedStates. by theacquisitionof with 639newproperties, ledpartially Development ofnewpartnerships, Launch of 254 newhotels,including12Sofitels, Accor, official partnerofFrance’s The 50%interest inEuropcar strategy.Deployment oftheInternet The hotelnetworkgrows by22% Launch ofthe 1,000 2,000 3,000 4,000 0 1967 . • Accorhotels.com. Olympic Games Corporate Card Red RoofInns Novotel SIEH-JBIchangesnameto 1983: 74 • in 75 • 2001 in theUnitedKingdom. of EmployeeAdvisoryResource Ltd. programs, withtheacquisition market foremployeeassistance Services businessinthefastgrowing T andBeijing Zenith HotelInternational hospitality marketinpartnershipwith and advertisingarchitecture. based onaconsistentvisualidentity the launchofanadvertisingcampaign brand awareness andvisibilitythrough acquired. introduced inChina. awareness. visibilityandpublic international highlight theAccorname,raising ourism Group. Suitehotel Sustained developmentofthe Broader presence intheChinese Faster developmentofglobal Courtepaille issold. 38.5% interest inGoVoyages The MealServiceCard is Brand logosare redesigned to 80 • 82 launched inEurope. • 83 • 85 • 90 • 91 • management board report (87 hotels,15,257rooms). in Germanhotelgroup in someoftheworld’s largest cities. owned withthe services. r Australia’s leadingprovider ofhuman the acquisitionofDavidsonTrahaire, employee assistanceserviceswith expand intheglobalmarketfor Olympics inSaltLakeCity to 60%. continuing tomanagethecompany. investment fund,withAccor 2002 esources consultingandassistance Accor Services Acquisition ofa30%interest Accor Casinos Accor ispresent atthe Stake in 14 Sofitel 94 • Go Voyages properties are opened Colony Capital is nowequally continues to 97 • Dorint AG is raised Winter 99 . • 2003 I • 9

q MANAGEMENT BOARD REPORT ANALYSIS OF 2003 RESULTS

2003 was an unprecedented year for the tourist industry. After a q CONSOLIDATED REVENUES first half shaped by the war in Iraq, the SARS epidemic, the broad- based economic slowdown on both sides of the Atlantic, the lower Consolidated revenues declined a reported 4.3% to €6,828 million dollar and labor unrest in France, a few encouraging–albeit from €7,139 million in 2002. Like-for-like revenues were stable local–signs of recovery emerged in the second six months of the (up 0.1%), reflecting improved business in the second half. This year. Thanks to responsive sales and marketing and disciplined performance demonstrates the advantages of Accor’s balanced management, Accor maintained its Ebitdar margin at a good level business portfolio. and continued to expand its business.

2003 REVENUES BY BUSINESS 2003 REVENUES BY REGION

North Latin France Europe Other* America America/ 34% (outside France) 8% 19% Caribbean 33% 71% Hotels 6%

7% Services

6% Travel agencies

3% Casinos

6% Restaurants

4% Onboard train services

3% Other businesses

* Including worldwide structures, corresponding to units whose revenues (royalties) are not specific to a given region.

The reported decline broke down as follows: QUARTERLY CHANGE IN LIKE-FOR-LIKE REVENUES • Like-for-like: + 0.1 % • Business expansion: + 3.4 % • Disposals: – 2.4 % +1.3% • Currency effect: – 5.4 % +1.0% Currency fluctuations had a negative impact of €395 million, of +0.2% which €239 million from the dollar’s decline against the euro and €66 million from the Brazilian real’s decline against the euro. The first affected economy hotels in the US, while the second impacted services. –1.7% Business levels bottomed out in the second quarter and then gradually improved. Q1 03 Q2 03 Q3 03 Q4 03

10 I management board report tl ,6 84 . .%–77 5.6% – 9.4% – 0.1% + 3.3% – 7.7% – 8.2% – 13.6% – 14.5% – 6.0% – 0.6% 3.4% – – 8.0% – 4.5% 0.5% + – 0.7% – 7.2% – 14.9% – 2.9% – 3.2% – 2.8% 2.4% + – 3.9% 4.5 + – 0.1 – 6.4% – 5.1 – 2.6% 58.4% – 59.4% 1.7% + 1.0% + 2.2 5.4% – + 68.4% 6.8 – 68.6% 3,468 3,295 0.3 2.1% – – 0.7 + 2.4 3,552 – 1.1 – 0.5% – 67.9% 5,228 62.9% RevPAR 63.3% 68.7% 73.9% 1.9% – 5,462 2.1% – (2) Subsidiariesonly, onsameperimeter and currency basis. 3.6% – (1) Subsidiaries(ownedandleased)hotels andhotelsundermanagementcontract. 30,473 Reported 82,333 3,764 9,913 United States(UpscaleandMidscale) 0.9% – Average room rate Hungary 0.9% + 4.7% – Italy 2.3% – Spain Occupancyrate Belgium 0.7 – 2.2 – Netherlands 2.4% – Numberofrooms 2.8% – Germany 16.2% – 216 RevPAR 64.4% France 2.5% – 72.0% 1.5 – 2.3% – Reported (in localcurrency) 420 212 CUMULATIVE Average room REVPAR rate AT DECEMBER31,2003,BYCOUNTRY 221 62.3% 277 18.5% – 2.3% + RevPAR, orrevenue peravailableroom, isdefinedasoccupancytimesaverageroom rate.Itcorresponds tohotellodgingrevenue 471 (2) Subsidiariesonly, onsameperimeterandcurrency basis. 3.3% Occupancyrate – (1) Subsidiaries(ownedandleased)hotelsundermanagementcontract. 432 253 Economy US(in$) 989 1.3% 1,166 190 + Economy Europe 284 Upscale andMidscaleEurope 482 4,850 472 302 owned, leasedandmanagedrooms 2,695 1,214 1,140 CUMULATIVE REVPAR AT DECEMBER31,2003,BYSEGMENT 277 5,014 498 effect. Newopeningsadded 3.8%toreported growth. like and3.3%onareported basisduetoanegative5.5%currency 2,660 1,326 1,022 Hotel divisionrevenues declined 0.7%to Hotels 5,052 *To becomparableto2003figures, 2002revenues havebeenrestated, through reallocations amongeitherregions orbusinesses. 2,704 T Other Onboard trainservices Restaurants Casinos T SERVICES Economy US Economy Upscale andMidscale HOTELS in REVENUES BYBUSINESS ae gnis494332–15.6% – 382 453 499 ravel agencies tl720719688–4.3% – 6,828 7,139 7,290 otal € ilos20 02 03%Change 2003 2002* 2001 millions ond esd RevPAR (owned, leased and managed) € 4,850 millionlike-for- % cgi ons cgi )(h n% (chgin%) (chgin%) (chgin%) (chginpoints) (%) % cgi ons cgi )(h n% (chgin%) (chgin %) (chgin%) (chginpoints) (%) r fourth. Inall,theyear’s performancedemonstratedAccor’s The uptrend thatbeganinthe third quarterwasconfirmedinthe to anegativecurrency effect andfewerUSvisitorsinEurope. esilience inadifficult business environment, astheweakdollarled management board report RevPAR (1) (1) expansion expansion excluding excluding 03/02 (2) (2) s. I 11

q MANAGEMENT BOARD REPORT Revenues from Upscale and Midscale Hotels (Sofitel, Novotel Other businesses and Mercure) rose a reported 1.3% to €2,695 million. Business expansion added 4.5%, while the currency effect reduced revenues Travel agencies by 2.7%. Reported RevPAR declined 4.7% for owned, leased and Revenues, comprising commissions on ticket sales, car rentals managed rooms in Europe, while like-for-like RevPAR decreased and hotel bookings and margins on package sales, 3.6% for owned and leased rooms alone. declined a reported 15.6% to €382 million and 6.8% like-for-like. Business improved significantly in the second half, both in Europe Economy Hotels outside the US (Ibis, Etap Hotel and Formule 1) and the United States. reported a 2.3% increase in revenues to €1,167 million, with like- for-like growth of 0.9%. New openings added 2.9%, offsetting the Casinos negative 1.2% currency effect. RevPAR from economy hotels in Casino revenues fell a reported 16.3% to €212 million due to the Europe declined 2.1%. Average room rates continued to rise, sale of 50% of Accor Casinos in June 2002. Like-for-like revenues gaining a further 0.9%, while the occupancy rate contracted by were up 0.8%. 2.2 points. Like-for-like, RevPAR edged back by just 0.5%. Restaurants In the Economy Hotels US segment (Motel 6 and Red Roof Inns), Revenues from restaurants in Italy and from Lenôtre declined a revenues decreased by 18.5% to €989 million. Of this, 15.8% reported 2.9% to €420 million, but rose 7.4% like-for-like. was attributable to the dollar’s depreciation against the euro. Like- Onboard train services for-like revenues were down 2.4%. RevPAR declined by 1.9%, Revenues fell a reported 2.5% to €277 million and 1.4% like-for- reflecting a 0.7-point decrease in the occupancy rate and a 0.9% like. reduction in average room rates. Like-for-like RevPAR fell 2.1%.

q EBITDAR Services Ebitdar (earnings before interest, tax, depreciation, amortization and Services revenues rose 8.4% like-for-like to €471 million, with rental expense) represents a key performance indicator. It totaled 7.7% of growth coming in the fourth quarter. The devaluation of €1,769 million in 2003, down 8.6% or €167 million from the €1,936 Latin American currencies depressed reported revenues by 2.3%, million recorded the year before. but the negative impact is gradually declining. Including acquisitions The decrease broke down as follows: but excluding currency fluctuations, growth came to 10.6%. • Like-for-like: – 3.0% • Business expansion: + 2.4% Services revenues comprise commissions and financial revenues • Disposals: – 1.1% from invested cash. In 2003, financial revenues represented 11.8% • Currency effect: – 6.9% of total like-for-like revenues, compared with 14.3% the previous year. On a like-for-like basis, change in financial revenues dipped The fact that the Group’s like-for-like Ebitdar declined only 3% 1.8% year-on-year, while commission revenues expanded 10.2%. attests to Accor’s responsiveness and disciplined management. Business was particularly strong in Latin America, where like-for- like revenues gained 14.4% in 2003. Growth was more moderate in Europe, in particular because there were fewer days worked in France.

12 I management board report bta ,7 ,3 ,6 8.6% – 17.4% – 21.4% + 1,769 38 6.9% – 17 1,936 1.2% – 22.4% – 189 46 N/S 9.0% – 14 1,971 360 4.8% – 418 this segmentrose fasterthanrevenues. outside theUS Pressured bythesamefactors,Ebitdarmargin for 6.3% + drove aninitialimprovement inmargins. 203 1,439 58 which Sofitels intheUSbenefitedfrom theeconomicupturn, 6 661 impact, whileregional hotelsheldupbetter. HotelsintheUKand 464 13 423 and Asia.CapitalslikeParisAmsterdam feltthegreatest guesttraffic,affected primarilyfrom bylowerinternational the US 34 down 1.6pointsfrom 2002.European countrieswere particularly Upscale andMidscaleHotels 1,581 206 Hotels 694 1 517 387 Ebitdar margin narrowed to25.9%from 27.1%in2002. 32 1,631 *To becomparableto2003figures, 2002 Ebitdarhasbeenrestated, through reallocations amongeitherregions orbusinesses. Ebitdar 727 Other -4 Onboard trainservices Restaurants 31 Casinos T Other businesses SERVICES Economy US Economy Upscale andMidscale HOTELS in EBITDAR BYBUSINESS 2003 EBITDARBYBUSINESS ae gnis3 94 22.0% – 46 59 36 ravel agencies € ilos20 02 03%Change 2003 2002* 2001 millions contracted by1.3pointsto35.8%.Expensesin posted anEbitdarmargin of24.5%, 1 Services 11% Hotels 81% %Other 8% Economy Hotels coverage expenses. improved economyanddespitehigherinsurance,taxhealth first half,reduced tojustone pointinthesecond,thanksto 36.4% overthefullyear. Thisincludeda2.5-point decrease inthe In are notspecifictoagivenregion * Includingworldwidestructures, corresponding tounitswhoseEbitbar 2003 EBITDARBYREGION such asCleanwayandEAPinFrance. the DicasaacquisitioninMexicoandrisingsalesforproducts stabilized economicsituationinVenezuela, thepositiveimpactof in thesecondhalfafterlosing1.7pointsfirst,reflecting the basis, butjust0.5pointslike-for-like. Themargin gained0.7points Services Ebitdarmargin narrowed 2pointsto40.1%onareported Services Economy HotelsUS 23% America North 5% Caribbean America/ Latin management board report , Ebitdarmargin declined1.8pointsto 30% France 35% (outside France) Europe 7% Other* 03/02 I 13

q MANAGEMENT BOARD REPORT q EBIT

Ebit, corresponding to Ebitdar less rental expense, depreciation, amortization and provisions, amounted to €603 million in 2003, versus €755 million the previous year. in € millions 2001 2002 2003 % Change 03/02 Ebitdar 1,971 1,936 1,769 – 8.6% Rental expense (698) (726) (730) Depreciation, amortization and provisions (443) (455) (436)

Ebit 830 755 603 – 20.1% q PROFIT BEFORE TAX Despite the challenging environment, the improvement in business in the second half enabled profit before tax to reach €523 million, Profit before tax, corresponding to Ebit less net interest expense versus €500 million announced. plus income from companies accounted for by the equity method, represents the results of operations after the cost of financing Group businesses and before tax. in € millions 2001 2002 2003 % Change 03/02 EBIT 830 755 603 – 20.1% Net interest expense (92) (66) (74) Income from companies accounted for by the equity method 20 14 (6)

Profit before tax 758 703 523 – 25.6%

Of the €180 million decline in profit before tax during the year, Total fixed asset holding costs (rental expenses plus depreciation €123 million occurred in the first half and €57 million in the second, and interest) were stable, at €1,240 million versus €1,247 million illustrating the improvement in business over the last six months in 2002. of the year. Income from companies accounted for by the equity method Net interest expense rose to €74 million from €66 million in 2002. swung to a €6 million loss for the year, from a positive €14 million It comprises both interest expense, which declined to €71 million in 2003. This item corresponds in particular to the contribution of from €106 million last year, and non-interest revenues. The latter 34.9%-owned SHCD (Société des Hôtels et Casino de Deauville) include exchange gains, which fell to €6 million in 2003 from the and 35.6%-owned Orbis in Poland. The decline was mainly previous year’s €44 million realized primarily on capital transactions attributable to the fall in earnings from the hotel business in the in the United States. Asia-Pacific region, which was affected by the SARS epidemic, as well as to the first-time accounting for the contribution from 40.2%-owned Dorint in Germany, which was a negative €5 million. q NET INCOME, GROUP SHARE in € millions 2001 2002 2003 % Change 03/02 Profit before tax 758 703 523 – 25.6% Gains and losses on management of hotel properties 29 54 68 Gains and losses on management of other assets 66 (30) (17) Amortization of goodwill (102) (109) (107) Income taxes (246) (234) (163) Exceptional items (net of tax) – 68 – Consolidated net income before minority interests 505 452 304 – 32.7% Minority interests (31) (22) (34)

Net income, Group share 474 430 270 – 37.2%

14 I management board report Gains and losses on management of hotel properties, There were no exceptional items in 2003. In 2002 they included a corresponding to sales carried out in the normal course of €68-million after-tax capital gain on the sale of a 44% interest in managing the hotel portfolio, totaled €68 million in 2003 compared Accor Casinos to Colony Capital. with €54 million the previous year. Sales of hotel buildings in Consolidated net income before minority interests amounted Europe netted gains of €102 million, including €42 million in to €304 million, versus €452 million in 2002. Hungary and €31 million in France, which were partially offset by a €30-million provision on hotel assets located in sensitive regions. After deducting minority interests of €34 million, net income, Group share came to €270 million, a decline of 37.2% on 2002. Gains and losses on management of other assets, at a negative €17 million, include a €51 million gain on the sale of all the Accor Earnings per share amounted to €1.36, versus €2.18 the year MANAGEMENT BOARD REPORT shares held by subsidiaries. Non-operating gains and losses totaled before, based on the weighted average 197,730,236 shares €55 million. outstanding in 2003. q

Income taxes came to €163 million, versus €234 million in 2002. The effective tax rate (expressed as a percentage of profit before tax) was 27.6% versus 31.0% the year before. q CASH FLOW in € millions 2001 2002 2003 % Change 03/02 Funds from operations 1,005 961 847 – 11.9% Investments for renovation and maintenance (405) (316) (284) – 10.1% Free cash flow 600 645 563 – 12.7% Investments for expansion and technology (923) (802) (586) – 26.9% Proceeds from asset disposals 535 660 461 – 30.2% Other changes including change in working capital (243) (130) 196 – Dividends (271) (326) (294) –

Decrease/(increase) in net debt (302) 47 340 –

Funds from operations amounted to €847 million in 2003, versus extensively upgraded. In 2003, they represented 4.2% of revenues, €961 million the year before. The €114 million decline was primarily high enough to keep assets competitive and in good condition. due to the contraction in Ebitdar, partially offset by the decrease Investments for expansion and technology totaled €586 million, in taxes. versus €802 million in 2002. The decline did not dampen the pace Free cash flow retreated 12.7% to €563 million. Investments for of expansion, as 170 hotels (22,105 new rooms) were opened renovation and maintenance were again reduced, to €284 million during the year. In Services, the highlight of the year was the from €316 million in 2002. These outlays were higher during the acquisition of Dicasa in Mexico (meal vouchers). strong growth years, from 1997 to 2000, when the hotel base was

Investments for expansion and technology in € millions 2001 2002 2003 Hotels 739 721 463 Upscale (Sofitel) 150 171 42 Midscale and Economy, Europe 346 409 329 Midscale and Economy, Emerging markets 168 109 77 Economy US 75 32 15 Services 23 18 68 Other businesses 161 63 55

Total 923 802 586

management board report I 15 Proceeds from asset disposals amounted to €461 million versus €660 million in 2002 and broke down as follows:

Disposal in € millions 2001 2002 2003 Hotel properties 357 413 366 Accor shares held by subsidiary – – 51 Other assets 178 247 44

Total 535 660 461

q FINANCIAL RATIOS q RETURN ON CAPITAL EMPLOYED

Gearing Return on capital employed (ROCE), expressed as a percentage of adjusted Ebitda over fixed assets at cost plus working capital, To further improve the structure of its debt, on October 24, 2003, stood at 9.2% in 2003, versus 10.7% the previous year. Excluding Accor issued a total of 15,304,348 OCEANE bonds convertible hotels under construction, ROCE stood at 9.4%, versus 11.0% and/or exchangeable into new or existing shares. Carrying in 2002. interest of 1.75% and maturing on January 1, 2008, the bonds were priced at €40.25 each, for an aggregate principle amount ROCE broke down as follows: of €616 million. 2001 2002 2003 Following the issue, the Group’s financing consisted of 15% HOTELS 11.3% 10.2% 8.7% bank loans, 49% ordinary bonds and 36% convertible bonds. The cost of financing was reduced to 3.29%, from 3.8% at year- Upscale and Midscale 10.5% 9.2% 6.8% end 2002, with 57% of debt at fixed rates (3.25% on average) Economy 15.3% 14.8% 15.1% and 43% at variable rates (3.34%). In addition, Accor enjoys a Economy US 10.0% 8.8% 7.2% healthy liquidity position, with €1,937 million in unused, confirmed long-term lines of credit. SERVICES 25.8% 26.7% 24.2% With shareholders’ equity including minority interests of €3,683 million and net debt of €2,462 million at December 31, 2003, the Travel agencies 3.0% 9.0% 6.9% gearing ratio came to 67%, versus 70% at year-end 2002. Casinos 16.6% 14.5% 15.5% Restaurants 11.9% 11.0% 11.0% Onboard train services 7.5% 8.9% 9.5% Interest cover Other businesses 1.4% 2.5% 2.6% Adjusted interest cover (corresponding to Ebitdar expressed as a multiple of interest expense plus one-third of rental expense) Consolidated ROCE 11.5% 10.7% 9.2% amounted to 5.6 in 2003, unchanged from the previous year.

q VALUE CREATION Adjusted funds from operations/adjusted net debt Adjusted operating cash flow corresponds to funds from operations Value creation is calculated as follows: after adding back two-thirds of rental expense. Based on the (ROCE after tax – weighted average cost of capital) x capital method used by the main rating agencies, net debt is adjusted employed. by adding back eight times annual rental expense. At year-end Based on an ROCE after tax of 7.6%, a weighted average cost of 2003, the ratio of adjusted funds from operations to adjusted net capital of 5.8% and capital employed of €11.6 billion, value created debt stood at 15.7%, compared with 16.5% in 2002. by Accor totaled €208 million, versus €278 million in 2002.

16 I management board report STRATEGIC VISION, INVESTMENT STRATEGY AND OUTLOOK

The difficulties encountered over the past two years have prompted q INVESTMENT STRATEGY MANAGEMENT BOARD REPORT Accor to meet new challenges, such as enhancing our marketing q responsiveness, carefully selecting investment opportunities and Focusing expansion on high-margin businesses optimizing our organization. This does not mean, however, that In line with our strategic vision, 68% of 2003 capital expenditure we have abandoned the long-term growth strategy that today was allocated to the development of Midscale and Economy hotels provides us with undeniable competitive advantage. In a market in Europe (56%) and Services (12%), two businesses that make that is just beginning to recover, these strengths, when taken major contributions to earnings and generate the highest return together, represent growth drivers that will enable Accor to efficiently on capital employed. pursue its expansion.

TARGETED EXPANSION IN HOTELS IN 2003

As a % of total rooms

By segment By type of operations

10% 17% Owned

43% 20% Leased

37% Managed

31% 26% Franchised

16% 2003 openings Total 100% 170 hotels (22,015 rooms)

2003 OPENINGS BY REGION

75%

36%

16% 11% Europe

North America ■ As a % of total rooms 24% ■ As a % of total investments 12% 3% 3% 12% 8% Asia/Pacific Middle East Africa Latin America

management board report I 17 The hotel business continued to expand at a sustained pace in management contracts and franchise agreements, which account 2003, opening 170 properties (22,015 additional rooms), mostly respectively for 37% and 26% of new rooms. Overall, Europe in the Midscale and Economy segments in Europe. Contracts for accounted for 36% of the openings and 75% of capital outlays, 105 existing hotels (9,419 rooms) were not renewed upon expiry. while Asia represented 24% and 3%. At December 31, 2003, we had 3,894 hotels (453,403 rooms) in This policy of investing selectively by region and market segment 85 countries. Given our assertive commitment to reducing capital makes it possible to manage country and product risk while expenditure, new hotels are primarily operated through maximizing profitability.

BREAKDOWN OF THE HOTEL PORTFOLIO BY REGION AN BY TYPE OF OPERATION AT DECEMBER 31, 2003

As a % of total rooms

70%

Accor Hotels Network 56%

43%

21% Owned 29% 30% 20% 42% Leased 14% 15% 10% 1% 7% 5% 17% Managed

20% Franchised North America Europe Rest of the world

■ Owned ■ Leased ■ Managed ■ Franchised

Stepped up development of Services The Services business pursued several opportunities to increase aftercare (47,000 users), and a 35% stake in Hungastro, Romania’s market share in 2003. Acquisitions included Dicasa, the fourth- third-largest food voucher company (212,000 users). Total capital largest food voucher issuer in Mexico (415,000 users) and, in expenditure in Services amounted to €68 million for the year, Europe, Smart Cleaning, the UK market leader in corporate clothing compared with €18 million in 2002.

q GROWTH DRIVERS Tourism Organization, the number of international travelers should increase at an average annual rate of 4.1% between 1995 and Moderate growth in hotel supply vs. strong 2020 and should more than double by 2020. This trend is being driven by growth in disposable income and more affordable airfares potential for growth in demand around the world. There is considerable potential for increasing Unlike the situation in the early 1990s, during the Gulf War, when the hospitality customer base, especially in the Economy segment. fast growing hotel capacity was outstripping demand by a wide France provides a significant example. According to the French margin, supply today is growing slowly. In 2003, for example, Ministry of Tourism, hotels account for less than 15% of the supply increased by 0.3% in Europe (source: MKG Consulting, 1.4 billion nights French and foreign travelers in France spend February 2004), after rising 0.8% in 2002, and by 1.3% in the away from home. More than half of those nights spent are with United States (source: PricewaterhouseCoopers, December 2003), friends or relatives (free and private accommodations), with the after a 1.7% increase in 2002. rest divided among guest houses, rentals, campgrounds and At the same time, our unique offer serves a market in which vacation clubs. demand is experiencing fast growth. According to the World

18 I management board report Source: Accor, MKG In %oftotalavailablerooms ACCOR’S MARKETSHAREINEUROPE Spain andItaly. where ourmarketshare remains low, notablytheUnitedKingdom, in ourmainmarketsandare focusingexpansiononcountries the topteninEurope (seepage 5).We holdleadershippositions number onehospitalitycompany. Fiveofourbrandsrankamong With more than2,100hotels in Europe, Accorisbyfartheregion’s Market leadershipinEurope ACCOR’S REBOUNDPOTENTIAL r hotel cycle.Insecond-half2003,wealready notedadistinct inthe faster riseinoccupancyratesthanduringthelastupturn In thesemarketconditions,theeconomicrecovery willdrivea A risinghotelcycle ecovery intheUnitedStatesandKingdom.Germany United Kingdom US, Motel6/RedRoofInns Germany Benelux France United States,Sofitel No.1 (2,989 rooms) Portugal 10/2H203/02 H1 03/02 .%+6.8% + 0.9% .%+5.9% –0.2% – 0.1% –3.5% –2.2% – 3.3% –3.3% – 7.6% – 4.0% – 1.4% No.1 No.1 No.8 United Kingdom 5%

(117,599 rooms) No.1 (10,003 rooms) ∆ RevPAR No.13 Spain (6,176 rooms) France 1% Belgium 2% (4 085rooms) 18% 10% No.1 Netherlands 9%

No.1 No.1 Switzerland (7,177 rooms) 4% business environment. customersinParisandthepersistentlydifficult international France, however, isstilladverselyaffected bythelackof and theBeneluxcountriesare alsoshowingencouragingsigns. economic recovery shouldenable themtorealize theirfullpotential. budgeted Ebitdarmargin iscurrently seventoninepoints,the fast asexpected.Whilethedifference betweentheiractualand years havebeenslowgearingupandwillnotreach maturityas Because ofthesluggisheconomy, hotelsopenedinthepasttwo Full ramp-upofrecent openings (2,912 rooms) 7% 1% 0,5% No.1 Germany 17% No.5 Italy (46,589 rooms) 5% management board report (4,702 rooms) France Economic cycle No.2 Hungary No.1 Poland No.2 Austria (3,617 rooms) (12,742 rooms) Benelux (3,757 rooms) Germany Motel 6/RedRoofInns

United Kingdom

Sofitel, UnitedStates I 19

q MANAGEMENT BOARD REPORT Continued development of the hotel business The Mouvango (in partnership with Total, Europcar, Courtepaille and Bouygues Telecom, among others) and Accor Hotels Favorite The beginning of the recovery paves the way for an increase in Guest programs now include 1.4 million loyalty cardholders. renovation budgets, with investments in existing assets expected to increase to €350 million in 2004, from €284 million in 2003. Internet bookings were up sharply for the year. The number of Total investments for development should amount to roughly €500 overnights reserved online rose by 57% to more than 6 million, million, compared to €586 million in 2003, with the same focus compared to 3.9 million in 2002. Of the total, 83% were booked on Economy and Midscale hotels in Europe and on acquisitions directly through Accor hotel websites, with the remaining 17% when opportunities arise. coming from distributor sites. These results were led by sharp A total of 275 new hotels, representing 37,000 rooms, are already growth in bookings for Upscale and Midscale chains, although planned between now and 2006, of which 58% Ibis and Etap Economy hotels continued to generate the majority (60%) of Hotel, 33% Novotel and Mercure, and 9% Sofitel. Of the total, Internet business volume. The focus is now on making the websites 33 will be in Spain, 13 in the United Kingdom, 42 in Brazil and more attractive and constantly expanding the range of online 6 in , demonstrating the strategic inroads planned in key products. markets. These developments will contribute to future earnings growth, especially the properties in Europe in which Accor is investing directly (88% of total investments). Services, our growth driver Over the past few years our Services business has demonstrated the ability to hold up through unfavorable economic cycles and Sofitel, our prestige brand to actively create new targeted products. Meal vouchers remain In recent years, Sofitel has become a truly international network of essential for facilitating daily life for employees, while products 180 hotels in 52 countries. The brand is now present in the vast that focus on well being are designed to meet the aspirations of majority of large international cities, with hotels offering high quality employees who want to find a better balance between their job in terms of architecture, interior decoration, service and restaurants. and their personal life. In addition, companies looking for ways to More than two-thirds of the chain’s establishments have been motivate their sales teams are increasingly turning to employee renovated within the past five years. incentive products.

The chain now ranks among the leaders in its segment, as Existing products are extended to new markets, like Clean Way in evidenced by a Business Travel News survey published in February the United Kingdom, Germany, Belgium and the Netherlands. At 2004 in which Sofitel placed second in the Upper Upscale segment the same time, new countries are opening up to these solutions, in the United States. The brand has also received around 50 awards like Panama and Peru in 2003, which bring to 34 the total number and citations in the past two years. of countries in which Accor delivers its services. Currently under study are roughly 15 countries where future projects will be These advances are helping Sofitel to plug the gap between its launched at the rate of one or two new countries a year. What’s prices and those charged by its British and American competitors, more, these new products and markets are gradually reaching providing a powerful lever for earnings growth. In addition, with breakeven. Therefore, the Services businesses benefit from a large the recovery, the more recently opened hotels will reach full ramp- number of future growth drivers, to be supported by acquisitions, up faster. which will result in market share gains and improved margins.

An assertive marketing strategy In conclusion, thanks to its global identity, powerful network and to “create a preference” for Accor technological capabilities, Accor is a major force in its markets and is thus positioned to pursue and accelerate its development Having demonstrated its effectiveness, the sales and marketing and its partnership strategy in all its businesses. strategy implemented to ride out the crisis still focuses on capturing, satisfying and retaining customers, with the goal of creating a Regardless of the economic environment, Accor is committed to “preference for Accor.” Innovation is playing a key role in achieving a long-term strategy firmly grounded in a culture of growth and this objective, both in the product offer and in improved services. innovation.

20 I management board report Champs-Elysées inParis.Thetransactionwillcombinethe a substantialrestaurant business, includingFouquet’s onthe and Nice.Additionally, theGroup willoperate13luxuryhotelsand include Deauville,Enghien,LaBaule,Montreux, Bordeaux, Biarritz 37 casinos,withcloseto5,000slotmachinesinlocationsthat approximately Pro formaforthetransaction,gross revenues fortheGroup were Management Board. Cohen willbeVice-Chairman. SvenBoinetwillchairthe Supervisory Board withspecific additionalpowers,Benjamin simplifiée) into a“simplifiedjointstockcompany” SHCLB, toberenamed Groupe LucienBarrière, willbetransformed a similaroptiontobuyColonyCapital’s shareholding. have anoptiontosellitsshareholding toAccor, withAccorholding structure. Undertheshareholders’ agreement, ColonyCapitalwill in accordance withusualpractice inthistypeofshareholding particular withrespect tocertain oftheGroup’s majordecisions, shareholders’ agreement settingforththeGroup’s in governance, The newshareholding structure willbeaccompanied bya further strengthening theGroup’s financialstructure. European fundColyzeo,will invest 15%. Inadditiontoitsshareholding, ColonyCapital,through its 51% oftheGroup, Accorholding 34%andColonyCapitalholding shareholding structure, withtheBarrière Desseignefamilyholding transaction, theGroupe LucienBarrière willsimplify the growth Casinos. Oncompletionofthisimportantexternal Casinos, withColonyCapitalowningtheremaining 50%ofAccor and 54%ofSHCD.Accorowns35%SHCD50% The Barrière Desseignefamilycurrently owns100%ofSHCLB Casinos, andtheirrespective subsidiaries. (SHCLB), SociétédesHôtelsetCasinodeDeauville(SHCD),Accor hotel assetsofSociétéHôtelière delaChaîneLucienBarrière The agreement isbasedonthecombinationofcasinoand the European casinosector. signed anagreement tocreate agroup withaleadingpositionin The Barrière Desseignefamily, AccorandColonyCapital have (press release datedJanuary19,2004) the majorEuropean playersinthecasinosector Creation ofaFrench-based group, oneof SIGNIFICANT EVENTS . DominiqueDesseignewillbeappointedChairmanofthe € 900 millionforFY2003.TheGroup willoperate € 100 millionintheGroup, (société paractions SINCE THEBEGINNINGOF2004 supervisory authorities. particular approval bytheantitrustauthoritiesandcasino The agreement issubjecttocertainconditionsprecedent, in valuation. terms setbyanexternal of thebrandtoallcasinosandhotelswithinGroup, onthe brand from theBarrière Desseignefamilyandwilllicense theuse Groupe LucienBarrière willalsoacquire the“LucienBarrière” and ColonyCapital. Casinos currently heldbytheBarrière Desseignefamily, Accor Lucien Barrière oftheoutstandingshares ofSHCDand Accor The transactionwilltaketheformofanacquisitionbyGroupe of thecasinosectorinEurope. improve theprofitability oftheGroup andcontinuetheconsolidation the commercial, industrialandfinancialareas toattractnew clients, r certificate issue. share fornomore than40.19%ofthetotal,and/ordividend rights their supportfortheplan,withAccortakingupitsfullstakein shareholders –AccorandtheEbertzfamilyhaveannounced an Extraordinary Shareholder’s Meeting.Thecompany’s twolargest The planwillbesubmittedtoDorintshareholders forapproval at – TheimplementationofamanagementcontractDorinthotels – – A measures: r The plan,whichextendsmeasures undertakenin2003toreduce economic recovery inGermany. position theGermanhotelcompanytobenefitfrom thecoming and approved bytheSupervisory Board. Theplanisdesignedto the long-termplanproposed bytheDorintManagementBoard Accor, holderofa40%stakeinDorint,announceditssupportfor (press release datedFebruary2,2004) Accor To SupportProposed DorintRecoveryPlan espective strengths oftheGroupe LucienBarrière andAccor, in ental expenseandoperatingcosts,isbasedonthefollowing deployed withtheSofitel,NovotelandMercure brands. performance aspartoftheco-brandingstrategynowbeing by AccorGermany, inorder toimprove theirsalesandoperating certificates inamaximumamountof An additionalissueofnewshares and/ordividendrights € 30 millionnewshare issue. management board report € 25 million. I 21

q MANAGEMENT BOARD REPORT SENSITIVITY ANALYSIS FOR 2004

Based on 2003 published data, Accor has performed sensitivity In the Hotels business, the sensitivity analysis shows that the analysis to measure the impact on profit before tax of a change in impact on profit before tax of a 1 point change in RevPAR interest rates, the dollar-to-euro exchange rate and RevPAR. (occupancy times average room rate) would be €13.4 million for Upscale and Midscale hotels in Europe, €9.2 million of Economy Regarding interest rates, the impact on profit before tax of a 50 bps hotels in Europe and €9.0 million for Economy hotels in the change in short-term interest rates would be €3.7 million for euro- United States. denominated debt and €2.2 million for dollar-denominated debt.

As for exchange rates, the impact on profit before tax of a 5 cent change in the dollar-to-euro exchange rate would be €4.3 million.

HOTELS BY SEGMENT IMPACT ON PBT

Impact of a 1 point change in RevPAR

• Upscale and Midscale Europe €13.4 million

• Economy € 9.2 million

• Economy US € 9.0 million

22 I management board report a fttlpyol .%23 .%28 .%17 2.3% 1.7% 3.3% 2.8% 1.9% 158,023 5,427 2.3% 28,157 1,802 4,854 2.3% 15,752 5,115 2,126 4,757 20,805 30,407 5,610 2,287 21,234 93 18,541 18,584 5,330 22,468 36,323 3,449 3,131 17,096 (as a%oftotalpayroll) 28,843 3,658 9,949 14,809 23 4,039 11,048 16,464 39 12,895 256 2,407 Number ofemployees 102,067 1,471 2,135 73,534 394 112,426 4,976 869 HUMAN RESOURCESINDICATORS BYREGIONASOFDECEMBER31,2003 122 84,282 14,809 112,095 2,513 1,028 1,893 43,420 84,391 1,028 2,817 8,677 T 41,013 498 Other 5,001 7,808 18,396 Onboard trainservices Restaurants 4,618 21,918 3,587 Casinos T 19,684 16,917 Other businesses SERVICES 15,066 Economy US Economy Upscale andMidscale HOTELS BREAKDOWN OFTHENUMBERPEOPLEBYBUSINESSANSREGION At December31,2003,there were 158,023peopleworking intheGroup. HUMAN RESOURCES EMPLOYEE Tr % managementpositionsheld q q ae gnis142545107077548,083 7,504 7,047 140 5,455 1,452 ravel agencies tl2,4 6331,4 0474,0 5,2 5,1 146,748 157,412 158,023 43,909 30,407 18,541 36,323 28,843 otal aining expenditure EMPLOYEES OFMANAGEDBUSINESSES HUMAN RESOURCESINDICATORS oe 2 9 0 8 0 1 50% 41% 20% 48% 70% 59% 52% % Women yMn5%5%5%3%7%7%60% 40% 71% 50% 29% 77% 59% 23% 39% 80% 61% 50% 52% 50% 58% 30% 42% 59% 41% 41% 48% by Men by Women % Men INFORMATION, rneErp ot ai fia oa oa Total Total NorthLatin Africa, Total Europe France ec.Fac)AeiaAeiaMdl at 0320 2001 2002 2003 MiddleEast, America America (excl. France) INDICATORS rneErp ot ai fia sa Total Asia- North Latin Africa/ Europe France ec.Fac)AeiaAeiaMdl atPacific MiddleEast America America (excl. France) Pacific Asia- management board report I 23

q MANAGEMENT BOARD REPORT BREAKDOWN OF GROUP EMPLOYEES BY AGE AS OF DECEMBER 31, 2003

Over 55 5%

45 to 54 14%

35 to 44 25%

25 to 34 36%

Under 25 20%

Estimate based on a sample of 139,000 employees.

q ACCOR SA CORPORATE REPORT • In 2002, an agreement was signed concerning the electronic display of union information. In 1995, Accor signed an agreement with the International Union • 2003 saw the renewal of the 1999 agreement with the French of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Education Ministry, the establishment of partnerships with the Allied Workers’ Associations (IUF) concerning the full and complete French National Employment Agency, with AGEFIPH (the agency recognition of union rights. The same year, Accor joined forces responsible for helping the disabled join the working population), with other major European groups to form Corporate Social with the Salvation Army and with hotel schools. Responsibility Europe, a network currently comprising 65 members whose mission is “to help companies achieve profitability, • Also in 2003, Accor took part with 11 other European companies sustainable growth and human progress by placing corporate in activities organized to mark the European Year of People with social responsibility in the mainstream of business practice” (see Disabilities. www.csreurope.org/aboutus/default.aspx). • Lastly, during the year, Accor signed the United Nations Global Since then, other initiatives have been undertaken to enhance Compact. social dialogue in all our operations: Regarding subcontractors, we strengthened the standards required • A European Works Council was set up in 1996, two years before in terms of working conditions and, in 2003, we introduced a new this became compulsory under European Union rules. Cleaning Companies Charter. Regular meetings are held with • In France, a joint declaration against discrimination in the employee representatives to assess performance compared with workplace was signed with the unions in 1997. the Charter standards.

24 I management board report osadtann o h ialdOngoingsearch forqualifiedpeople,butthe6%quotamandated byFrench lawhasnotyet Jobs andtrainingforthedisabled Tr Accoriscommittedtocombatingallformsofdiscriminationandmakesnodistinction Equity intheworkplace usucdepomn 50people withtheInformationTechnology Department Outsourced employment Nomajorrisks,sinceallemployeesworkinheadoffices. Heath andsafetyconditions of collectiveagreements 4%in2003 50%employertaxes Illness:9,094days Social securityandotherpayroll taxes Temporary workersponctuallyused Unusual.Salariesare basedonannualworkinghours. Annual wageincrease Absenteeism A A Accorhires peopleforstaff positions.Becausethepositionsrequire ahighlevelof Outside labor Overtime Recruitment problems contracts duringtheyear A contracts duringtheyear A To HUMAN RESOURCESDATA FORACCORSA Wo Signature in2003oftheMandatoryAnnualNegotiation. Union relations andresults Te eaenme fpr-ieepoes67 1,222 verage numberofpart-timeemployees verage numberoffull-timeemployees 65 verage numberofhiringsunderfixed-term 12 verage numberofhiringsunderpermanent iigTraining budgetincludingwages:2.5%ofpayroll. aining mntosraosRealandseriouscause:31 rminations/reasons tal number of employees (annual average) 1,289 (including Société Management Internationale asfrom 2003) 1,289(includingSociétéManagementInternationale tal numberofemployees(annualaverage) krbnft Provided bytheWorks Council rker benefits handicap, lifestyle,politicalopinions,unionactivities,actualorperceived ethnicgroup, between personsbasedonnationalorigin,gender, familysituation,healthcondition, Conditions. Quarterly meetingswithmembersoftheCommitteeforHygiene,SafetyandWorking been met. national affiliation, raceorreligion. expertise, itoftentakesalongtimetofindtherightperson. Implementation ofanemployeeassistanceprogram (“Bien-Etre àlaCarte”) More thanhalfofallemployeesattendedatrainingcoursein2003. Occupational accidentrate:0.95%. 23% employeewithholding Other reasons (unjustifiedorunpaidleave):344days Misdemeanor: 0 Authorized leave(familyleave,training):2,298days leave:6,175days leave:4,031days.Paternity Maternity Occupational orwork-related travelaccidents:94days Professional misconduct:2 management board report I 25

q MANAGEMENT BOARD REPORT ENVIRONMENTAL REPORT

The following indicators cover directly operated (owned and Improving energy efficiency leased) Accor establishments: Energy consumption rose in 2003, led by the increase in France due • Hotels in France, Europe (United Kingdom, Germany, Belgium, to the very cold weather at the start of the year and the heatwave the Netherlands, Denmark and Sweden) and North America in the summer. (United States, Canada) representing 87% of owned or leased In the High Environmental Quality (HEQ) assessments carried out hotels worldwide, during the year by outside consultants (Tribu and Math Ingenieurie), • Thalassotherapy institutes in France, Ibis and Suitehotel hotels scored very high marks for the • Casinos in France, performance of their energy systems. Beginning in 2004, new • Operations of Compagnie des Wagons-Lits in Austria, Spain, construction and refurbishment projects launched will progressively France, Italy and Portugal, improve the energy efficiency of the buildings and systems, in • Operations of the Lenôtre production facility in Plaisir, France. compliance with HEQ standards. For example, low energy light The Service business is not included in the indicators because it bulbs and water-saving devices will be used. has little impact on the environment. In France, for example, the The following table shows water, raw materials and energy impact is limited to the 200 metric tons of paper used every year consumption data for 2003. to print service vouchers. Accor’s environmental initiatives in 2003 can be summed up as follows:

WATER, RAW MATERIALS AND ENERGY CONSUMPTION Hotels Thalassotherapy Compagnie Casinos Lenôtre France Rest of Europe North institutes des (France) America (France) Wagons-Lits Number of facilities 749 392 987 11 25 16 1

Number of rooms rented out (in millions) 18.6 11.6 27.1 – – – –

Drinking water consumption (thousands of cubic meters) 5,671 3,035 20,079 97 51 133 30 Energy consumption (MWh) 703,536 605,967 1,094,903 29,132 12,021 30,479 7,933

Promoting renewable energies Limiting local impacts Solar power is increasingly used to produce hot water for hotel In 2003, a standard environmental risk audit was defined for use bathrooms. As of December 31, 2003, solar panels totaling 1,980 in construction projects in cities and environmentally-sensitive square meters were installed at 19 hotels in the world, generating areas. Diagnostic studies using the criteria of this audit will enable 1,100 MWh of electricity each year and avoiding the production of us to evaluate the environmental impact brought on by the

320 metric tons of CO2 equivalent. construction of a hotel, with a focus on waste production, soil use, damage to the ecosystem, the use of local natural resources (such as spring water) and any effects on the community.

26 I management board report oa niomna rtciniiitvs3%5%5%5%4%86% 43% 100% 51% 100% 92% 57% 96% 71% 93% 69% 50% 100% 85% 50% 54% 43% 71% 20 34% 100% 93% 57% 90% 87% 43% 91% 35% 90% 57% 83% 74% 111 98% 36% 76% 76% 88% 63% 95% 77% 94% 79% 14% 88% 80 57% 97% • Initiatives toenhancecustomerawareness 96% 45% 94% 79% 97% 61% • Localenvironmental protection initiatives 96% 98% 76% 52 96% 91% 65% 97% 92% • All staff reminded ofAccor’s 93% environmental 88% 82% 91% 83% • Atleastonetree plantedeveryyearonthehotelproperty 94% 665 73% 88% • Upkeepandenhancementofgreen areas 89% 79% 1,042 91% • Compliance withAccorgraphicstandards 72% • Asbestos-free certification 61% control ofwaterconsumption • Internal control ofenergy• Internal consumption • Recycledpaperusedwheneverpossible • Cookingoilcollection • Sortedtonercollection • Sortedglasscollection • Sortedcardboard collection • Sortedwastepapercollection Number ofhotels 314 751 PERCENTAGE OFHOTELSSUPPORTING THE"HOTELENVIRONMENTCHARTER" THAT IMPLEMENTEDITSACTIONSIN2003 1,900 municipal sewageplants.Hotelsthatservemealsare equipped 1,047 to householdwastewater. Mostofthiswastewateristreated by Accor’s activitiesgeneratewastewaterwhosecontentissimilar 1,009 Managing wastewaterandeffluent 1,065 system replacements. in order fluidsandtoschedule toreplace CFCwithalternative 731 Cooling systemsandtypesofcoolantare nowbeingidentified, 3,921 r or asaresult ofaleak.To limitthisrisk,coolingsystemsundergo 351,732 98,158 there isariskofcoolantevaporationduringmaintenanceoperations eliminate anyriskofcoolantemissionsinnormaluse.However, Cooling systemsusedbytheGroup haveclosedcircuits that 163,155 48,912 • Emissionsofozone-depletingsubstances 39,119 35,818 Indirect greenhouse gasemissions Direct greenhouse gasemissions (metric tonsofCO DIRECT ANDINDIRECTGREENHOUSEGASEMISSIONSGENERATED BYTHEUSEOFELECTRICITYIN2003 • Atmosphericemissions Protecting airquality egular maintenancechecks,performedbyqualifiedengineers. A oiya es neaya 7 5 9 9 6 93% 76% 59% 49% 93% 75% 94% 57% 88% 71% 98% 90% policy atleastonceayear for hotelanddirectional signage fAcrsevrnetlporm 6 8 5 9 0 100% 80% 89% 65% 88% 56% of Accor’s environmental programs eaenme fiiitvsprhtl1. 321. 131. 11.4 11.9 11.3 10.8 13.2 11.3 verage numberofinitiativesperhotel 2 qiaet oesTaasteayCmaneCsnsLenôtre Casinos ThalassotherapyCompagnie Hotels equivalent) rneRs fErp ot isiue ds(France) des institutes North RestofEurope France rneRs f saAsrlaBai Africa Brazil Australia Asia Restof France mrc Fac)Wagons-Lits (France) America management method. for allhotelsthatsupporttheCharter, whateverthechainand “Hotel Environment Charter”andtheirimplementationistracked For theHotelbusiness,preventive measures are describedinthe Preventive measures Accor’s activitiesdonotcontaminatethesoil. Preventing soilcontamination discharging pollutingeffluent intotheaquaticenvironment. by aspecialistcontractor, toavoidcloggingwastepipesand discharged intothesewagesystem.Usedcookingoiliscollected with scumandfatseparatorstoimprove thequalityofwastewater uoeNwZaad(Egypt) New-Zealand Europe management board report TOTAL 1,970 42% 63% 70% 92% 92% 91% 94% 91% 80% 91% 92% 80% 79% 74% 70% I 12.0 27

q MANAGEMENT BOARD REPORT Collecting and recycling waste Environment Department organization The Hotel businesses generate two types of waste: Since October 2003, the Environment Department has been part • Non-hazardous industrial waste (similar to household waste). of the Sustainable Development Department reporting to John Du No data are available concerning the quantity of waste generated Monceau, Deputy Vice-Chairman of the Management Board. due to the current collection method. Backed by a cross-functional committee, the Environment • Potentially hazardous industrial waste. This waste is collected Department determines the Group’s environment policy and separately, enabling the hotels to ensure that it is properly coordinates initiatives with the units concerned. Environmental processed and to track the quantity of waste collected and policy is rolled down to the local level by a network of international recycled. Although consolidated figures are not available for this correspondents and then adapted to local conditions. In addition, type of waste, we are committed to moving forward by involving since 2003, employees can access a wide range of environmental waste collection contractors more closely in the quantity monitoring material on the corporate intranet. process. Hotel managers are also being actively encouraged to Raising environmental awareness among employees improve their waste recycling rates. In 2003, 63% of the hotels that have pledged to support the “Hotel Abating noise pollution and odors Environment Charter” organized awareness programs based on Noise pollution and odors generated by Accor’s activities are corporate documents describing best environmental practices limited. published in 2003 (“Understanding and Managing Water, Energy and Waste in an Accor Hotel” and two waste management fact Compliance monitoring sheets). In 2003, a detailed review was carried out to identify all of the In addition, environmental guidelines are included in the Sustainable environmental laws and standards applicable to the Hotel business. Development recommendations published in French and English This information has been used to prepare environmental and distributed to 20,000 line managers. compliance guidelines that will be posted on the Hotel business intranet in 2004. A compliance monitoring unit will also be Provisions and guarantees for environmental risks established at Group level to ensure that Hotel managers have No material provisions have been set aside for environmental risks. up-to-date information about regulatory requirements. Penalties paid following a court ruling on environmental claims Assessment and certification process Accor has not been the subject of a court ruling in connection The environmental assessment process is based on the “Hotel with any environmental claims. Environmental Charter”. Since the end of 2003, a version of the Objectives assigned to foreign subsidiaries “Hotel Environment Charter” tailored to local regulatory require- The Group’s environmental policy applies to all hotels outside ments has been posted in employee dayrooms at Group-owned France that are owned or leased by Accor. hotels in the United States. Ibis hotels are involved in an environmental management process designed to earn ISO 14001 certification for all the French hotels in the chain by 2005. Two Thalassa institutes are also scheduled to become ISO 14001- certified in 2004.

Environmental expenditure The Environmental Department’s 2003 operating budget amounted to €564,000. The Department’s remit consists of reducing our environmental footprint by introducing compliance monitoring processes, setting up HEQ work groups, conducting environmental risk audits and developing new media to promote employee awareness of environmental issues. The budget does not cover all the costs incurred by the hotels or corporate functions (Hotel Technical Department, Purchasing Department, Marketing Department, Legal Department, Communications Department, etc.) for environmental initiatives such as the Ibis chain’s ISO 14001 program.

28 I management board report RISK FACTORS

q LIQUIDITY RISK minimize the risks on commercial transactions. Computer MANAGEMENT BOARD REPORT

applications (GTM, Microlis) are used to monitor the breakdown of q The Group’s short-term financing needs are covered by undrawn debt between fixed and floating rate and by currency, as well as long-term confirmed lines of credit obtained from leading banks (see to generate reporting schedules, with online access to Reuters note 27 B to the consolidated financial statements, page 74). At and Bloomberg databases. December 31, 2003, Accor had access to €1,937 million in undrawn long-term confirmed lines of credit. Accor has also secured Investment policy diversified medium and long-term financial resources, comprising bank debt and bond issues, to finance its development. In light When the Accor SA parent company invests directly or indirectly of these facilities, the Group is not exposed to any liquidity risk. in a foreign subsidiary, the investment is generally made in the subsidiary’s local currency. These are very long-term positions and consequently the currency risk is not hedged. Acceleration clauses / Covenants None of the loan agreements include any rating triggers. However, Short-term financing certain loan agreements include acceleration clauses which are An internationally-recognized signature allows Accor to raise triggered if covenants related to financial ratios are breached. The various forms of short-term financing on the markets, through main financial ratios are as follows: billets de trésorerie (commercial paper) programs in France and • Gearing ratio equal to or in excess of 120%; commercial paper programs in the United States. • Interest cover – corresponding to the ratio of Ebitdar to interest From time to time, we also take advantage of market opportunities expense plus 1/3 of annual rental expense – equal to or less by raising short-term financing in a given currency and at a given than 3.8x. rate of interest and then using a swap to convert the facility into These clauses concern only committed lines of credit that had not the currency and interest rate required to finance our business been drawn down at December 31, 2003. needs (see note 27.C to the consolidated financial statements, No acceleration clauses apply to the consolidated gross debt at page 75). This use of swaps represents an effective method of December 31, 2003, in the amount of €3,285 million. reducing our borrowing costs. In addition, none of Accor’s loan agreements include a cross default clause, requiring immediate repayment of a debt in the event of default on another debt. Cross acceleration clauses only concern loan Hedges of interest rate risks agreement with a duration of at least three years and such clauses Group borrowings include both fixed rate debt and floating rate debt could be triggered only if significant amounts of financial debt are indexed to the Libor, the Euribor or other benchmarks (see note accelerated. 27.D to the consolidated financial statements, page 75). Target breakdowns between fixed and floating rate debt are determined currency by currency, giving due regard to anticipated trends in interest rates and to changes in the composition of debt, due to INTEREST RATE AND CURRENCY RISKS q new borrowings and the repayment of existing borrowings. The targets are reviewed at regular intervals and new targets are set for A variety of financial instruments, including swaps, caps and future periods by senior management. The related financing strategy forward purchases and sales of foreign currencies, are used to is implemented by Group Treasury and Financing. manage interest rate and currency risks arising in the normal course The most commonly-used instruments are interest rate swaps and of business. Risk management policies are based on three core caps, contracted with banks that have high-quality credit ratings principles: protection, liquidity and cost-effectiveness. Interest and do not give rise to any counterparty risk. The contracts are rate and currency risks are managed by the Group Treasury and based on the model recommended by the French Banking Financing unit which reports directly to the Management Board. Federation (FBF), which is consistent with the models used Financial instruments are used to support Group investment, internationally. financing and hedging policies, to help manage debt and to

management board report I 29 Hedging of currency risks Assets required for the business that are not owned by Accor and Currency risk hedging primarily concerns the Travel Agencies its subsidiaries are not material in relation to the Group’s total business and is based on identified underlyings (outstanding assets and do not give rise to any dependence on external invoices). Hedges generally consist of forward purchases and companies. sales of foreign currencies. The customer base of the hotel business comprises a very large In the Services business, which has a major presence in Latin number of individual customers, none of which accounts for a America, Accor was able to limit earnings erosion from the sharp material proportion of Group revenues. devaluation of local currencies by hedging cumulative earnings in The Group is not dependent on any suppliers or contractors and hard currencies. is not exposed to any other specific business-related risks. There is little need to hedge currency risks in our other businesses because the volume of intercompany transactions in foreign currencies is limited and revenues are denominated in the same q LEGAL RISKS currency as the related costs. The Accor Group operates on a global scale and no regulations are applicable across all of its businesses. In summary, Accor does not conduct any trading transactions Accor and its subsidiaries have operations in a large number of and has no plans to develop this type of activity. Neither the Parent countries and are subject to local regulations governing their hotel, Company nor the Group has any open currency or interest rate restaurant, service voucher, , and casino positions that would be likely to expose the Group to significant businesses. They are therefore required to comply with local risks. standards and to obtain the necessary licenses and permits for their businesses. For example, in each country: • The hotels are required to comply with the regulations applicable q EQUITY RISK to establishments open to the public. • The service offer has to be tailored to local tax and labor laws and Accor does not hold any shares in listed or unlisted companies, other legal requirements governing the issue of service vouchers. except for strategic investments. At December 31, 2003, strategic • Licenses and permits have to be obtained from the local investments in listed companies were as follows: authorities to operate travel agencies or casinos. • Compass: these shares were acquired through an exchange To the best of our knowledge, no regulatory changes are planned transaction in connection with the sale of Eurest assets (see note that would have a material adverse impact on our business. 19 to the consolidated financial statements, page 68). Information concerning recent or current claims and litigation that • Granada: these shares, which were also acquired through an could have a material impact on the Group’s financial position or exchange transaction in connection with the sale of Eurest assets, results is provided in note 34 to the consolidated financial were sold during 2003 (see note 28 to the consolidated financial statements (page 78). statements, page 76). Liabilities are accounted for in accordance with the applicable • Accor (treasury stock): the 1,528,731 Accor shares held by the accounting standards (see note 1.K to the consolidated financial Company are intended to be held on a long-term basis to manage statements, page 46). the dilution caused by the exercise of stock options and have Details of provisions for claims and litigation are provided in note therefore been recorded as a reduction in shareholders’ equity 24 to the consolidated financial statements (page 72). The method since the date of purchase. In view of this accounting treatment, used to calculate provisions complies with the applicable they are carried at historical cost and not at the lower of cost accounting standards. and market. To the best of the Company’s knowledge, no other claims or litigation are in progress or pending that could have, or have had in the recent past, a material impact on the Group’s financial q BUSINESS RISKS position, business or results of operations. Accor has not given any material commitments under shareholder Accor SA and some of its wholly-owned subsidiaries own the agreements except as explained in note 35 to the consolidated trademarks used by the Group. These trademarks are registered financial statements on page 79 (Off-balance sheet commitments with local intellectual property organizations, such as INPI and and contingencies). OMPI. The period of protection in each case depends on local legislation.

30 I management board report Group’s hotels. in 2003onassessingthesafetyofcustomersandstaff inthe The Committeeissupportedbyseveralworkgroups whichfocused presented onpage100. procedures,the ChairmanofSupervisoryBoard oninternal r A RiskPrevention Committee wassetupin2002.Therole and 2003. Insurance costsrepresented around 0.5%ofGroup revenues in that were satisfactoryinrelation tothemarkettrend. The insuranceprogram was renewed onJanuary1,2004atrates businesses andavoidsharpfluctuationsinthesecosts. insured inorder tolimittheinsurancecostsincurred bythevarious rates are closelymonitored and,where appropriate, risksare self- insurance andreinsurance markets.Changesinmarketinsurance a cost-effective basis,takingintoaccountconditionsinthe of insurablerisks,toensure that theyare adequatelycovered on The Group anditsinsurers performregular auditsandappraisals excess oflosscover. markets, underarrangementsthatcombineself-insurancewith risks, theGroup hasobtainedcoveronthespecializedinsurance To r Risk thatare notself-insured are covered byinternationally- used up. commitments andavoidthefundsearmarkedfortheserisksbeing insured recurring risksare reinsured inorder tolimittheGroup’s self-insured withallGroup unitssharingtherelated costs.Self- Under theglobalinsuranceprogram, 90%ofrecurring risks are of the Group’s hotels.Liabilityrisksare alsoinsured uptoamaximum maximum claimthatwouldarisefrom thelossoflargest of up toamaximumof Property andcasualtybusinessinterruptionrisksare insured affect theGroup’s financialcondition. throughout theworldandlossofonefacilitywouldnotmaterially Accor’s risksare spread overaverylarge numberoflocations q ecognized insuranceandreinsurance companies. esponsibilities ofthisCommitteeare describedinthereport of

€ extend itsprotection againstnaturaldisasterandterrorism 300 millionperclaim. INSURANCE –RISKCOVERAGE € 300 millionperclaim,corresponding tothe not recorded intheGroup’s balancesheet. (“nantissements defondscommerce”). Suchbusinessesare the Group maybecalledontograntalienthebusiness Group policytogivecollaterallenders.Undercertainleases, Collateral forparent companyborrowings isnotmaterial. Itisnot environmental risksthemselves. environmental risks,suchasoilspills,thantobethesource of In addition,ourbusinessesare more likelytobeexposed toexternal environmental policy(seeEnvironmental Reportonpage 26). of theserisksoccurringisverylimitedinlighttheGroup’s the hotwatersystem,andriskoffire. However, theprobability wastewater orbyaruptured evacuationpipe,contaminationof the malfunctionofaPCBtransformer, theriskofsoilpollutionby the riskofexplosionduetostoragegasinornearhotels, Potential environmental risksinthehotelbusinessmainlyconcern q q GUARANTEES ANDCOLLATERAL ENVIRONMENTAL RISKS management board report I 31

q MANAGEMENT BOARD REPORT SWITCH TO IAS/IFRS

In order to prepare the transition to International Financial Reporting • Goodwill will no longer be amortized as from January 1, 2004. In Standards (IFRS), which will be applicable as from January 1, the same way as brands that have an indefinite life, such as 2005, during 2003 the Group carried out detailed analysis to Motel 6 and Red Roof Inns, goodwill will be tested for impairment identify: at each period-end, in accordance with IAS 36. Goodwill is – The main differences between the Group’s current accounting currently amortized on a straight-line basis over the estimated policies and IFRS in the areas of accounting treatment, valuation period of benefit, not to exceed 40 years. In addition, market and presentation of financial information, shares will be reclassified as goodwill, as their separate – The additional disclosures required under IFRS, recognition is not allowed under IFRS. – The necessary changes to information systems, • In the IFRS accounts, deferred taxes will be recognized on all – The historical data required to produce the opening IFRS balance temporary differences in accordance with IAS 12. Deferred taxes sheet at January 1, 2004. on the following temporary differences, which are not currently recognized in the French Gaap accounts, will be recorded in the The main identified differences in accounting policies that will opening IFRS balance sheet at January 1, 2004, impacting impact opening consolidated shareholders’ equity at January 1, retained earnings at that date: 2004 and/or the Group’s future results are as follows: – Deferred taxes on temporary differences between the tax basis • Costs incurred prior to the opening of new hotels and restaurants of investments in companies accounted for by the equity that fulfill the criteria set forth in IAS 38 will be charged to the method and their carrying value in the consolidated balance income statement. Currently, these costs are capitalized and sheet, amortized over three to five years (see note 1.H.). In the opening – Deferred tax liabilities on the remaining debt under the IFRS balance sheet at January 1, 2004, the unamortized balance repackaged perpetual subordinated floating rate notes. of these costs will be written off against retained earnings. • Application of IFRS 2 “Share-based Payments”–which was • Rental payments on contracts qualified as operating leases under recently published by the IASB but has not yet been approved by IAS 17 are currently recognized on a straight-line basis and are the European Commission–will lead to changes in the accounting adjusted over the lease term based on changes in the treatment of employee stock option plans set up after November construction cost index, inflation or any other appropriate index. 7, 2002 (as allowed under the proposed transition rules, the Group The indexation adjustment is not allowed under IAS 17 and rental will elect not to restate plans dating back prior to November 7, expenses will therefore be recognized as a constant amount 2002). If the standard becomes applicable, it will have an impact over the lease term. On adoption of IFRS, rental expenses will be on opening shareholders’ equity at January 1, 2004 and on the adjusted retrospectively from the inception of the lease. The Group’s future results. effect of this change of method at January 1, 2004 will be recorded as a reduction in retained earnings.

32 I management board report value. to January1,2004orvalueproperty, plantandequipmentatfair does notplantorestate business combinationscarriedoutprior As allowedunderIFRS1“First-TimeAdoptionofIFRS”,theGroup similar tothoseprescribed inIFRS17and19. r obligations are currently accountedforinaccordance withthe Leases andpensionsotherpost-retirement definedbenefit the 2005IFRSaccounts. purpose ofpreparing the2004comparativestobepublishedwith Group doesnotcurrently plantoapplyIAS32and39 forthe adopting thesestandards havenotbeenanalyzedindetail.The IAS 32and39onfinancialinstruments,thefullconsequencesof Pending finalEuropean Unionapproval oftherevised versionsof ecommended methodssetoutinstandard CRC99-02whichare Group financedepartments in makingthetransitiontoIFRS. A globaltrainingplanwillberolled outduring2004,toassistthe and monitoringIFRSdevelopments. finalizing thenewreporting process, auditingbalancesheetdata the datarequired toprepare theopeningIFRSbalancesheet, 2004 willbedevotedtocompletingthecollectionandanalysisof financial andaccountingdatabasesonacentralizedbasis. At thesametime,Group setupanERPsystemtomanage during 2004. these accountingpoliciestocomplywithIFRSwillbecompleted data bybusinessandgeographicregion. Theadaptationof information systemthatincludesfunctionstoanalyzekeyfinancial accounting policiesforallofitsbusinessesandsetupan In 2000,theGroup adoptedstandard statutoryandmanagement management board report I 33

q MANAGEMENT BOARD REPORT REPORT OF THE SUPERVISORY BOARD TO THE ANNUAL SHAREHOLDERS’ MEETING

The Supervisory Board reviewed the 2003 financial statements fundamentals, balanced business base and strict cost discipline. and the Management Board’s report on March 2, 2004. The financial The Group also kept its sights firmly fixed on its long-term growth results reflected in these statements are significantly below those targets. Positions were consolidated in Europe and emerging for 2002. This is the first time for several years that the Group has markets as part of the strategy to achieve profitable growth through experienced a material decline in results. selective investment.

Under the circumstances described above, we consider that the In 2003, the tourist industry was hit by an unprecedented ongoing implementation of the Group’s strategy by the accumulation of unfavorable events, which took place against a Management Board under the guidance of its Chairman, and the backdrop of persistently depressed economic conditions in measures taken during the year to adapt to the prevailing Continental Europe, especially in the first half of the year. These conditions, have placed Accor in a position to reap the full benefits developments adversely affected our Group’s revenues. At the of the recovery. same time, the fall in the dollar and South American currencies against the euro led to a significant negative currency effect. In The Management Board recommends paying a dividend of €1.05, this very difficult environment, Accor succeeded in limiting the the same amount as for 2002. We support this recommendation. decline in margins and posting pre-tax profit in line with the forecasts announced by the Management Board during the year. We also invite shareholders to approve the other resolutions tabled This performance was attributable to the Group’s strong at the Meeting.

34 I management board report Statements Financial Consolidated 44 43 42 41 40 38 Notes totheConsolidatedFinancialStatements onCapitalEmployed(ROCE) Return Key ManagementRatios Changes inConsolidatedShareholders’ Equity Consolidated StatementofCashFlow Consolidated BalanceSheet 37 36 Auditors ontheConsolidatedFinancialStatements Report oftheStatutoryAuditorsandIndependent Consolidated IncomeStatement consolidated financial statements I 35

q FINANCIAL STATEMENTS REPORT OF THE STATUTORY AUDITORS AND THE INDEPENDENT AUDITORS ON THE CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2003

To the shareholders, II - Justification of our assessments

In accordance with the terms of our appointment by your Annual In accordance with article L. 225-235 of the French Commercial General Meeting, we have audited the accompanying consolidated Code requiring to justify our assessments, which is applicable for financial statements of Accor for the year ended December 31, the first time this year pursuant to the Financial Security Act of 2003. August 1, 2003, we report the following information:

The consolidated financial statements have been prepared by the Notes 1.D.5 and 1.D.3 to the consolidated financial statements Management Board. Our responsibility is to express an opinion on describe accounting policies and methods applied to assess these financial statements, based on our audit. property, plant and equipment and intangible asset values, as well as policies and methods used to account for leases and sale-and- I - Opinion on the Consolidated Financial Statements leaseback transactions. We reviewed the appropriateness of those accounting policies and methods and of the related information We conducted our audit in accordance with professional standards given in the notes to the consolidated financial statements, applicable in France. Those standards require that we plan and examined the consistency of the data and assumptions used, and perform the audit to obtain reasonable assurance about whether reviewed the supporting documentation, and on these bases the consolidated financial statements are free of material assessed the reasonableness of the estimates made. misstatement. An audit includes examining, on a test basis, These assessments were made in connection with our audit evidence supporting the amounts and disclosures in the financial procedures on the consolidated financial statements taken as a statements. An audit also includes assessing the accounting whole, and contributed to the formulation of the unqualified audit principles used and significant estimates made by management, opinion expressed in the first section of this report. as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. III - Specific Procedure

In our opinion, the consolidated financial statements give a true and We have also performed the procedures required by law on the fair view of the financial position and the assets and liabilities of the Group financial information given in the Management Board Report. Group as at December 31, 2003 and the results of its operations We have no comment to make as to the fair presentation of this for the year then ended in accordance with rules and accounting information nor its consistency with the consolidated financial principles generally accepted in France. statements.

Neuilly, April 8, 2004

The Statutory Auditors The Independent Auditors

Barbier Frinault & Autres Deloitte Touche Tohmatsu – Audit Deloitte Touche Tohmatsu Réseau Ernst & Young

Christian Chochon Alain Pons Members of the Versailles Chamber of Auditors

This is a free translation into English of the Report of the Statutory Auditors and the Independent Auditors on the consolidated financial statements signed and issued in the French language and is provided solely for the convenience of English speaking readers. The report of the Statutory Auditors and the Independent Auditors includes for the information of the reader, as required under French law in any auditor's report, whether qualified or not, an explanatory paragraph separate from and presented below the audit opinion discussing the auditor's assessments of certain significant accounting and auditing matters. These assessments were considered for the purpose of issuing the audit opinion on the consolidated financial statements taken as a whole and not to provide separate assurance on individual account caption or on information taken outside of the consolidated financial statements. Such report should be read in conjunction and construed in accordance with French law and French auditing professional standards.

36 I consolidated financial statements e noe(ru hr)4440270 430 474 * Recommended,subjecttoapproval attheAnnualShareholders’ Meeting. Dividend pershare pershare Fully dilutedearnings pershare Basic earnings We Net income(Group share) Minority interests Consolidated netincome Exceptional items(netoftaxandminorityinterests) Income from companiesaccountedforbytheequity method Depreciation andoperatingprovision expense Rental expense Ebitdar Operating expense Consolidated revenues Other operatingrevenues Revenues in CONSOLIDATED Gains andlossesonmanagementofhotelproperties Profit before tax Ebit Ebitda Gains andlossesonmanagementofotherassets Net interest expense Amortization ofgoodwill Income tax € ighted averagenumberofshares outstanding millions (atDecember31) (in € ) (in € ) (in INCOME STATEMENT € ) (in thousands) Note 22 22 23 36 13 10 11 14 12 9 6 5 4 3 7 8 consolidated financial statements 9,4 9,7 197,730 197,573 197,042 539 523 (5,059) (5,203) (5,319) ,7 ,3 1,769 6,828 1,936 6,774 7,139 1,971 7,071 7,290 7,218 ,7 ,1 1,039 1,210 1,273 0120 2003 2002 2001 2.39 2.141.35 2.40 2.181.36 .510 1.05* 1.05 1.05 43 45 (436) (730) (455) (726) (443) (698) 12 19 (107) (109) (102) 26 24 (163) (234) (246) 0 5 304 452 523 505 703 758 3 5 603 755 830 3)(2 (34) (22) (31) 9)(6 (74) (66) (92) 26 54 68 72 01 (6) 14 20 95 68 54 29 6(0 (17) (30) 66 8– – 68 I 37

q FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEET

Assets in € millions (at December 31) Note 2001 2002 2003

Goodwill 14 1,879 1,679 1,719

Intangible fixed assets 15 533 479 384

Property, plant and equipment 16 5,026 4,521 4,133

Long-term loans 17 334 429 450

Investments in companies accounted for by the equity method 18 266 249 202

Other investments 19 282 487 386

Total financial assets 882 1,165 1,038

Total fixed assets 20 8,320 7,844 7,274

Inventories 89 90 64

Trade accounts receivable 1,218 1,139 1,074

Other receivables and accruals 21 926 957 946

Service voucher reserved funds 305 345 340

Receivables on asset disposals 28 101 20 18

Short-term loans 28 47 160 186

Marketable securities 28 830 541 833

Cash and cash equivalents 28 264 179 221

Total current assets 3,780 3,431 3,682

Total assets 12,100 11,275 10,956

38 I consolidated financial statements evc ocesi iclto ,4 ,0 1,346 1,304 1,446 To (447) 1,268 1,903 To Bank overdrafts (135) 1,102 Short-term debt 1,903 Service vouchersincirculation Other payablesandaccruals 926 255 1,892 Tr To To Obligations underfinanceleases Provisions forcontingenciesandcharges To Minority interests Shareholders’ equity Net incomefortheyear Cumulative translationadjustment Reserves (retained earnings) Additional paid-incapital Share capital in Liabilities andshareholders’ equity CONSOLIDATED Repackaged PerpetualSubordinated FloatingRate Notes(TSDI) Other long-termdebt Convertible orexchangeablebonds ade accountspayable € a urn iblte ,4 ,9 3,378 10,956 3,391 11,275 3,843 12,100 7,578 7,884 tal liabilitiesandshareholders’ equity 8,257 3,683 tal current liabilities 3,984 4,279 tal non-current liabilitiesandshareholders’ equity tal long-termdebt tal shareholders’ equityandminorityinterests millions (atDecember31) BALANCE SHEET 27 and28 25 and28 26 and28 Note 28 21 27 28 24 23 22 28 consolidated financial statements ,6 ,0 1,009 1,101 3,344 1,064 3,372 3,441 3,587 3,893 4,139 ,0 ,9 1,896 2,493 3,007 0120 2003 2002 2001 8 5 647 655 683 270 430 593 474 593 592 1 798 278 97 234 113 182 537 158 551 96 220 528 91 537 140 1 5 80 151 214 7 1,186 – 570 I 39

q FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CASH FLOW

in € millions (at December 31) Note 2001 2002 2003

Ebitda 1,273 1,210 1,039

Net interest expense (including provision movements) (92) (66) (74)

Income tax (including provision movements) (161) (196) (147)

Elimination of provision movements included in net interest expense and income tax (21) 9 24

Dividends received from companies accounted for by the equity method 6 4 5

Funds from operations 29 1,005 961 847

Investments for renovation and maintenance (1) 30 (405) (316) (284)

Free cash flow 600 645 563

Investments for expansion and technology (2) 31 (923) (802) (586)

Proceeds from disposals of assets (3) 535 660 461

Decrease/(increase) in working capital (*) (99) (46) 78

Non-operating (gains) losses (36) (39) (63)

Net cash provided (used) by operating and investing activities 77 418 453

Dividends paid (4) (271) (326) (294)

Share issues/(reduction in capital) (5) (1) 12 –

Effect of exchange rate changes (6) (*) (109) 144 173

Impact of changes in scope of consolidation on provisions and minority interests (7) 238

Reclassification of Compass shares as long term investments – (204) –

Decrease/(increase) in net debt 28 (302) 47 340

Net debt at beginning of period (2,547) (2,849) (2,802)

Net debt at end of period (2,849) (2,802) (2,462)

Decrease/(increase) in net debt 28 (302) 47 340

Net cash from operating activities (*) 870 672 862

Net cash used by investing activities (1) + (2) + (3) (793) (458) (409)

Net cash provided (used) by financing activities (4) + (5) (272) (314) (294)

Other cash flows (6) + (7) (*) (107) 147 181

Decrease/(increase) in net debt (see note 28) (302) 47 340

(*) Changes in working capital in 2001 and 2002 included negative translation adjustments in the amount of €16 million and €119 million respectively. These adjustments had no impact on cash flows and were therefore reclassified under “Effect of exchange rate changes”.

40 I consolidated financial statements • 1.2630atDecember2003 • 1.0487atDecember2002 3,893 • 0.8813atDecember2001 The USdollar/euro exchangeratesusedwere: amount of r 1,532 The (2) At December31,2003,Accorheld1,528,731shares intreasury stock,for (135) a (1) Including 1,903 Net incomefortheyear T 593 Gross dividendspaid 4,139 197,729,819 1,400 255 Issuance ofshares: At December31,2002 1,892 Net incomefortheyear T 592 Gross dividendspaid 197,364,684 Issuance ofshares: At December31,2001 in (excluding minorityinterests) CHANGES INCONSOLIDATED SHAREHOLDERS’EQUITY esulted inanegativetranslationadjustmenttothevalueof Group’s NorthAmericanassets,mainlyMotel6and RedRoofIn At December31,2003 ranslation adjustments ranslation adjustments € mlyesaeise341511 12 – – 1,000 11 • Employeeshare issue • Mergers 1 • Purchases oftreasury stock – • Onexercise ofstockoptions • Onconversionofbonds 314,135 – 51,000 • Employeeshare issue • Mergers • Purchases oftreasury stock • Onexercise ofstockoptions • Onconversionofbonds Including a Including a ilosNme fCptlAdtoa uuaieRtie Consolidated Retained Cumulative Additional Capital Numberof millions € 312 million negative translation adjustment for 2003 primarily concerns theUSdollar.312 millionnegativetranslationadjustmentfor2003primarily concerns Theeuro’s appreciation againstthedoll € € € € 237 millionfor2003. 17 millionnegativeadjustmentrelated toeuro-zone countries atDecember31,2003 15 millionnegativeadjustmentrelated toeuro-zone countries atDecember31,2002 14 millionnegativeadjustmentrelated toeuro-zone countries atDecember31,2001 (2) 9,3,1 9 ,0 47 ,3 3,587 1,538 (447) 1,903 593 197,730,819 usadn aia adjustment capital outstanding hrssokpaid-in earnings translation shareholders’ shares stock and € 55 million.Theseshares havebeendeductedfrom shareholders’ equityatcost. consolidated financial statements 32 (312) (312) (390) (390) (1) e noeequity net income 24 (264) (264) (298) (298) 7 270 270 430 430 ns, inthe I 41 ar

q FINANCIAL STATEMENTS KEY MANAGEMENT RATIOS

Notes 2001 2002 2003 Gearing a 67% 70% 67% Adjusted Funds From Operations / Adjusted Net Debt b 17.3% 16.5% 15.7% Interest Cover c 5.4x 5.6x 5.6x Return on Capital Employed d 11.5% 10.7% 9.2% Value creation (in € millions) e 291 278 208

Note a: Gearing corresponds to the ratio of net debt to shareholders’ equity (including minority interests). Note b: Based on the method used by the main rating agencies, the adjusted funds from operations / adjusted net debt ratio is calculated as follows : • Funds from operations (see consolidated statement of cash flows) are adjusted by adding back two-thirds of rental expense; • Net debt is adjusted to take into account business acquisitions and disposals, prorated on the basis of the impact on the income statement. For example, the proceeds from a disposal carried out on December 31 will be eliminated in full from the cash equivalents used to compute net debt. Adjusted net debt includes eight times annual rental expense in accordance with the methods recommended by the three leading rating agencies. Note c: Interest cover corresponds to Ebitdar expressed as multiple of net interest expense plus one-third of rental expense. Note d: Return on Capital Employed (ROCE) is defined below. Note e: Value creation was calculated as follows for 2001, 2002 and 2003: 2001 2002 2003 Cost of equity (1) 9.05% 8.74% 8.15% Cost of debt (after tax) 2.85% 2.62% 2.33% Equity / debt weighting – Equity 60.03% 58.13% 59.93% – Debt 39.97% 41.87% 40.07%

Weighted average cost of capital (WACC) (2) 6.57% 6.18% 5.82%

ROCE after tax (3) 9.06% 8.56% 7.63%

Capital employed (see ROCE below) (in € millions) 11,689 11,846 11,599

Value creation (in € millions) (4) 291 278 208

(1) The Beta used to calculate the cost of equity for 2001, 2002 and 2003 was 1.0. (2) WACC is determined as follows :

Equity Debt Cost of Equity x + Cost of Debt x (Equity + Debt) (Equity + Debt)

(3) ROCE after tax is determined as follows: Adjusted Ebitda – [(Adjusted Ebitda – depreciation and operating provision expense) X tax rate] Capital employed For example, the data used at December 31, 2003 were as follows: Adjusted Ebitda: € 1,070 M (see ROCE below) Depreciation and operating provision expense: € -436 M Normative tax rate: 29.1% Capital employed: € 11,599 M (see ROCE below)

(4) Value creation is determined as follows: (ROCE after tax – WACC) X Capital employed The impact of a 0.1 increase or decrease in the Beta would have been €28 million in 2001, €28 million in 2002 and €28 million in 2003.

42 I consolidated financial statements – the consolidatedfinancialstatements: It iscalculatedonthebasisofaggregated amountsderivedfrom are eithernon-consolidatedoraccountedforbytheequitymethod. businesses. Itisalsoanindicatoroftheprofitability ofassetsthat tomeasure theperformanceofGroup’sused internally various onCapitalEmployed(ROCE)isakeymanagementindicator Return cnm ntdSae 00 .%7.2% 8.8% 10.0% ** 15.5%and15.8%excludinghotels underdevelopmentin2002and2003respectively. 9.2% * 9.9%and7.1%excludinghotelsunder constructionin2002and2003respectively. T 37 Other 10.7% Onboard trainservices (6) Restaurants Casinos 11,250 40 11.5% T Other businesses 14 SERVICES 11,601 Economy UnitedStates 47 Economy** Upscale andMidscale* 12,020 20 HOTELS Activities oncapitalemployed((1)/(2)ratio)overa12-monthrolling periodbrokeReturn downasfollows: (2) Capitalemployedistranslatedattheaverageexchangerateforyear, corresponding totherateusedtranslateEbitd (1 ROCE (AdjustedEbitda/Capitalemployed) Adjusted Ebitda Other adjustments Income from companiesaccountedforbytheequity method loansanddividends Interest incomeonexternal Ebitda Capital employed Effect ofexchangeratechangesoncapitalemployed Adjustments related tobusinessacquisitionsanddisposals Capital employedatyear-end in RETURN ONCAPITAL EMPLOYED ravel Agencies otal Group ) accounted forbytheequitymethod; unconsolidated assets,plusshare inthenetincomeofcompanies r Adjusted Ebitda:foreachbusiness,totalofEbitda,plusfinancial € the capitalemployedinabusinessacquired onDecember31thatdidnotgenerate Ebitdaduringtheyearwouldnotbeincludedi For thepurposeofcalculatingROCE,capitalemployedinbusinessesacquired ordisposedofduringtheyearisprorated ove evenues (dividendsandinterest income)generatedby millions (2) (1) been 11.0%inDecember2002versus9.4%2003. that doesnotcurrently generateanyEbitda),ROCEwouldhave Excluding hotelsunderconstruction(representing capitalemployed stood at9.2%versus10.7%theprevious year. average capitalemployedfortheperiod.InDecember2003,ROCE ROCE corresponds totheratiobetweenadjustedEbitdaand – capital. based onaveragecostoftotalgross assets,plusworking Capital employed:foreachbusiness,totalvalueoffixedassets, consolidated financial statements (ROCE) 1691,4 11,599 11,846 11,689 15 07 9.2% 11.0% 10.7% 15.5% 11.0% 11.5% 24.2% 14.5% 15.1% 6.8% 11.9% 26.7% 16.6% 8.7% 14.8% 9.2% 25.8% 10.2% 15.3% 10.5% 11.3% ,4 ,6 1,070 1,264 1,039 1,340 1,210 1,273 .%25 2.6% 9.5% 2.5% 8.9% 1.4% 7.5% .%90 6.9% 9.0% 3.0% 0120 2003 2002 2001 0120 2003 2002 2001 35 0 283 203 (355) 44 66 42 24 ––– a. r theperiodofownership.Forexample, n thecalculation. I 43

q FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

q NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING The amortization periods applied are as follows : POLICIES • Hotels 40 years The consolidated financial statements of the Accor Group have • Onboard train services 40 years been prepared in accordance with French generally accepted • Services 40 years accounting principles, including the Group adopted standard • Travel agencies 20 years CRC 99-02. • Restaurants 20 years • Casinos 20 years As of January 1, 2003, the Group adopted standard CRC 2000-06 In the case of an unfavorable change in these factors, the concerning liabilities. This change in method had no impact on amortization period may be shortened or the unamortized goodwill either opening shareholders’ equity or net income for the period. may be written down. In view of the international scope of its businesses, where alternative accounting treatments are allowed under French rules, C. Foreign currency translation the Group has selected the accounting treatment that most closely reflects international accounting practices (capitalization of finance The balance sheets of foreign subsidiaries are translated into euros leases, full recognition in the balance sheet of employee benefit at the closing period exchange rate, and their income statements obligations included in unrealized exchange gains and losses). are translated at the average rate of the year. The resulting differences are recorded as a separate component of shareholders’ The financial statements of consolidated companies, prepared in equity under “Cumulative translation adjustment”. accordance with local accounting principles, have been restated In the case of subsidiaries operating in hyper-inflationary to conform to Group principles prior to consolidation. economies, non-monetary balance sheet items are translated at the historical exchange rate, while monetary items are translated at A. Consolidation methods the closing period exchange rate. Income statement items related to non-monetary balance sheet items are also translated at the The companies over which the Group exercises exclusive control, historical rate. directly or indirectly, are fully consolidated. Other income statement items are translated at the average rate Companies controlled and operated jointly by Accor and a limited for the month in which the translation was recorded. Differences number of partners are proportionally consolidated. resulting from the application of this method are recorded in the income statement under “Net interest expense”. Companies over which the Group exercises significant influence are accounted for by the equity method. Significant influence is considered as being exercised when the Group owns between D. Fixed assets 20% and 50% of the voting rights, directly or indirectly. D.1 Intangible fixed assets Intangible fixed assets are stated at cost. Start-up costs and organization expenses are amortized over a maximum period of five B. Goodwill years. Lease rights are usually amortized over the life of the lease. In the year following the acquisition of a consolidated company, As of January 1, 2002 business rights, networks and brand names fair value adjustments are made to the identifiable assets and are included in goodwill and amortized by the straight-line method liabilities acquired. In subsequent years, these fair value adjustments over maximum periods described in the above note B. follow the same accounting treatment as the items to which they Intangible assets recognized in connection with business relate. combinations are valued on the basis of estimates obtained from independent experts. These estimates are produced using relevant Goodwill, representing the difference between the cost of shares in criteria for the business concerned, which are also applied in consolidated companies and the Group’s equity in the underlying subsequent years to determine whether the related assets net assets at the date of acquisition, after the fair value adjustments, concerned have suffered any impairment. is amortized over the estimated period of benefit, not to exceed • Identified brands are valued by applying a range of criteria, taking 40 years. The amortization period is determined based on the nature into account the level of brand recognition and the profits of the acquired business and prevailing market conditions, as well generated by the business conducted under the brand as the operating assumptions applied and projections made at the concerned. time of acquisition.

44 I consolidated financial statements indicators mayincludeafallinEbitorlossofmarketshare. indicators ofanimpairmentinvalueintangibleassets.These At eachyear-end, theGroup determineswhetherthere are any Fair valueofintangibleassetsandgoodwill of assetsthatare intendedtobesold. impaired are writtendowntofairvalue,ormarketvalueinthecase Long-lived assetsare stated atcost.Assetswhosevalueis D.5 Long-livedassets consolidated companiesare recorded atcost. Long-term financialportfolioinvestmentsandinnon- D.4 Othercapitalassets by anindependentexpert,are recognized directly inincome. and rent are basedonmarketvaluesdeterminedmostfrequently all thecharacteristicsofanoperatinglease,where thesaleprice Gains onassetssoldundersaleandlease-backagreements with payments underoperatingleasesare presented innote5below. these leasesare recorded directly intheincomestatement.Future All otherleasesare treated asoperatingleases.Paymentsunder case ofapermanentimpairmentinvaluetheasset. in theincomestatementoverlifeoflease,except all thecharacteristicsofafinanceleaseisdeferred andrecognized 60years The gainonassetssoldundersaleandlease-backagreements with 10to30years amount isrecorded underliabilities. over theirestimatedusefullives,andanobligationinthesame 5to10years the lessee.Therelated assetsare capitalizedanddepreciated transfer substantiallyalloftherisksandrewards ofownershipto capitalized. TheGroup qualifies asfinanceleasesanythat 20years dealing withleases,assetsacquired underfinanceleasesare In accordance withtherecommended French accountingmethod D.3 Financeleases,saleandlease-backtransactions • Fixtures andfittings,furniture • Otherbuildings • Onboard trainservicesrolling stock • Otherhotels • over thefollowingusefullives: capitalized interest. Theyare depreciated onastraight-linebasis Property, plantandequipmentare statedatcost,including D.2 Property, plantandequipment • • difference. in valueisofapermanentnature, aprovision isbooked forthe acquisition, islowerthantheirnetbookvalueandtheimpairment value, asdeterminedusingthecriteriaappliedattimeof to indicatethattheirvaluemaynotberecoverable. Iftheirfair at regular intervalsandwheneveraneventoccurswhichappears Brands andmarketshares are notamortized.Theyare assessed earnings. position are valuedbasedonprojections offuture revenues and r Market shares ofservicesandonboard trainservicesbusinesses oml tp/Mtl6/RdRo tdo6htl 40years Formule 1/EtapMotel6RedRoofStudiohotels epresenting investmentsmadetostrengthen theGroup’s market case oflistedshares. therefore doesnotsystematicallycorrespond tomarketvalueinthe r indicators. Thefairvalueoflong-termfinancialportfolioinvestments andother outlookofthecompanyconcerned the earnings based ontheGroup’s equityintheunderlyingrevalued netassets, The fairvalueofinvestmentsinnon-consolidatedcompaniesis Fair valueofinvestmentsinnon-consolidatedcompanies portfolio” (Seenote1.P.5). statement under“Gainsandlossesonmanagementofthehotel Allowances forimpairmentinvalueare charged totheincome by applyingthetworecommended methodsdescribedabove. net bookvalueoftheassetwithhighervaluesobtained The amountoftheimpairmentisdeterminedbycomparing discount rate. on amaximumoffiveyears’projected cashflowsandapre-tax As inthecaseofintangibleassets,valuationisgenerallybased to thelong-termrateofgrowth inrevenues generatedbytheasset. cash flowmethod,includingafinalvaluedeterminedbyreference is assessedbasedonamultipleofEbitdaandthediscounted indication thatthevalueofanassetmaybeimpaired, itsfairvalue decline inpricesonthereal estatemarket.Where there isan equipment. TheseindicatorsmayincludeafallinEbitdaror indicators ofanimpairmentinvalueproperty, plantand At eachyear-end, theGroup determineswhetherthere are any Fair valueofproperty, plantandequipment assets” and/or“Amortizationofgoodwill”(Seenote1.P.6). statement under“Gainsandlossesonmanagementofother Allowances forimpairmentinvalueare charged totheincome and apre-tax discountrate. generally basedonamaximumoffiveyears’projected cashflows growth inrevenues generatedbytheasset.Thevaluation is a finalvaluedeterminedbyreference tothelong-termrateof value isassessedusingthediscountedcashflowmethod,including may beimpaired, iftheassetisnotintendedtobesold,itsfair Where there isanindicationthatthevalueofintangible asset Market securitiesare statedatthelowerofcostandmarket. G. Marketablesecurities accounts. operating fundsinFrance,theseare heldinspecialescrow As aresult oflegalrestrictions ontheuseofTicketRestaurant F. r probable realizable value.Moreover, theyincludeassetsheldfor Inventories are statedatthe lowerofweightedaveragecostand E. Inventories esale. eflects the general outlook for the company concerned and eflects thegeneraloutlookforcompanyconcerned

Service voucherreserved funds consolidated financial statements I 45

q FINANCIAL STATEMENTS H. Deferred charges L. Foreign currency conversion Deferred charges include : Transactions carried out by Group companies in currencies other – Costs incurred prior to the opening of new hotels and restaurants, than their local currency are converted at the exchange rate ruling which are written off over three years in the case of hotels and on the transaction date. over one year in the case of restaurants. Foreign currency receivables and payables other than those for – Costs related to the acquisition of fixed assets, which are written which the exchange rate has been fixed by means of a hedging off over a maximum of five years. contract are converted into euros at the closing period exchange – Bond issuance costs, which are written off over the life of the issue. rate and the resulting unrealised exchange gain or loss is recorded – Costs related to the development of data processing systems, in the income statement under “Net interest expense”. which are written off over the useful life of the systems. They are included in “other receivables and accruals”. M. Deferred taxes Deferred taxes are recognized by the liability method for all I. Prepaid expenses temporary differences between the book value of assets and Prepaid expenses correspond to expenses paid during a given liabilities and their tax basis. Under the liability method, deferred period but related to the following periods. They also include the taxes recognized in prior years are adjusted at the year-end based rental expenses which are charged to the income statement on a on the latest known tax rate. The effects of the change in tax rate straight-line basis over the life of the lease (see note 5). They are are stated in the income statement of the periods that are included in “other receivables and accruals”. concerned by the tax rate variation. Deferred tax assets on ordinary and evergreen tax loss carry- J. Payroll costs forwards are recognized only if they are almost certain of being recovered in the foreseeable future. Deferred tax liabilities are Payroll costs include all sums paid by the Company to its salaried included in “Provisions for contingencies and charges”. employees, including employee profit-sharing.

N.1 Stock options K. Provisions Certain subsidiaries, mainly in the United States and in France, have Accor complies with standard CRC 00-06 issued on December 7, set up employee stock option plans. As these subsidiaries are not 2000, incorporating Conseil National de la Comptabilité listed, the Group is committed to buying back the shares issued on recommendation 00-01 of April 20, 2000 on the accounting exercise of the options, at a price based on their fair values (generally treatment of liabilities. Provisions are booked when, at the period corresponding to a multiple of Ebitda less net debt). end, an obligation exists towards a third party that is probable or certain of giving rise to an outflow of resources and no economic At each year-end, the Group estimates the impact of the exercise of benefit of equivalent value is expected in return. The obligation stock options on its equity in the net assets of the subsidiary may be legal, regulatory or contractual. The amount of the provision concerned. The potential dilutive effect is provided for. The provision depends on the type of obligation and is determined on a best- is charged to the income statement under “Gains and losses on estimate or statistical basis. management of other assets”. Effective from January 1, 2000, full provision is made for retirement Stock options granted by the parent company do not affect commitments, in accordance with the recommended method consolidated net income. When the stock options are exercised, contained in standard CRC 99-02 issued by the Comité de la the Group records the shares issued as a capital increase according Réglementation Comptable. to the payments received from the employees concerned. Obligations under defined benefit plans are calculated in accordance with IAS 19. The amount of the obligation is estimated by the projected unit credit method, based on actuarial assumptions N.2 Accor shares held by the Group concerning future salary levels, retirement age, mortality and staff Accor SA shares held by the parent company and/or its subsidiaries turnover rates and discount rates. The assumptions applied take are recorded as marketable securities, when the shares were into account macro-economic conditions in the countries where the specifically acquired for allocation to employees or to stabilize the Group operates and other specific circumstances. share price. In all other case, they are deducted from consolidated The projected benefit obligation was determined by taking into shareholders’ equity. account the fair value of plan assets. Unamortized actuarial gains Accor SA shares held as marketable securities are recorded at and losses at that date were not charged to opening shareholders’ the lower of cost and market. Provisions for impairment and any equity. gain or loss on the sale of these shares are posted to the income Actuarial gains and losses arising from changes in actuarial statement. assumptions are recorded directly in provisions for contingencies In all other cases, the gain or loss on the sale of treasury stock and charges. and the related tax effect is directly recorded in consolidated shareholders’ equity, without impacting net income for the year. These shares are not written down.

46 I consolidated financial statements taking intoaccountfinancingcosts. It therefore represents anindicatorofGroup performanceafter and incomefrom companiesaccountedforbytheequitymethod. Profit before afternetinterest taxcorresponds expense toearnings P Ebitdar isusedasakeymanagementratio. expense (Ebitdar)correspond torevenues lessoperatingexpenses. before interest,Earnings tax,depreciation, amortizationandrental P used inGroup communications. above togetherrepresent theheadlineconsolidatedrevenue figure voucher reserved funds.These revenues plustherevenues defined Other operatingrevenues includeinterest income on service P – Casinos: gross receipts from gamingactivities(slotmachines – – Services: feesreceived– from clientcompaniesandparticipating – consolidated companies.Theserevenues include: in thenormalcourseofbusinessbyfullyandproportionally Revenues correspond tothevalueofproducts andservicessold P schedules usedtomanagethebusiness. are presented onthesamebasisasmanagement reporting The consolidatedincomestatementandofcashflows P. hedged assetorliability. accounted foronasymmetricalbasiswiththelossorgain Gains andlossesonfinancialinstrumentsacquired ashedgesare O. Financialinstruments .4 Profit before tax .3 Ebitdar .2 Otheroperatingrevenues .1 Revenues and traditionalcasinogames). billed torailwayoperatorsandsubsidiesreceived; Onboard trainservices:sleeping compartmentandfoodservices sales withoutrisk; commissions, servicefeesandmargins onvacationpackage T assistance fees; r contracts, themanagementorfranchisefee; services); forhotelsmanagedundermanagementorfranchise from customers(includingaccommodation,cateringandother Hotels :fordirectly ownedansleasedhotels,allrevenues received

estaurants, royalties fortheuseoftrademarksandtechnical ravel agencies:ticketsales,carrental andhotelbooking Income statementandofcashflows – The netchangeinworkingcapital. – Proceeds from thedisposalofassets. – Investmentsforexpansion,includingthefixedassetsofnewly- – – Cash flowsfrom operatingand investingactivitiesinclude: activities ontheother. investing activitiesontheonehandandcashflowsfrom financing to managethebusiness.Itshowscashflowsfrom operatingand same basisasthemanagementreporting schedulesusedinternally The consolidatedstatementofcashflowsispresented onthe P significantchangesintheportfolio. concern not relate totheGroup’s continuingoperations.Theyprimarily exceptional intermsoftheiramountandfrequency andwhichdo Exceptional itemscorrespond toincomeandexpensethatare P. directly related tothemanagementofcontinuingoperations. are not operating gainsandlosses.Thetransactionsconcerned impairment inthevalueoftheseassets,aswellothernon- assets otherthanhotelsandmovementsinprovisions for This itemcorresponds togainandlossesondisposalsoffixed P continuing operations. transactions, andare notdirectly related tothemanagementof disposals represent routine hotelportfoliomanagement in valueonproperties thatare notintendedtobesold.The hotel properties, butalsomovementsinprovisions forimpairment This itemincludesnotonlygainsandlossesonmanagementof P. of theOrdre desExpertsComptablesFrançais. pershare complywithIAS33recommendationdiluted earnings 27 The accountingrulesandmethodsusedtocalculatebasic Q. Earningspershare .8 Consolidatedstatementofcashflows .6 Gainsandlossesonmanagementofotherassets subsidiaries. consolidated subsidiariesandadditionstofixedassetsofexisting maintain existingoperatingassetsinagoodstateofrepair. Investments forrenovation and maintenanceexpenditure to gains orlossesondisposalsofassets. Funds from operationsafterchangesindeferred taxesandcapital 7 Exceptionalitems(netoftaxesandminorityinterests) 5 Gainsandlossesonmanagementofhotelproperties consolidated financial statements I 47

q FINANCIAL STATEMENTS q NOTE 2 CHANGES IN THE SCOPE OF CONSOLIDATION In January 2004, the Barrière Desseigne family, Accor and Colony Capital signed an agreement based on the combination of the A. Disposals casino and hotel assets of Société Hôtelière de la Chaîne Lucien Barrière (SHCLB), Société des Hôtels et Casino de Deauville A.1 Disposals and lease-back of hotel buildings (SHCD), Accor Casinos, and their respective subsidiaries. In 2002, the Group disposed of: – 2 Upscale and Midscale hotels in Eastern Europe (in Budapest The Barrière Desseigne family currently owns 100% of SHCLB and Warsaw), for total proceeds of €47 million. and 54% of SHCD. Accor owns 35% of SHCD and 50% of Accor – 21 Economy properties (Ibis, Etap and Formule 1) in France, Casinos, with Colony Capital owning the remaining 50% of Accor Poland and the Netherlands, for total proceeds of €146 million. Casinos. – 7 Upscale and Midscale hotels (6 Novotel and 1 Mercure) for Following this agreement, Accor will hold 34% of the Lucien Barrière total proceeds of €75 million. Group and will be consolidated using the proportional method. – 2 Suitehotel Properties in France for total proceeds of €23 million. The new shareholding structure will be accompanied by a During the first half of 2003, the Group disposed of €265 million shareholders’ agreement setting forth the Group’s governance, in worth of buildings, followed by lease contract : particular with respect to certain of the Group’s major decisions. – 4 Upscale and Midscale hotels in France, for total proceeds of Under the agreement, Colony Capital will have an option to sell €46 million. its shareholding to Accor, with Accor holding a similar option to buy – 2 Upscale and Midscale hotels in the United Kingdom of Colony Capital’s interest. €51 million. Pro forma for the transaction, gross revenues for the Group were – 5 properties in Hungary for total proceeds of €88 million. approximately €900 million for FY2003. The Group will operate – 15 Economy properties in France, United Kingdom and Spain 37 casinos, with close to 5,000 slot machines in locations that for total proceeds of €73 million. include Deauville, Enghien, La Baule, Montreux, Bordeaux, Biarritz A.2 Disposals of hotels and Nice. Additionally, the Group will operate 13 luxury hotels and Accor also sold the buildings and business rights of hotels for a a substantial restaurant business, including Fouquet’s on the € € total amount of 94 million in 2001, 121 million in 2002 and Champs-Elysées in Paris. €101 million in 2003. The agreement is subject to certain conditions precedent, in In 2002, the disposals were related to: particular approval by the antitrust authorities and the casino – 2 Upscale and Midscale hotels in London for total proceeds of supervisory authorities. Regarding this, the agreement had no €83 million. impact on consolidated accounts as of December 31, 2003. – 1 Economy property in Montreal for total proceeds of €5 million. € During the first half of 2003, the 101 million in disposals were B. Investment program related to: – 1 Upscale and Midscale property in Portugal, for total proceeds B.1 Acquisition of 20% of Orbis in August 2000, 5% in 2001, of €4 million. 2.17% in 2002 and 8.41% in 2003 – 11 Upscale and Midscale and Economy properties in Poland, In August 2000, as part of the Polish State’s privatisation program, for total proceeds of €64 million. Accor acquired a 20% interest in the capital of the Polish hotel € – 4 Economy properties in France, for total proceeds of €3 million. and tourism group Orbis, for a total investment of 81 million. – 3 Upscale and Midscale hotels in France, for total proceeds of Orbis, which also operates travel agencies and casinos, is Poland’s €8 million. leading hotel operator, with 55 properties (10,439 rooms) located – 1 Economy property in the United States, for total proceeds of in the country’s 25 largest cities. The hotels have been renovated €3 million. and were re-opened under Accor tradenames since 2001. In 2001, € – 1 Upscale and Midscale hotel in Brazil, for total proceeds of an additional 5% stake in Orbis was acquired for 12 million, €2 million. raising the Group’s interest to 25%. In 2002, an additional 2.17% stake in Orbis was acquired for €4.7 million from minority A.3 Accor-Colony Capital partnership in Accor Casinos shareholders, raising the Group’s interest to 27.17%. In 2003, In 2001, Accor and the American investment fund Colony Capital an additional 8.41% stake in Orbis was acquired for signed an agreement aimed at creating Europe’s leading group of €20 million from minority shareholders, raising the Group’s interest casinos. As a consequence of this partnership, Colony Capital to 35.58%. In October 2003, Accor sold directly owned hotels in acquired 50% of Accor Casinos, (6% in 2001 and 44% in 2002). Poland to Orbis for €64 million (8 Ibis et 3 Novotel). Accor continues to manage the company. The deal was based on an enterprise value of €450 million and generated an after-tax consolidated capital gain of €68 million (see Note 13). Accor has granted a €80 million loan to Colony Capital (see Note 17).

48 I consolidated financial statements € consolidated netdebt,withaminimumfixedpurchase priceof by Dr. Ebertz.ThisoptionisbasedonamultipleofEbitdaless any timebetween2008and2010byexercising acalloptiongranted Accor mightalsopurchase an additional25%ofthecompanyat and Dorint. February 1,2003,dateofthedefinitiveagreement betweenAccor Accor hasaccountedforDorintbytheequitymethodsince equity methodinthe2002financialstatements. 2002, andconsequentlydidnotaccountforthecompanyby Accor didnotexercise any significantinfluenceoverDorintin amounted to investments”. AtDecember31,2002,thetotalinvestment investment securitiesandaccountedforas“otherfinancial transaction, theshares heldinescrow were considered as European Unioncompetition authoritieshadapproved the In theconsolidatedaccounts,whichwere publishedafterthe company accounts. to theaccountingtreatment ofthetransactioninparent was placedinanescrow account.Thisbreakdown corresponds companies”. Inaddition,another13.21%ofthecompany’s capital Accor SA’s balancesheetunder“investmentinnonconsolidated AG through acapitalincrease. Theshares were recorded inthe In September2002,AccorSAacquired a16.79%interest inDorint Dr. HerbertEbertz. German hotelgroup DorintAGanditsmajorshareholder, During thesecondhalfof2002,agreements were signed with B.3 Acquisitionof40.19%thecapitalDorintAG tourism market,especiallyontheInternet. one ofthemostactiveandefficient playersinthetraveland Following implementationofinnovativeITtools,GoVoyages is for anamountof In 2003,Accorincreased itsparticipationinGoVoyages by10%, was acquired for Dr. Ebertz.Today, DorintAGowns88hotelstotalling15,400rooms. and gaveDorintAGa price of Accor acquired aninitial38.5%ofGoVoyages in2000foratotal B.2 Acquisitionof70%GoVoyages 45 million.Lastly, AccorgrantedDr. Ebertza € 11.9 million.In2002,another21.5%ofthecompany € 49.7 million. € € 12.3 million,raisingtheGroup’s interest to60%. 7.2 million,raisingGroup’s interest to70%. € 25 millionbankguarantee, € 35 millionloan pari passu with • • A measures: r The plan,whichextendsmeasures undertakenin2003toreduce economic recovery inGermany. position theGermanhotelcompanytobenefitfrom thecoming approved bytheSupervisory Board. Theplanisdesignedto long-term planproposed bytheDorintManagementBoard and At thebeginningof2004,Accorannounceditssupportfor amounted to The portionofincometheelevenmonthsactivityDorint by theequitymethodduringsecondhalf2003. to 40.19%,arateatwhichAccoraccountedfortheDorintGroup 10.19% foratotalpriceof underwritten byAccorandDr. Ebertz,Accoracquired afurther At theendoffirsthalf2003,aspartacapitalincrease capital heldduringtheperiod,namely30%. for theDorintGroup bytheequitymethodbasedonportionof As mentionedabove,sinceFebruary1,2003,Accorhasaccounted have beenintegratedintotheAccornetworksinceFebruary1,2003. Dorint-Mercure properties. TheDorintsalesandmarketingteams hotels willbeco-brandedasDorint-Sofitel,Dorint-Novoteland with Accor, basedonfranchiseandmarketingagreements. AllDorint AGhaveapproved thecreation ofastrategicpartnership Dorint Moreover, theManagement Board andSupervisoryBoard of and closed105hotels(9,419rooms). 2003, theGroup hasopenedoracquired 170hotels(22,015rooms) T andorganicgrowth) B.4 Otherinvestments(external certificate issue. for nomore than40.19%ofthetotal,and/ordividendrights support fortheplan,withAccortakingupitsfullstakeinshare, shareholders, Accorandthe Ebertzfamily, haveannounced their an Extraordinary Shareholders’ Meeting.Thecompany’s twolargest The planwillbesubmittedtoDorintshareholders forapproval at • TheimplementationofamanagementcontractDorinthotels ental expenseandoperatingcosts,isbasedonthefollowing kn noacutetra n rai rwh ic aur 1, andorganicaking intoaccountexternal growth, sinceJanuary certificates inamaximumamountof An additionalissueofnewshares and/ordividendrights deployed withtheSofitel,NovotelandMercure brands. performance aspartoftheco-brandingstrategynowbeing by AccorGermany, inorder toimprove theirsalesandoperating € 30 millionnewshare issue. consolidated financial statements € -5.3 million. € 13.2 million,raisingGroup’s interest € 25 million. I 49

q FINANCIAL STATEMENTS B.4.a Hotel portfolio by brand and type of operation at December 31, 2003 In number of hotels Owned Leased Managed Franchised Total Sofitel 28 44 79 28 179 Novotel 67 154 92 75 388 Mercure 54 202 198 272 726 Ibis 120 265 57 209 651 Etap Hotel 77 95 8 107 287 Formule 1 220 135 1 15 371 Red Roof Inns 97 154 – 98 349 Motel 6 / Studio 6 232 491 1 156 880 Other 7 13 39 4 63

Total 902 1,553 475 964 3,894 Total in % 23.2% 39.9% 12.2% 24.8% 100.0%

In number of rooms Owned Leased Managed Franchised Total Sofitel 4,537 9,852 16,283 5,637 36,309 Novotel 9,873 23,679 19,874 13,842 67,268 Mercure 5,427 28,108 24,640 28,064 86,239 Ibis 13,242 33,071 8,110 15,527 69,950 Etap Hotel 5,657 8,361 699 8,059 22,776 Formule,1 16,289 10,555 103 1,004 27,951 Red Roof Inns 11,871 17,637 – 8,701 38,209 Motel 6 / Studio 6 25,645 55,817 59 10,947 92,468 Other 1,363 1,862 8,291 717 12,233

Total 93,904 188,942 78,059 92,498 453,403 Total in % 20.7% 41.7% 17.2% 20.4% 100.0%

B.4.b Hotel portfolio by region and type of operation at December 31, 2003 In number of hotels Owned Leased Managed Franchised Total France 385 367 88 454 1,294 Europe excluding France 125 440 49 225 839 North America 334 652 6 254 1,246 Latin America/Caribbean 25 22 94 15 156 Other countries 33 72 238 16 359

Total 902 1,553 475 964 3,894 Total in % 23.2% 39.9% 12.2% 24.8% 100.0%

In number of rooms Owned Leased Managed Franchised Total France 31,721 43,720 8,436 33,722 117,599 Europe excluding France 14,782 56,375 7,576 34,622 113,355 North America 39,233 75,786 1,387 19,648 136,054 Latin America/Caribbean 4,132 3,748 12,733 1,799 22,412 Other countries 4,036 9,313 47,927 2,707 63,983

Total 93,904 188,942 78,059 92,498 453,403 Total in % 20.7% 41.7% 17.2% 20.4% 100.0%

50 I consolidated financial statements 076729––896 4,639 – 14,231 76 18,387 – 1,707 5,034 430 2,064 259 12,233 5,094 3,392 92,468 38,209 9,489 8,139 637 4,602 – – 741 27,951 22,776 385 69,950 2,321 3,657 2,964 119 – – 5,822 – 86,239 699 67,268 36,309 – 63 13,504 4,684 92,468 38,209 479 17,945 14,140 – 10,340 – 43 – – 880 – 349 3,513 2,791 T 371 1,880 – 287 651 2007 Total 3,180 2006 1 29,666 – – 1,835 3,542 6,481 2005 – 726 – 40 Other 388 2004 1 38 179 21,108 35,768 29,778 28,675 9,106 16,176 In numberofrooms, LatinAmerica/ theexpected organic growth forthecomingyearsisasfollows: – – 93 – B.4.d ExpectedexpansionintheHotelportfolioasofDecember31,2003 2 26,627 81 63 North 31 – 15,300 6,730 To T 4 82 880 349 Europe Other – 21 19 – Motel 6/Studio – Red RoofInns France – – Formule 1 – 15 6 Etap Hotel 44 11 244 Ibis Total 75 Mercure – 264 Novotel – 285 Other 160 48 Sofitel 338 211 LatinAmerica/ 287 In numberofrooms 120 38 North To T Europe Other Motel 6/Studio Red RoofInns France Formule 1 Etap Hotel Ibis Mercure Novotel Sofitel In numberofhotels B.4.c Hotelportfoliobyregion andbrandatDecember31,2003 nnme frosOndLae aae rnhsdTotal Franchised Managed Leased Owned In numberofrooms tl7361,9 ,8 ,1 38,153 6,817 7,588 16,392 7,356 453,403 63,983 22,412 136,054 113,355 3,894 117,599 otal 359 156 1,246 otal 839 1,294 otal a n%2.%2.%3.%49 41 100.0% 14.1% 4.9% 30.0% 25.0% 26.0% 100.0% 9.2% 4.0% 32.0% tal in% 21.6% 33.2% tal in% ec.Fac)AeiaCrbenCountries Caribbean America (excl. France) Countries Caribbean America (excl. France) consolidated financial statements I 51

q FINANCIAL STATEMENTS q NOTE 3 BREAKDOWN OF CONSOLIDATED REVENUES BY REGION AND BY BUSINESS in € millions France Europe North Latin Other Worldwide 2003 2002* 2001 (excluding America America/ countries structures(1) France) Caribbean HOTELS 1,632 1,504 1,162 110 352 90 4,850 5,014 5,052 Upscale and Midscale 1,037 999 173 95 301 90 2,695 2,660 2,704 Economy 595 505 – 15 51 – 1,166 1,140 1,022 Economy United States – – 989 – – – 989 1,214 1,326

SERVICES 92 180 11 172 14 2 471 482 498

Other businesses Travel agencies 67 165 103 22 14 11 382 453 499 Casinos 195 – – – 17 – 212 253 302 Restaurants 80 235 – 89 16 – 420 432 472 Onboard train services 157 117 – – – 3 277 284 277 Holding Companies and Other 129 69 – 11 – 7 216 221 190

Total December 31, 2003 2,352 2,270 1,276 404 413 113 6,828

Total December 31, 2002 (*) 2,405 2,238 1,550 457 383 106 7,139

Total December 31, 2001 2,420 2,155 1,714 537 337 127 7,290

(*) Pro forma: to be comparable to 2003 figures, 2002 revenues have been restated, through reallocations among either regions or businesses. (1) Operating revenues of units of which the revenues (corresponding to royalties) are not generated in a single region are included under worldwide structures.

Consolidated revenues totalled €6,828 million in 2003 versus €7,139 million in 2002, representing a decline of €311 million (4.3%).

The reported year-on-year decrease broke down as follows: • Like-for-like + 0.1% + €10 million • Business expansion + 3.4% + €244 million • Currency effect – 5.4% – €395 million • Disposals – 2.4% – €170 million Change in revenues in 2003 – 4.3% – €311 million

52 I consolidated financial statements uoe(xldn rne 2()–0.2% – (5) 1.4% – 2.3% + 32 (4) 5 4 2.4% – 0.6% – (7) (5) (29) (136) (15) T Worl Other countries Latin America (225) North America 35 Europe (excludingFrance) France CHANGE INCONSOLIDATED REVENUESBYREGION T Holding CompaniesandOther Onboard trainservices Restaurants Casinos T Other Businesses SERVICES Economy UnitedStates Economy Upscale andMidscale HOTELS CHANGE INCONSOLIDATED REVENUESBYBUSINESS ravel agencies otal Group otal Group dwide structures consolidated financial statements Reported in Reported in 31 0+0.1% + 10 (311) 0.1% + 10 (311) 0.7% – (34) (164) 24 4)–2.8% – (43) (274) 1)4 8.4% + 40 (11) 5)5 11.3% + 0.5% – 52 (12) (53) 7.4% + 0.8% + (53) 32 2 (12) (41) 7)(1 6.8% – (31) (71) 05+1.4% + 5 30 0.9% + 10 26 71 € € ilosin% millions in% millions 3+ Like-for-like Like-for-like 11.9% I 53

q FINANCIAL STATEMENTS Pro forma sales for the first half of 2002 and the first half of 2003, adjusted for the reallocations made in the second half of 2003, are as follows: in € millions France Europe North Latin Other Worldwide June June 2003 June June 2002 (excluding America America/ Countries structures 2003* Reported 2002* Reported France) Caribbean HOTELS 798 723 570 56 157 41 2,345 2,354 2,468 2,478 Upscale and Midscale 508 482 83 49 133 41 1,296 1,324 1,296 1,327 Economy 290 241 – 724 – 562542 550 529 Economy United States – – 487 – – – 487 487 622 622

SERVICES 46 90 6 82 7 1 232 231 254 247

Other businesses Travel agencies 31 85 55 10 7 5 193 193 237 238 Casinos 92 – – – 10 – 102 94 156 148 Restaurants 40 119 – 41 7 – 207 205 237 233 Onboard train services 77 56 – – – 1 134 134 138 138 Holding Companies and Other 55 31 – 5 – 2 93 96 95 103

June 2003* 1,139 1,104 631 194 188 50 3,306

June 2003 Reported1,139 1,104 632 194 187 51 3,306

June 2002* 1,187 1,098 793 273 183 51 3,585

June 2002 Reported1,187 1,097 793 274 183 51 3,585

(*) Pro forma: to be comparable to 2003 figures, 2002 revenues have been restated, through reallocations among either regions or businesses.

q NOTE 4 BREAKDOWN OF EBITDAR BY REGION AND BUSINESS in € millions France Europe North Latin Other Worldwide 2003 2002* 2001 (excluding America America/ Countries structures (1) France) Caribbean HOTELS 456 460 386 11 86 40 1,439 1,581 1,631 Upscale and Midscale 286 274 26 7 64 4 661 694 727 Economy 170 186 – 422 36 418 423 387 Economy United States – – 360 – – – 360 464 517

SERVICES 31 95 2 72 1 (12) 189 203 206

Other businesses Travel agencies 6 20 13 (1) 1 7 46 59 36 Casinos 32 – – – 6 – 38 46 58 Restaurants 6 23 – 4 1 – 34 32 31 Onboard train services 8 8 – – – 1 17 14 13 Holding Companies and Other (5) 8 – (3) – 6 6 1 (4)

Total 2003 534 614 401 83 95 42 1,769

Total 2002* 563 642 511 96 90 34 1,936

Total 2001 591 612 572 114 68 14 1,971

(*) Pro forma: to be comparable to 2003 figures, 2002 Ebitdar has been restated, through reallocations among either regions or businesses. (1) Ebitdar of units of which the revenues (corresponding to royalties) are not generated in a single region is included under Worldwide Structures.

54 I consolidated financial statements ipsl – – – – + Change inEbitdar2003 • Disposals • Currency effect • Businessexpansion • Like-for-like down asfollows: T Worl Other countries Latin America North America Europe (excludingFrance) France in CHANGE INEBITDARBYREGION T Holding CompaniesandOther Onboard trainservices Restaurants Casinos T Other Businesses SERVICES Economy UnitedStates Economy Upscale andMidscale HOTELS in CHANGE INEBITDARBYBUSINESS Ebitdar amountedto ravel agencies otal Group otal Group € € millions millions dwide Structures € 1,769 millionin2003,compared with € 1,936 millionin2002.Theyear-on-year declineof consolidated financial statements € € 6 million 167 € € € 131 million 21 million 43 million 58 million Reported Like-for-like Reported Like-for-like 17 (58) (167) (58) (167) (81) (142) 10 (27) (110) (32) (104) 1)9 14 (11) (14) 1)8 (13) (23) (13) (28) (29) (40) (33) 1)– (13) € 8 (2) (8) (9) (5) 8 54 54 33 24 167 millionor8.6%broke I 55 (7)

q FINANCIAL STATEMENTS Pro forma Ebitdar for the first half of 2002 and the first half of 2003, adjusted for the reallocations made in the second half of 2003, are as follows: in € millions France Europe North Latin Other Worldwide June June 2003 June June 2002 (excluding America America/ countries structures 2003* Reported 2002* Reported France) Caribbean HOTELS 214 215 180 6 35 10 660 659 745 745 Upscale and Midscale 132 128 11 4 25 (1) 299 305 332 330 Economy 82 87 – 210 11 192 185 182 184 Economy United States– – 169 – – – 169 169 231 231

SERVICES 13 47 – 32 – (4) 88 88 106 106

Other businesses Travel agencies 1 11 9 (1) 1 4 25 25 33 33 Casinos 13 – – – 1 – 14 14 24 24 Restaurants 3 10 – 1 – – 14 14 15 15 Onboard train services 3 2 – – – – 5 6 4 4 Holding Companies and Other (5) 15 – (1) – 2 11 11 6 6

June 2003* 242 300 189 37 37 12 817

June 2003 Reported 242 303 189 37 37 9 817

June 2002* 258 316 256 57 41 5 933

June 2002 Reported 258 318 256 57 41 3 933

(*) Pro forma: to be comparable to 2003 figures, 2002 Ebitdar has been restated, through reallocations among either regions or businesses.

q NOTE 5 RENTAL EXPENSE to protect Accor against the absence of commercial property rights Rental expense amounted to €730 million in 2003 versus in certain countries. €726 million in 2002. None of these leases include any clauses requiring advance In accordance with international accounting standards (see Note payment of rentals in the event of a downgrading of Accor’s credit 1.D.3), rental expenses correspond exclusively to operating leases. rating or for other reasons, or any cross-default clauses or Finance leases are capitalized and the obligation corresponding to covenants. future lease payments is recorded under liabilities in the amount The amount of €730 million corresponds to 1,553 hotel leases, of €207 million (see Note 27). including 70% with a purchase option and 30% without a purchase Rental expenses are charged to the income statement on a straight- option. Usually, the purchase options are fixed in the lease contracts line basis over the life of the lease, even if payments are not made proportionally to the initial value of the owner investment. Generally, on that basis. The annual charge is indexed to an appropriate these options can be exercise after 10 or 12 years of the lease benchmark, such as the French INSEE new construction index, contract. In addition, some contracts allow the acquisition of in order to recognize a constant expense stream on an economic goods, based on an expert evaluation, at the end of the contract. basis. Most leases have been signed for periods exceeding the Undiscounted rental expenses were as follows: traditional nine-year term of commercial leases in France, primarily in € millions 2001 2002 2003 Upscale and Midscale (333) (357) (373) Economy (114) (131) (157) Economy United States (195) (189) (162) Other (56) (49) (38)

Total (698) (726) (730)

56 I consolidated financial statements odn opne n te 2 – 4 ()()(0 (28) (10) 176 17 (8) 177 16 (2) 45 165 618 – – 20 – (13) 33 512 223 (2) –3 – 375 (4) 28 152 21 66 – 16 105 – 6 7 (11) 18 1 1 – 22 (1) Ebitofunitswhichthecostsandincome(corresponding toroyalties) are notgeneratedinasingleregion isincludedu 7 (*) Pro forma:tobecomparable2003figures, 2002Ebithasbeenrestated, through reallocations amongeitherregions orbus (4) 9 (433) 87 (1,047) (2) (242) (286) – 7 77 (5) 26 (339) 189 (449) (402) Holding CompaniesandOther 80 (22) – 7 (478) 198 Onboard 206 (603) Restaurants 28 183 (616) 171 (435) Casinos 162 train (629) – T (643) 106 32 Other businesses – 99 services SERVICES 52 9 – 99 Economy 2023 Economy 77 > 2023 1 Upscale andMidscale United 2022 HOTELS (660) 2021 (678) 2020 States in (680) 2019 (684) 2018 (689) 2017 (696) 2016 T (704) 2015 (706) Provisions (710) Depreciation andamortization (704) in (703) 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 Y Future minimumundiscountedrentals payableasfrom January2004break downasfollowsbymaturity: q q To To To ae gnis383()– 62 (5) 20 16 3 – (1) 3 8 3 ravel agencies otal a in ear € € a 012229128 1 830 755 (1) 603 14 9 7 18 22 81 66 60 192 139 269 81 256 282 198 262 233 tal 2001 tal 2002* tal 2003 NOTE 7 NOTE 6 ilosFac uoeNrhLtnOhrWrdie20 02 2001 2002* 2003 Worldwide Other Latin North Europe France millions millions EBIT BYBUSINESSANDREGION DEPRECIATION, AMORTIZATION ANDPROVISIONS ecuigAeiaAeia onre Structures countries America/ America (excluding rne Caribbean France) € ilosYa in Year millions T tl(12,899) otal consolidated financial statements 0120 2003 2002 2001 43 45 (436) (455) (443) 8 6 (3) (6) (8) nder Worldwide Structures. (1) inesses. € millions I 57

q FINANCIAL STATEMENTS Consolidated Ebit amounted to €603 million in 2003, compared with €755 million in 2002. The decline of €152 million or 20.1% broke down as follows: • Like-for-like – €76 million • Business expansion – €16 million • Currency effect – €51 million • Disposals – €9 million Change in Ebit in 2003 – €152 million

CHANGE IN EBIT BY BUSINESS in € millions Reported Like-for-like HOTELS (137) (94) Upscale and Midscale (47) (33) Economy (27) (18) Economy United States (63) (43)

SERVICES (12) 15

Other Businesses (3) 3 Travel Agencies (4) 1 Casinos (5) (2) Restaurants 45 Onboard Train Services – (1) Holding Companies and Other 2–

Total Group (152) (76)

CHANGE IN EBIT BY REGION in € millions Reported Like-for-like France (29) (17) Europe (excluding France) (58) (27) North America (58) (32) Latin America (6) 16 Other Countries 42 Worldwide Structures (5) (18)

Total Group (152) (76)

58 I consolidated financial statements (**) The 2003figure takesintoaccount a xhnegisadlse*2 46 (15) 44 (13) (3) 28 (1) 6 40 9 42 15 (* To Other movementsinfinancialprovisions** Exchange gainsandlosses* 90 Dividends from non-consolidatedcompaniesandon marketablesecurities in 17 90 Other financialincomeandexpensebreaks downasfollows: 213 17 62 Net interest expense 213 75 Other financialincomeandexpense 9 128 59 Interest expense 75 in 127 – 23 – 9 (6) 78 2 20 (1) (*) Pro forma:tobecomparable2003figures, 2002Ebithasbeenrestated, through reallocations among eitherregions orbus 7 – 1 81 1 (10) –28 1 8 69 (2) (1) – 43 71 (2) 22 Onboard 2 11 73 Restaurants 12 (14) 26 Casinos Train (1) 73 – T 3 7 Other businesses 77 Services 36 SERVICES 19 1 41 Economy – 36 Economy 36 Upscale andMidscale United – 36 HOTELS States in Pro formaEbitforthefirsthalfof2002and2003,adjustedreallocations madeinthesecondhalfof q odn opne n te 5 ()– 5 6 1)(15) (15) (6) (5) 2 – (3) – 1 (5) Holding CompaniesandOther ue20 eotd16196 04()325 325 223 223 (5) (7) 2 4 (1) 4 1 40 1 40 23 63 23 63 23 117 23 119 84 106 87 106 90 90 June 2002Reported June 2002* June 2003Reported June 2003* ae gnis()51()– 111 11 8 8 4 – (1) 1 5 (1) ravel Agencies ) € € € gain wasmainlyduetoLatinAmerica. In 2002,theexchangegainwasmainlyduetocapitaltransactionsinUnited States( a te iaca noeadepne4 4 (3) 40 42 tal otherfinancialincomeandexpense NOTE 8 millions millions June2002 June June2003 June Worldwide Other Latin North Europe France millions NET INTERESTEXPENSE € 13 millionprovision forredemption premiums ontheOCEANEbondissuedinApril2002. ecuigAeiaAeia onre tutrs20*Rpre 02 Reported 2002* Reported 2003* Structures countries America/ America (excluding rne Caribbean France) € 28 million).Theothergainsoriginatedfrom LatinAmerica.In2003,theexchange consolidated financial statements 0120 2003 2002 2003 2001 2002 2001 14 16 (71) (106) (134) 9)(6 (74) (66) (92) 1111 8888 inesses.

2003, are asfollows: I 59

q FINANCIAL STATEMENTS q NOTE 9 INCOME FROM COMPANIES ACCOUNTED FOR BY THE EQUITY METHOD This item broke down as follows: in € millions 2001 2002 2003 Orbis (Poland) (see note 2.B.1) 6 5 4 ABC Hotels (Demeure/Libertel hotels) – (2) (4) Société des Hôtels et Casino de Deauville (see note 2.A.3) 7 8 7 Investments funds in Tunisia & Morocco (STI & RISMA) (2) (4) (5) Dorint (Germany) (see note 2.B.3) – – (5) Asia / Australia Hotels 491 Other 5 (2) (4)

Pre-tax income from companies accounted for by the equity method 20 14 (6)

q NOTE 10 GAINS AND LOSSES ON MANAGEMENT OF HOTEL PROPERTIES in € millions 2001 2002 2003 Gains and losses on management of hotel properties 34 84 102 Movement in provisions for impairment in value (note 1.D.5) (5) (30) (34)

Total 29 54 68

The 2002 total includes: • Net gains on disposals of hotel buildings, mainly in Eastern Europe (€28 million), France (€29 million) and the Netherlands (€29 million); • €30 million in charges to provisions for impairment in value of hotels, mainly in the United States, the French West Indies and Jordan.

The 2003 total includes: • Gains on disposals of hotel buildings, primarily in Hungary for €42 million (5 units), France for €34 million (12 units), the United Kingdom for €10 million (4 units) and Poland for €8 million (11 units): see Note 2.B.1. • €30 million in charges to provisions for impairment in value of assets, held for sale or otherwise, mainly in the United States, Denmark, Portugal, the Dominican Republic and Israel.

60 I consolidated financial statements rftbfr a,icuigntgiso aaeeto oe rpris7777591 757 27.6% 31.0% 787 31.3% Effective rateoftaxonprofit, includingnetgainsonmanagementofhotelproperties Income tax Profit before tax,includingnetgainsonmanagementofhotelproperties (63) T T (39) 59 Deferred taxes Current taxes in Note 12.1Incometaxexpensefortheyear(excludingexceptionalitems) (36) (3) Non-operating lossesprimarilycomprised 74 gain ofthedisposalGranadashares. In 2003,gainsondisposalsofotherassetsmainlyconsistedina arising from thediscontinuationof“CestaTicket”inBrazil. Non-operating lossesof contingencies of r Net provision movementsof along witha In 2002,thegainsondisposalsofotherassetsmainlyconsistedinagaindisposalthree touroperatorsinEurope ( T Other non-operatinggainsandlosses Provisions Gains andlossesonmanagementofotherassets in r q q ecognition, atDecember31,2002,ofnon-operatinglossesinthesameamount,andnetadditionstoprovisions forlitigationa elated toseveraldisputesresolved duringtheperiod. xo noefo opne cone o yteeut ehd()()(8) (8) (8) ax onincomefrom companiesaccountedforbytheequitymethod otal otal € € NOTE 12 NOTE 11 millions millions € GAINS ANDLOSSESONMANAGEMENTOFOTHERASSETS INCOME TAX 18 millionprovision onGranadashares. € 17 million. € 39 millionprincipallyincludethe € 12 millioninclude € 35 millioninrestructuring costsinHotelandTour Operatordivisionsand € 29 millioninreversals ofprovisions forlitigationandother contingencies,offset bythe € 29 millionEuropean touroperatorsreferred toaboveanda € 51 millioncapitalgainonthesaleofAccorshares, alongwitha consolidated financial statements 0120 2003 2002 2001 2003 2002 2001 26 24 (163) (234) (246) 26 24 (163) (234) (147) (246) (196) (161) 7)(0 (8) (30) (77) 6(0 (17) (13) (30) 12 66 28 € 20 millionincosts € 6 millionloss € 12 million), € nd others 7 million I 61

q FINANCIAL STATEMENTS Note 12.2 Effective tax rate in € millions 2001 2002 2003 Profit before tax 758 703 523 Net gains on management of hotel properties 29 54 68 Net gains on management of other assets 66 (30) (17) Amortization of goodwill (102) (109) (107) Pre-tax income 751 618 467 Amortization of goodwill 102 109 104 Elimination of intercompany profits (3) 13 (13) Non-deductible asset impairment charges – 5 13 Other (43) 11 (13) Total permanent differences (non-deductible expenses) 56 138 91 Untaxed income and income taxed at reduced rate (226) (138) (101) Income taxable at the standard rate 581 618 457

Standard tax rate in France 36.42% 35.43% 35.43% Theoretical tax charge at standard French tax rate (211) (219) (162) Effect on theoretical tax charge of: • Differences in foreign tax rates 8 8 7 • Unutilized tax losses for the year (42) (42) (36) • Utilization of tax loss carryforwards 18 5 6 • Previously unrecognized deferred tax assets on temporary differences – – (1) • Other (17) (1) 5 Total (33) (30) (19) Income tax at standard rate (244) (249) (181) Income tax at reduced rate (2) 15 18 Income tax recorded in the consolidated income statement (246) (234) (163)

Profit before tax, including net gains on management of hotel properties 787 757 591 Income tax (246) (234) (163) Effective rate of tax on profit before tax, including net gains on disposal of hotel properties 31.3% 31.0% 27.6%

Note 12.3 Recognized deferred tax assets and liabilities in € millions 2001 2002 2003 Deferred tax assets 87 60 45 Deferred tax liabilities (237) (264) (284)

Net deferred taxes (1) (150) (204) (239)

(1) Net deferred taxes break down as follows: in € millions 2001 2002 2003 Deferred taxes on temporary differences in tax system and corporate financial statements (127) (101) (149) Deferred taxes on differences in consolidation and corporate financial statements (102) (184) (211) Deferred taxes on taxable losses carried forward 79 81 121

Net deferred taxes (150) (204) (239)

62 I consolidated financial statements ala aeig rne( er)1 7 12 9 7 26 13 19 13 11 11 20 2 – 2 14 41 56 (7years) 13 33 32 9 31 9 26 – (40years) 82 – 14 – 37 78 8 31 (20years) 157 (40years) 12 12 27 (40years) (28years) – – 228 17 73 (40years) 8 31 194 195 10 97 28 To (40years) (40 years) 101 (20years) – 285 (40years) Other (under (40 years) Railway Catering,France 237 (40years) (40years) 181 Luncheon Vouchers, 218 Venezuela (Seremca) 109 108 (8years) Lenôtre (20 341 (40years) Luncheon Vouchers, Argentina (ServiciosTicket) Hotels, Netherlands 181 209 Luncheon Vouchers, Romania (40years) 119 194 Luncheon Vouchers, Sweden(Riskuponger) Hotels, Egypt(Gezirah) (40 years) 11 Go Voyages (40 years) (20years) 195 Société desHôtelsetCasinodeDeauville Luncheon Vouchers, Mexico(Dicasa) Hotels, Hungary(Pannonia) (40years) 15 Hotels, Italy(Sifalberghi) Hotels, Poland Hotels, Asia Hotels, Germany(Dorint) 15 Economy Hotels(excludingMotel6andRRI) Casinos (Accorandsubsidiaries) Red RoofInns years) T Hotels, Australia/Pacific Upscale andMidscaleHotels,France Motel 6 in To To Goodwill (gross) in In 2002,exceptionalitemsincludea Exceptional items in Unrecognised deferred taxassetsamountedto Note 12.4Unrecognized deferred taxassets q q ae gnis(0yas 1 9 183 198 212 (20years) ravel agencies € € € a mriain n rvsos(0)(6)(634) (562) (507) tal amortizationsandprovisions tal netgoodwill tal netgoodwill NOTE 14 NOTE 13 millions millions millions € GOODWILL EXCEPTIONAL ITEMS(NETOFTAXES ANDMINORITYINTERESTS) 6 million) € 68 milliongainonthesaleof44%AccorCasinostoColonyCapital(seenote2.A.3). € 125 millionatDecember31,2002and consolidated financial statements € 150 millionatDecember31,2003. ,7 ,7 1,719 1,679 1,879 1,719 2,353 1,679 2,241 1,879 2,386 0120 2003 2002 2003 2001 2002 2003 2001 2002 2001 7 1 119 118 173 –68 – I 63

q FINANCIAL STATEMENTS The change in net goodwill breaks down as follows: in € millions 2001 2002 2003 Total net goodwill at beginning of period 1,911 1,879 1,679 Increase in gross value and impact of changes in scope of consolidation 88 126 222 • Hotels, Germany (Dorint) (see Note 2.B.3) – – 90 • Services, Mexico (Dicasa) – – 26 • Hotels Italy (Sifalberghi) – – 26 • Hotels, Egypt (Gezirah) – – 19 • Upscale and Midscale Hotels France – 12 18 • Accor Services 19 9 17 • Luncheon Vouchers, Romania – – 12 • Go Voyages (see Note 2.B.2) 9 11 6 • Hotels, Poland (Orbis) (see Note 2.B.1) 9 25 (6) • Hotels, Asia 612– • Other 45 57 14 Disposals during the period (36) (28) (7) • Accor Casinos (see Note 2.A.3) (3) (23) – • Other (33) (5) (7) Amortization (102) (109) (107) Translation adjustments 21 (116) (79) Line-by-line restatement and other changes (3) (73) 11

Total net goodwill at end of period 1,879 1,679 1,719

q NOTE 15 INTANGIBLE FIXED ASSETS in € millions 2001 2002 2003 Motel 6 brand (1) 228 191 159 Red Roof Inns brand (1) 136 114 95 Start-up costs 15 17 14 Other networks and brands 11 12 12 Onboard train services market share 75 75 75 Other intangible fixed assets 250 259 235 Total (cost) 715 668 590 Amortization and provisions (2) (182) (189) (206)

Total (net) 533 479 384

(1) Increases in the valuation of the Motel 6 and Red Roof Inns brands are primarily due to changes in the exchange rate of the US dollar against the euro at the balance sheet date (December 31, 2002: 1,0487 – December 31, 2003: 1,2630). (2) When intangible assets are intended to be sold, an impairment provision is recorded if their estimated market value is lower than the net book value.

64 I consolidated financial statements 2002 andbroke downasfollows: itns qimn n untr 17 60 70 81 35 4 4,133 25 Net value To 4,521 Gross cost Fittings, equipmentandfurniture Land andbuildings in 5,026 At December31,2003property, plantandequipment heldunderfinanceleasestotaledanet To Reclassifications (2,518) T Depreciation Additions (2,409) Disposals Changes inscopeofconsolidation To (2,369) in 6,651 Changes innetfixedassetsoverthethree-year periodcanbeanalysedasfollows: Property, plantandequipment(Net) 6,930 Construction inprogress Equipment andfurniture Fittings Buildings 7,395 Land in Property, plantandequipment(Provision) Construction inprogress Equipment andfurniture Fittings Buildings Land in Property, plantandequipment(Gross) Construction inprogress Equipment andfurniture Fittings Buildings Land in q ranslation adjustments € € € € € a ercainadpoiin 11 16 (195) (186) (191) tal depreciation andprovisions tal atDecember31 tal atJanuary1 NOTE 16 millions millions millions millions millions PROPERTY, PLANTANDEQUIPMENT consolidated financial statements € 480 million,versus ,2 ,2 4,133 4,521 5,026 4,521 5,026 4,696 2,209 2,301 2,414 1,610 1,278 3,057 1,674 1,217 3,157 1,708 1,102 3,280 0120 2003 2002 2001 2003 2002 2001 2003 2002 2001 2003 2002 2001 2003 2002 2001 39 38 (392) (271) (398) (403) (399) (322) (986) (678) (848) (942) (606) (856) (926) (569) (866) 4 8 480 675 489 615 675 540 605 731 650 580 746 942 197 624 600 327 503 732 611 617 550 782 533 680 203 332 503 625 550 680 0 43 (341) (433) 108 2)(1 1 (21) (24) 8 5 (6) (5) (8) –– – Depreciation andprovisions € 489 millionatDecember31, Gross Net I 65

q FINANCIAL STATEMENTS q NOTE 17 LONG-TERM LOANS in € millions 2001 2002 2003 Long-term loans (gross) 360 445 474 Provisions (26) (16) (24)

Total net long-terms loans 334 429 450

in € millions 2001 2002 2003 Colony Capital (note 2.A.3) (1) – 80 86 Hotels, Asia/Pacific (2) 85 60 74 ABC Group ( Demeure/Libertel hotels) (3) 55 58 64 Hotels, UK 31 41 27 Hotels, Germany (note 2.B.3) (4) – 30 35 Hotels, US/Canada 36 29 26 Hotels, the Netherlands 28 28 28 Front de Seine Participations (Novotel, Paris Tour Eiffel) 21 22 23 Financière Courtepaille 19 20 21 Orbis (note 2.B.1) (5) –– 14 Others 59 61 52

Total 334 429 450

(1) In connection with the sale of 50% of Accor Casinos, Accor granted a €80 million loan to Colony Capital. Interests on this loan are capitalized and will be paid at redemption date (see Note 2.A.3). (2) During the period, Accor granted €60 million in loans to Tahl. (3) In December 1999, Accor and two American investment funds jointly acquired the hotel business of CGIS, a subsidiary of Vivendi. The acquired hotel portfolio comprises 41 Libertel hotels and 8 Sofitel Demeure hotels, representing a total of 3,240 rooms. The acquisition vehicle (ABC Hotels), 30% owned by the Accor Group, simultaneously signed management contracts with Accor. In addition, Accor granted a €64 million loan to ABC Hotels. (4) In connection with the acquisition of the 40.19% stake in Dorint AG, the Group made a €35 million loan to Dr. Ebertz. This loan is repayable no later than December 31, 2010. See description in note 2.B.3. (5) In connection with the sale of 3 Novotel hotels and 8 Ibis hotels, for a total of €64 million, the Group made a €14 million loan to the buyer. The loan is repayable in 2008 at the latest.

q NOTE 18 INVESTMENTS IN COMPANIES ACCOUNTED FOR BY THE EQUITY METHOD in € millions 2001 2002 2003 Orbis (Hotels Poland) (see note 2.B.1) (1) 98 79 80 Société des Hôtels et Casino de Deauville (2) 34 38 39 Accor Asia Pacific subsidiaries 34 36 31 Hotels, Morocco (RISMA) (3) 21 19 18 Sofitel, Paris Le Faubourg 9910 Hotels, Tunisia (STI) (5) 867 Société Hotelière Paris les Halles (SHPH) (6) 655 Sofitel St James London (Hotels, UK) 6 5 3 ABC Hotels (Demeure/ Libertel hotels) (4) 14 10 1 Novotel Paris Tour Eiffel (7) –41 Dorint (Germany) (see Note 2.B.3) (8) ––(29) Other companies 36 37 36

Total 266 249 202

66 I consolidated financial statements Portion ofcapitalheld Shareholders’ equity Net cash/(Netdebt) Net income Revenues SHPH (6) Keyfigures for Portion ofcapitalheld Shareholders’ equity Net cash/(Netdebt) Net income Revenues Investment funds,Tunisia (5) Keyfigures for Portion ofcapitalheld Shareholders’ equity Net cash/(Netdebt) Net income Revenues Hôtel ABC(Demeure/Libertel hotels) (4) Portion ofcapitalheld Shareholders’ equity Net cash/(Netdebt) Net income Revenues (3) Keyfigures for Portion ofcapitalheld Shareholders’ equity Net cash/(Netdebt) Net income Revenues Société desHôtelsetCasinodeDeauville (2) Keyfigures for Portion ofcapitalheld Shareholders’ equity Net cash/(Netdebt) Net income Revenues Orbis (HotelsPoland) (1) Keyfigures forthe Risma (InvestmentfundsMorocco) ABC (en owns jointlytheDemeure hotels (Sofitel)andLibertelwithAccor, BlackstoneandColony. Thekeyfigures are asfollows: € millions) Société Hôtelière ParislesHalles STI Risma Société desHôtelsetCasinodeDeauville (in Orbis Group are asfollows: € (in ilos 0120 2003 2002 2001 millions) are asfollows: € ilos 0120 2003 2002 2001 millions) (in (in are asfollows: € € ilos 0120 2003 2002 2001 millions) ilos 0120 2003 2002 2001 millions) (in € ilos 0120 2003 2002 2001 millions) are asfollows: are asfollows: consolidated financial statements 11%3.9 31.19% 31.19% 31.19% 37.50% 35.00% 31.19% 30.00% 30.00% 30.00% 45.29% 45.29% 47.53% 34.90% 34.90% 34.90% 35.58% 27.17% 25.00% 0120 2003 2002 2001 43 38 (321) (368) (413) 3 2 81 122 132 203 199 225 129 183 292 157 286 187 2)(0)(98) (102) (27) (44) (37) (42) (14) (36) (56) 91 15 51 17 46 18 19 42 16 4 16 34 40 46 43 47 40 113 49 6 35 108 14 98 9 22 13 14 0 1 (5) (6) (1) (5) (0) 8 (5) (10) (6) (4) (5) (3) 521 71917 940 – I 67

q FINANCIAL STATEMENTS (7) Key figures for Front de Seine Participations, the holding for Novotel Tour Eiffel, are as follows:

Front de Seine Participations (Novotel Paris Tour Eiffel) (in € millions) 2001 2002 2003 Revenues 26 33 26 Net income (2) (3) (8) Net cash / (Net debt) (111) (113) (115) Shareholders’ equity 14 10 2 Portion of capital held 40.00% 40.00% 40.00%

(8) Main Dorint AG financial indicators during the consolidation period were as follows:

Dorint (in € millions) 2001 2002 2003 Revenues ––451 Net income* ––(15) Net cash / (Net debt) ––(42) Shareholders’ equity* ––(72) Portion of capital held 40.19%

(*) After adjustments related to the company’s first-time consolidation (see Note 2.B.3).

q NOTE 19 OTHER INVESTMENTS in € millions 2001 2002 2003 Investments in non-consolidated companies 191 412 311 Deposits 128 112 109 Total gross value 319 524 420 Provisions for impairment in value (37) (37) (34)

Net value 282 487 386

The main investments in non-consolidated companies are as follow: in € millions 2001 2002 2003 Compass Group (1) – 204 204 Hotels, Germany (2) – 50 – El Gezirah Hotel (Cairo) (3) – 42 – Other investments in non-consolidated companies and deposits 282 191 182

Net value 282 487 386

(1) In March 1999, the Group issued bonds exchangeable for Compass / Granada shares. The bond issue reflected the Group’s intention to sell the Compass shares, which were reclassified under “marketable securities” in 1999. The bonds were redeemed in March 2002. After reviewing the intended holding period of the 30,706,882 Compass shares, the Group reclassified the Compass shares under “other investments” for an amount of €204 million, corresponding to their cost at March 30, 2002. At December 31, 2003, the market value of the Compass shares was €166 million. In light of the decision to hold the shares over the long term, they were maintained in the balance sheet at fair value to the Group. (2) See note 2.B.3. Dorint Group has been accounted for by the equity method since February 1, 2003. (3) In November 2002, Accor acquired 65 % of the company that currently operates the Cairo Sheraton with the intention of turning it into a Sofitel. This company has been fully consolidated since January 1, 2003.

68 I consolidated financial statements te iaca ses2 87 0234054319 267 360 524 248 445 420 731 202 10,512 474 263 2,386 9,839 668 – 195 2,241 30 9,594 590 62 2,353 78 650 2 133 321 1 655 10 5 76 287 319 365 – 1 360 524 28 119 23 2,768 445 420 69 89 546 474 21 2,427 255 303 731 200 1 70 101 2,729 580 70 Other financialassets 668 – 10,512 in associatedcompanies 1 2,386 Investment 9,839 500 590 56 2,241 Long-term loans 4 9,594 – 68 2,353 Sub-total 550 – 330 T 31 132 7 Intangible assets 18 – Goodwill 169 5 3 56 in 274 2 2 Note 20.2Fixedassetsbyregion (atcost) 54 139 408 1 41 289 301 11 154 2,347 4 59 88 1,840 Other financialassets 518 277 263 3,573 in associatedcompanies 173 Investment 58 Long-term loans 676 49 Sub-total T Intangible assets Goodwill in Fixed assetsatDecember31,2003included Note 20.1Fixedassetsbybusiness(atcost) q To To To To To To nil ses2131771992333166616907,395 6,930 6,651 196 363 223 1,919 1,777 2,173 7,395 6,930 6,651 angible assets 152 83 108 133 78 88 1,552 1,609 2,848 angible assets € € NOTE 20 a e.3,20 ,0 ,3 ,5 3 3 2 6 0 0 11,056 907 10,690 206 1,047 133 160 172 225 274 433 418 232 306 2,854 1,837 2,402 4,202 1,872 tal Dec.31,2002 4,066 tal Dec.31,2003 a e.3,20 ,5 ,4 ,1 5 8 ,9 11,458 11,056 1,793 10,690 1,572 485 1,108 860 355 825 335 3,817 378 3,294 2,149 2,845 11,458 2,235 2,859 2,613 2,760 tal Dec.31,2001 2,921 tal Dec.31,2002 tal Dec.31,2003 735 130 169 424 462 245 3,339 1,905 4,049 tal Dec.31,2001 ilosFac uoeNrhLtnOhrWrdie20 02 2001 2002* 2003 Worldwide Other Latin North Europe France millions millions FIXED ASSETS n isaeU evcsother services US and Midscale pcl cnm cnm gnisrnstancoand train rants agencies Economy Economy Upscale 4 7––3–()–4 0 4 267 248 202 – 42 (2) – – 3 17 142 oesServices Hotels ec.Fac)AeiaAeiacutisstructures countries America America (excl. France) € 2,945 millioninhotelproperties, compared with T ae aio etu nbadHlig20 012000 2001 2003 Holding Onboard Restau- Casinos ravel consolidated financial statements € 3,110 millionatDecember31,2002. I 69

q FINANCIAL STATEMENTS q NOTE 21 OTHER RECEIVABLES AND PAYABLES in € millions 2001 2002 2003 Gross other receivables (1) 1,016 1,041 1,058 Provisions (90) (84) (112) Net other receivables 926 957 946 Other payables (2) 1,064 1,101 1,009

(1) Other receivables at December 31, 2003 included: in € millions 2001 2002 2003 VAT receivables 162 202 215 Other tax receivables 39 28 16 Prepaid payroll taxes 10 8 9 Prepaid expenses 245 285 311 Deferred charges 160 165 189 Other receivables 313 293 273 Deferred tax assets 87 60 45 Gross other receivables 1,016 1,041 1,058

(2) Other payables at December 31, 2003 included: in € millions 2001 2002 2003 Accrued payroll costs 374 356 387 Accrued taxes 150 187 107 VAT payable 50 79 99 Accrued revenues 122 125 115 Other payables 368 354 301 Other payables 1,064 1,101 1,009

q NOTE 22 FULLY DILUTED SHARE CAPITAL As of December 31, 2003, a total of 199,259,550 common shares were issued and outstanding. The average number of common shares outstanding in 2003 was 197,730,236.

In addition, a total of 9,115,023 employee stock options, exercisable for shares representing 4.57% of the total capital, were outstanding as of December 31, 2003: • 85,000 stock options exercisable from January 7, 1999 until January 7, 2005 at €15.46 per share. • 1,352,950 stock options exercisable from January 7, 2003 until January 7, 2006 at €32.47 per share. • 757,322 stock options (Stock Saving Warrants) exercisable from December 22, 2003 until December 22, 2007 at €43.40 per share. • 580,525 stock options exercisable from January 6, 2004 until January 6, 2007 at €33.95 per share. • 690,125 stock options exercisable from March 30, 2005 until March 30, 2008 at €37.00 per share. • 1,957,000 stock options exercisable from January 4, 2004 until January 4, 2009 at €40.58 per share. • 3,438,840 stock options exercisable from January 8, 2005 until January 8, 2010 at €37.77 per share. • 104,361 stock options (Stock Saving Warrants) exercisable from July 12, 2005 until July 2009 at €39.10 per share. • 148,900 stock options exercisable from January 3, 2006 until January 3, 2011 at €31.80 per share.

Accor has also issued 18,719,772 convertible bonds (OCEANEs), which could lead to the issuance of 25,550,620 shares (see Note 26).

70 I consolidated financial statements 2003 paiddividendstoAccorGroup Net debt Cash andcashequivalents Gross financialdebt Fixed assets Share inminorityinterests atDecember 31,2003 in Significant minorityinterests controlled Brazilianactivities: bytheGroup mainlyconcern Other movements 6 T Dividends paidtominorityinterests Minority interests innetincomefortheperiod December 31,2002 Other movements 285 T – 13,141 Dividends paidtominorityinterests Minority interests innetincomefortheperiod 210,871 December 31,2001 7,018 439 197,730 in 375 204,966 197,573 – 474 T 762 197,803 Reversal ofredemption premiums onconvertiblebonds(OCEANEs) 197,042 Reversal oftheinterest charges relative toconvertiblebonds(OCEANEs) in (1) Restatementsofnetincomeare asfollows: pershare (in Diluted earnings Fully dilutedaveragenumberofshares outstanding(inthousands) Number ofshares resulting from theconversionofOCEANEs Number ofshares resulting from theexercise ofstockoptions Fully dilutednumberofshares outstanding(inthousands) Restated netincomebefore minorityinterests Restatement forconvertiblebonds(OCEANEs) Net income,Group share (in in pershare areFully dilutedearnings calculatedasfollows: On thisbasis,theaveragefullydilutednumberofshares outstandingonDecember31,2003was210,871,000. q December 31,2003 ranslation adjustments ranslation adjustments otal € € € € NOTE 23 millions millions millions millions MINORITY INTERESTS € ilo)4440270 430 474 million) € ) (1) consolidated financial statements 0120 2003 2002 2001 .921 1.35 2.14 2.39 –915 Brazil subsidiaries 2003 140 I (35) (30) (22) (27) (22) 43 82 27 34 91 22 15 96 (1) (4) 71 8 5 9

q FINANCIAL STATEMENTS q NOTE 24 PROVISIONS FOR CONTINGENCIES AND CHARGES in € millions December 31, 2001 537

Additions 86 Reversals (90) Translation adjustments (12) Changes in scope of consolidation 7

December 31, 2002 528

Additions 133 Reversals without use (21) Reversals with use (74) Translation adjustments (3) Changes in scope of consolidation (12)

December 31, 2003 551

The change in provisions for contingencies and charges between December 2002 and December 2003 breaks down as follows: in € millions 2002 Additions Reversals Reversals Translation Changes in with without adjustments scope and use use reclassifications 2003 Deferred tax provisions 263 21 –––– 284 Retirement provisions 58 30 (13) – – (2) 73 Tax provisions 19 8 (1) (4) (1) 8 29 Provisions for restructuring 22 20 (16) – – (12) 14 Litigation provisions and other 166 54 (44) (17) (2) (6) 151

Total 528 133 (74) (21) (3) (12) 551

At December 31, 2003, the main provisions for litigation provisions and other were as follows: • A €21 million provision for bond redemption premiums (see note 26). • A €9 million provision for on-board train services contract termination costs. • A €8 million provision for currency risks in Latin America.

The net impact of the provisions on income (additions less reversals with or without use) breaks down as follows: in € millions 2002 2003 Ebit (1) (4) Net interest expense 918 Gains and losses on management of hotel properties 6 (3) Gains and losses on management of other assets (13) 9 Income tax (5) 17

Total (4) 37

72 I consolidated financial statements The netproceeds from theissueamountedto A commitmentnottoclaimpaymentofanyprincipalorinterest• • vehicle anamountof à DuréeIndéterminée).Concurrently, itpaidaspecialpurpose Perpetual Subordinated FloatingRateNotes(Titres Subordonnés FLOATING RATE NOTES(TSDI) in arrears, onJanuary1. € € exchangeable forneworexistingshares (OCEANEs)atapriceof On April24,2002,Accorissued3,415,424bondsconvertibleor or existingAccorshares 2002 OCEANEbondsconvertibleorexchangeablefornew accounting treatment ofthe issueinearly1993. The French Tax Authoritiesconfirmedtheiragreement withthe issue. The taxeffect isprorated tointerest expenseoverthelifeof February 2000. on marketrates)wasthesubjectofaninvestmentreimbursed in r margin) fora15-yearperiod.Theswaptakenouttolockinprincipal The notescarryamarket-basedvariableinterest rate(PIBOR+ would becapitalized. exceptional financialdifficulties. Inthiscase,accruedinterest semi-annual paymentsofinterest andprincipalintheeventof Since thenotesare subordinated, Accormaytemporarily suspend was recorded asaliabilityoftheissuedate. On December1990,Accorissued q q epayments whileleavingtheafter-tax interest ratevariable(based 570 millionandtheinterest rateis1%.Interest ispayable annually on thenotesfrom Accor. to sellthenotes); the endof15years(matchedbyacommitmentlenders Subordinated FloatingRateNotesfrom thevariouslendersat A commitmenttorepurchase theRepackagedPerpetual 166.89. Theaggregate nominalvalueoftheissuewas NOTE 26 NOTE 25 REPACKAGED PERPETUALSUBORDINATED EXCHANGEABLE BONDS € 170 millioninexchangefor: € 762 millioninRepackaged € 592 million,which • On January1,2005atapriceof • The bondsare redeemable inthree instalmentsasfollows: • On January1,2006atapriceof • • On January1,2007atapriceof • issue price,i.e. 1,2005,iftheAccorshare priceexceeds110%ofthe February Accor hasanearlyrepayment option,exercisable asfrom 24, 2003onthebasisof1share perbond. for shares, attheinitiativeof thebondholders,asfrom October on January1,2008.Theyare convertibleand/orexchangeable On October24,2003,Accorraised or existingAccorshares 2003 OCEANEbondsconvertibleorexchangeablefornew • from January8,2006to7,2007,attherateof1Accor • from January8,2005to7,2006,attherateof2Accor • up toJanuary7,2005,attherateof3Accorshares perbond. from May3,2002asfollows: Bond holdersmayconvertorexchangetheirbondsforshares as to-maturity from thedateofissue3.125%. value plusaredemption premium representing anannualyield- These redemption pricesincludeone-third ofthebond’s nominal exchanged willberedeemed forcashatpar( exchangeable forexistingshares. Bondsthatare notconvertedor January 1.Thebondsare convertiblefornewAccorshares or interest rateonthebondsis 1.75%, payableannuallyinarrears on issuance of15,304,348OCEANEbondsataprice of one-third ofthebonds’nominalvalue. of one-third ofthebonds’nominalvalue. share perbond. shares perbond. of one-third ofthebonds’nominalvalue. consolidated financial statements € 44.27, during20consecutivedays. € € € 58.86, representing 105.81% 60.14, representing 108.11% 61.47, representing 110.50% € 616 millionthrough the € 40.25 perbond) € 40.25. The I 73

q FINANCIAL STATEMENTS q NOTE 27 TOTAL LONG-TERM DEBT BY CURRENCY AND MATURITY Note 27.A Gross long-term debt At December 31, 2003, gross debt after hedging transactions broke down as follows: in € millions 2001 2002 2003 Amount Actual interest Amount Actual interest Amount Actual interest rate % rate % rate % EURO 1,822 3.74 1,664 3.06 2,246 2.47 US Dollar 1,543 4.20 1,382 3.89 784 4.57 Australian Dollar 163 4.45 137 5.58 136 5.98 Other currencies (1) 123 – 109 – 119 –

Gross debt 3,651 4.15 3,292 3.80 3,285 3.29

Capital leases 253 – 185 – 207 – Short-term debt and overdrafts 187 – 226 – 228 –

Total debt 4,091 – 3,703 – 3,720 –

€35 million in BRL, €30 million in JPY, €14 million in GBP and €10 million in CAD at December 31, 2003.

Long-term debt 3,441 – 3,372 – 3,344 – Short-term debt and overdrafts 650 – 331 – 376 –

Total debt 4,091 – 3,703 – 3,720 –

Note 27.B Maturity of the gross long-term debt Maturity of gross long-term debt broke down as follows: in € millions 2001 2002 2003 Due in 1 year 650 331 376 Due in 2 years 375 141 517 Due in 3 years 295 828 1 668 Due in 4 years 1,341 1,870 241 Due in 5 years 1,297 380 777 Due in 6 years 25 31 28 Due in more than 6 years 108 122 113

Total long-term debt 4,091 3,703 3,720

At December 31, 2003, Accor had several unused confirmed lines result, €67 million short-term financing that the Group intends to of credit with maturities of more than one year, for a total of €2,004 roll over has been reclassified as long-term debt. After reclassifications, million, expiring between July 2005 and December 2008. As a the long term unused confirmed credit lines total €1,937 million.

74 I consolidated financial statements € purchased For hedgingandcashmanagementpurposes,Accorhas Gross debtbefore hedgingtransactionsbroke downasfollows: Note 27.CGross debtbefore andafterhedgingtransactions eebr20 ,7 .5 7 ,0 .4 3 ,8 3.29% 3.80% 3,285 4.15% 3,292 3,651 43% been drawndownatDecember 31,2003. 60% onlycommittedlinesofcreditThese clausesconcern thathadnot 53% 3.34% 4% 3.74% • Interest cover–corresponding totheratioofEbitdarinterest 1,406 3.82% • Gearing ratioequaltoorinexcessof120%; 4% 5.98% 24% 1,965 main financialratiosare asfollows: 1,928 136 triggered ifcovenantsrelated tofinancialratiosare breached. The 7.20% 4.57% 68% 57% certain loanagreements includeaccelerationclauseswhichare None oftheloanagreements includeanyratingtriggers.However, 40% 119 784 2.47% and Australiandollars(9%). 47% 98% 3.25% debt wasdenominatedprimarilyineuros (52%),USdollars(30%) 2,246 3.88% primarily ineuros (80%)andUSdollars(19%),whilevariablerate 1,879 5.93% 92% 55% 4.51% As ofDecember31,2003,fixed-ratedebtwasdenominated 1,327 133 33% 7.29% 2.11% 1,723 – (*) Fixed-ratedebtisforwhichtheunderlyinginterest ratewasoriginallyfixed formore thanoneyear, aswellvari 110 428 2.99% December 2003 2% 735 December 2002 7.97% 1% 8% 45% December 2001 1% 8.05% 10 3 67% 1.73% 7.53% 98% 5.95% 13.66% in 24 356 50 2.21% 9 Note 27.DFixed/variablebreakdown ofdebt(afterhedging) 3.54% 68% 1,511 3.241 7.94% (*) Thedifference betweengross debtbefore andaftertheswapsismainlyduetoexchangeratespread onthecurrency swap 100% 83% 7 To 13% 1.73% 15.28% Other currencies –24 41 AUD 3.08% USD 32% 433 EUR 8.05% 17% 3 87% in 5.95% – 3.61% 9 2,808 To Other currencies AUD USD EUR in 2,175 millionworthofratehedgeshavebeencarriedout. than 3.8x. expense plus1/3ofannualrental expense–equaltoorless € € € fixed ratemore thanoneyear. a rs et18932%5%14633%4%325 .9 100% 3.29% 3,285* 43% 3.34% 1,406 57% 100% 3.25% 3.69% 1,879 3,325 15% tal gross debt 4.09% 505 85% 3.62% 2,820 tal gross debt ilosFxdRt et aibeRt etTotal Debt Variable-Rate Debt Total Debt Fixed-RateDebt* Variable-Rate Debt millions Fixed-RateDebt Total Debt Variable-Rate Debt millions Fixed-RateDebt millions € 941 millionworthofcurrency swaps.Inaddition, mutRt ie mutRt aibeAon ae% Rate Amount Variable Rate FixedAmount Rate % Amount Rate Amount Variable Rate FixedAmount Rate Amount mutRt ie etAon aeV Rate Amount FixedDebt Rate Amount etDb oftotal Debt Debt etDb oftotal Debt Debt swaps: The followingtableshowsgross debtaftertheserateandcurrency accelerated. could betriggered onlyifsignificant amountsoffinancialdebtare agreement withadurationof atleastthree yearsandsuchclauses loan default onanotherdebt.Cross acceleration clausesonlyconcern clause, requiring immediaterepayment ofadebtintheevent In addition,noneofAccor’s loanagreements includeacross default December 31,2003,intheamountof No accelerationclausesapplytotheconsolidatedgross debtat consolidated financial statements ariable able-rate debtthathasbeenhedgedata Debt s. € 3,285 million. mutRate Amount I 75

q FINANCIAL STATEMENTS q NOTE 28 NET INDEBTEDNESS in € millions 2001 2002 2003 Repackaged perpetual subordinated notes 214 151 80 Convertible and exchangeable bonds – 570 1 186 Other long-term debt 3,007 2,493 1,896 Obligations under finance leases 220 158 182 Short-term debt 537 234 278 Overdrafts 113 97 98

Debt 4,091 3,703 3,720

Short-term loans (47) (160) (186) Marketable securities (2) (830) (541) (833) Cash and cash equivalents (264) (179) (221) Short-term receivables on asset disposals (101) (20) (18)

Net debt 2,849 2,802 2,462

Net debt at January 1 2,547 2,849 2,802

Change in long-term debt (439) 166 233 Net change in short-term debt and cash and cash equivalents 686 (59) (402) Changes in scope of consolidation and translation adjustments (1) 54 (235) (173) Change in receivables on asset disposals 1 81 2 Net change for the year 302 (47) (340)

Net debt at December 31 2,849 2,802 2,462

(1) Long-term debt. (2) At December 31, 2003, marketable securities no longer include any Accor treasury shares or any Granada shares. The balance at that date consists mainly of €371 million in available cash invested for an average period of 2 months, corresponding to part of the proceeds from the €616 million OCEANE bond issue.

The detail of marketable securities is as follows: in € millions 2001 2002 2003 Shares of public traded companies 338 116 – Bonds 180 160 225 Monetary investments 283 233 590 Others 29 32 18

Total marketable securities 830 541 833

76 I consolidated financial statements odn opne n te 22 15 284 21 316 22 405 63 (161) 39 Investments forrenovation andmaintenance Holding CompaniesandOther Onboard trainservices (173) Restaurants 36 Casinos T 543 (108) Other businesses 270 SERVICES Economy UnitedStates 564 Economy 430 Upscale andMidscale HOTELS in 72 545 Investments inexistingassetsbroke downbybusinessasfollows: 474 investments forexpansion,fixedassetsofnewlyconsolidatedsubsidiaries,aswellthecreation orconstructionofnewasse 18 These investmentsincluderenovations andallexpensesthatmaintaintheusefullifeofexistingassetsonJanuary1.Theyexcl 28 Funds from operations (2) Non-operating (gains)/losses (44) Net gainsondisposalsofassets Cash flow (6) Change inprovisions includedininterest expenseandprovisions forimpairmentinvalue Deferred taxes Net incomefrom companiesaccountedforbytheequitymethod,netofdividendsreceived Depreciation, amortizationandprovisions Minority interests Consolidated netincome,Group share in q q ravel agencies € € NOTE 30 NOTE 29 millions millions BREAKDOWN OFFUNDSFROMOPERATIONS INVESTMENTS FORRENOVATION ANDMAINTENANCE consolidated financial statements ,0 6 847 945 961 1,095 1,005 1,077 0120 2003 2002 2001 2003 2002 2001 6 1 99 114 168 088 23 8 61 55 22 10 68 60 20 77 75 8 34 53 22 77 31 91 12 10 19 786 755 ts. I 77 ude

q FINANCIAL STATEMENTS q NOTE 31 INVESTMENTS FOR EXPANSION AND TECHNOLOGY Investments for expansion and technology include fixed assets of newly consolidated subsidiaries and the creation or construction of new assets. They broke down by region and business as follows: in € millions France Europe North Latin Other Worldwide 2003 2002 2001 ((excluding America America/ countries structures* France) Caribbean HOTELS 56 324 17 9 53 4 463 693 743 Upscale and Midscale 39 181 2 5 37 4 268 516 466 Economy 17 143 – 416 – 180145 277 Economy United States – – 15 – – – 15 32 –

SERVICES 6 15 – 42 2 3 68 18 23

Other businesses Travel agencies 7 10 – 1 – – 18 1 8 Casinos 8 6 – – – – 14 41 65 Restaurants 3 7 – 1 – – 11 5 14 Onboard train services – – – – – – – – 1 Holdings Companies and Other – – – – – 12 12 44 69

Total December 31, 2003 80 362 17 53 55 19 586

Total December 31, 2002 146 364 109 62 100 21 802

Total December 31, 2001 193 314 194 91 86 45 923

(*) Investments for expansion that are not committed in a single region are included under worldwide structures.

q NOTE 32 PAYROLL COSTS • CIWLT tax control € Total payroll costs amounted to 2,543 million in 2003 compared During the year, a tax audit was carried out on the accounts of the € with 2,583 million in 2002. permanent establishment in France of Compagnie Internationale des Wagons-Lits et du Tourisme (CIWLT), a Belgian company that is 99.43%-owned by Accor SA. Following the audit, the French tax q NOTE 33 DIRECTOR’S FEES authorities concluded that CIWLT’s seat of management is located Fees paid by various Group companies to members of the in France and not in Belgium. Supervisory Board amounted to €585,929 of which €276,000 were Accordingly, the French tax authorities added back CIWLT’s profits paid by Accor SA in Belgium to the income taxable in France. CIWLT has contested all of the resulting reassessments, on the basis of the notice received q NOTE 34 CLAIMS AND LITIGATION from the Belgian tax authorities confirming that its seat of management is located in Belgium. • Management contracts Reorganization of the Formule 1 and Etap Hotel networks continued • Other claims and litigation throughout 2003, as part of a process allowing shareholders of In the normal course of its business, the Group is exposed to companies managing these hotels to choose between management various claims and litigation. The Company believes that these and employment contracts. Managers of nearly one third of the claims and litigation will not give rise to any material costs and hotels concerned opted to become employees during the year. will not have a material impact on its financial position, business and/or results of operations. Several recent decisions by industrial tribunals (Conseils de Prud’hommes) and the Paris Court of Appeals confirmed the commercial nature of the management contract.

The legal actions still underway are unlikely to modify the estimated financial impact of the related risks recorded in the consolidated financial statements for 2003.

78 I consolidated financial statements u co – 66 • Hotels,Australia • Put Accor e noeo osldtdcmais5555425 – 555 (17) 68 68 595 (30) 529 54 – 66 689 6 29 738 (14) Net incomeofconsolidatedcompanies (20) Exceptional items(netoftaxandminorityinterests) Income tax Gains andlossesonmanagementofotherassets Gains andlossesonmanagementofhotelproperties Current incomebefore taxofconsolidatedcompanies 205 12 Cancelation ofincomefrom companiesaccounted forbytheequitymethod Profit before tax 134 in 5 91 8 To – (6) Otherfinancialandcommercial commitmentsincludeaguaranteegiventothe owneroffourIbishotelsinPoland,coveringt – (5 83 (4) OnthebasisofDecember2003accounts,exercice pricefortheoptionon GoVoyages amountsto (3) InAugust2003,IFILsoldits25%share inSifalberghi toAccorfor – 8 (1) The 8 – 6 –6 Other financialandcommercial commitments Unilateral purchase commitments • Otherunilateralpurchase commitments • • NovotelParisTour Eiffel – 26 • (30%) • GoVoyages Hotels, • Hotels,Italy(25%) Hotels, Switzerland Loans, credit linesandbankoverdrafts in Hungary Off-balance sheetscheduleasofDecember31,2003broken downasfollows: (Pannonia) (2) As partofa10-yearmanagementcontractfor theMercure SydneyRailwaySquare hotel,openedduringthefourthquarterof1 q q To To To ) € €

re Front deSeineParticipationsshares, exercisable betweenthefifthandseventhyear. Thepricewillbebasedon10times Under theagreements signedbetweenColonyandAccoratthetimeofacquisition ofNovotelParisTour Eiffel, Colonywasgi € of theproperty a acquisition (seenote2.B.3) the knowledgeofGroup, there are nocommitmentsotherthantheoneslistedabove, according tocurrent accountingstand NOTE 36 NOTE 35 a eebr3,20 1 3 4 276 296 49 103 136 145 91 48 tal December31,2002 tal December31,2003 a eebr3,20 6 10 272 – 110 162 tal December31,2001 63 million. presenting atotaldiscountedamountof millions 2001 2002 2003 >5years 1to5years <1year millions € 67 millionremaininga inguaranteesgivenunderfinancingtransactionsmainlyconcern OFF-BALANCE SHEETCOMMITMENTSANDCONTINGENCIESASOFDECEMBER31,2003 NET INCOMEOFCONSOLIDATED COMPANIES (2) € 46 millionputoptionontheproperty, exercisable bytheownertotalledapprox afterJanuary1,2004.Constructioncostsborne (3) (4) (5) € 28 million. (1) (6) € 32 million. 0 –2767 42 27 40 – 6276 138 100 40 – 9 – 9 17 – –2229 – 22 – 39 –46 46 32 – 46 consolidated financial statements € 25 millioncommitmentgiventothebanksfinancingDorintAG € 22 million. 0120 2003 2002 2001 28 26 (155) (226) (238) 5 0 523 703 758 ven aputoptionon60%ofoutstanding he paymentbyOrbisofannualrentals Ebitda lessdebt. 998, Accorhasgrantedtheowner imately I ards. 79

q FINANCIAL STATEMENTS q NOTE 37 MAIN SUBSIDIARIES AND AFFILIATES AT DECEMBER 31, 2003

France Belgium Latin America ■ SMI France 100.00% ■ Accor Hotels Belgium 98.90% Argentina ■ SNC DGR GO 100.00% ■ Accoordination 99.33% ■ Servicios Ticket 100.00% ■ SNC DGR RAM 100.00% ■ Accor T.R.B. 100.00% ■ NSB 100.00% ■ SNC DGR IDF 100.00% ✻ CIWLT 99.49% Brazil ■ Accor Redevances 100.00% ▲WL Tourisme(**) 49.74% ■ H.A.B SA 71.31% ■ PIH 100.00% Denmark ●■T.S. do Brasil 49.99% ■ MIH 100.00% ■ Accor Hotels Denmark 100.00% ✻ DALKIA 49.99% ■ S.E.H.S. 98.35% ▲World Tourist(**) 49.74% Chile ■ Sté Hôtelière Nice Centre (*) 45.00% Spain ■ Accor Services Chili 74.35% ■ S.P.F.H. 100.00% ■ Accor Hoteles Espagne 100.00% Mexico ● Financière Courtepaille (*) 20.00% Greece ▲WLT Mexicana 99.49% ● Lenôtre 98.75% ■ SH Athènes Centre (*) 41.82% ■ Accor Servicios Empresariales 98.00% ✻ Accor Casinos SA (**) 50.00% Hungary Asia-Pacific ✻ SFPTH SA 99.49% ■ Pannonia 74.39% ■ ■ Hotexco 100.00% Italy AAPC (Accor Asia Pacific Corp.) 100.00% ▲HQ Asia (**) 49.74% ■ SCHE 100.00% ●■Gemeaz 94.64% ■ AS Australia 100.00% ■ Exhotel 100.00% ■ Sifalberghi 96.28% ✻ DEVIMCO 99.97% ✻ Scapa Italia 97.00% Other Countries ✻ Accor Réservation Service 100.00% ◆ Treno 99.49% ■ Saudi Hotels Management 100.00% ✻ S.H.C.D. (*) 34.90% ■ Famosa Immobiliaria 96.28% ✻ Académie Accor 100.00% ■ SGAI 99.49% North America ■ ✻ Frantour SA 100.00% Netherlands Canada ▲ Go Voyages 70.00% ■ Novotel Netherlands 100.00% ■ Novotel Canada 100.00% ✻ Restaupro 99.96% ■ Nhere BV 100.00% ▲Carlson Canada (**) 49.74% ✻ French Line Diffusion (*) 43.87% ■ MMH Mercure 100.00% United States ■ Accor Services France 100.00% ■ Postiljon 100.00% ■ Novotel USA 100.00% ■ IBL Ltd 100.00% Europe Portugal ■ ■ Red Roof Inns 100.00% Germany ESA 97.50% ■ ■ Accor Lodging North Am. 100.00% ■ Accor Hôtellerie DTC 100.00% Portis Goldtur (**) 50.00% ▲Carlson USA (**) 49.74% ■ Accor Services Deutschland 100.00% Poland ■ ■ Orbis (*) 35.58% Accor H. Mercure Mgt 50.97% Africa ■ United Kingdom Dorint (*)(***) 40.19% Ivory Coast ■ Austria Accor UK Up and Midscale 100.00% ■ Société Abidjanaise 74.92% ▲ ■ Accor GmbH 100.00% WLT Travel UK (**) 49.74% Morocco ■ ■ Accor Services Austria 99.17% Luncheon Vouchers 100.00% ■ Risma (*) 45.29% Sweden Senegal ■ Rikskuponger 99.90% ■ SPHU (Hôtel Union) 96.72% Swizerland ■ Accor Suisse 100.00%

(*) Company accounted for by the equity method. (**) Company consolidated using the proportional method. (***) Company consolidated accounted for the first time in 2003. NB 1 : Percentage indicates Group interest. NB 2 : A comprehensive list of consolidated subsidiaries and equity holdings is available to shareholders upon request.

■ Hotels ■ Services ◆ Onboard train services ▲ Travel agencies ● Public restaurants and institutional catering ✻ Other services

80 I consolidated financial statements Statements Financial Company Parent 92 88 Auditors’ SpecialReportonRegulatedAgreements Condensed FinancialStatementsoftheParent Company 83 82 on theCompany’s 2003Results Report oftheManagementBoard on theFinancialStatementsofAccorSA Statutory Auditors’Report p arent company I 81

q PARENT COMPANY STATUTORY AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS OF ACCOR SA YEAR ENDED DECEMBER 31, 2003

To the shareholders of Accor SA II. Justification of our assessments

In accordance with the terms of our appointment at the Annual In accordance with article L. 225-235 of the French Commercial General Meeting, we hereby submit our report for the year ended Code requiring to justify our assessments, which is applicable for December 31, 2003, on: the first time this year pursuant to the Financial Security Act of August 1, 2003, we report the following information: – The audit of the accompanying financial statements of Accor SA.

– The justification of our assessment. Note 1.c to the financial statements presents the accounting policies and methods applied to assess financial assets value. We – The specific procedures and information required by law. reviewed the appropriateness of those accounting policies and methods, and of the related information given in the notes to the These financial statements have been prepared by the Management financial statements. Board. Our role is to express an opinion on these financial statements, based on our audit. These assessments were made in connection with our audit I. Opinion on the Financial Statements procedures on the Company’s financial statements taken as a whole, and contributed to the formulation of the unqualified audit We conducted our audit in accordance with professional standards opinion expressed in the first section of this report. applicable in France. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether III. Specific Procedures and Information the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, We have also performed the specific procedures required by law, evidence supporting the amounts and disclosures in the financial in accordance with professional standards applicable in France. statements. An audit also includes assessing the accounting principles used and significant estimates made by management, We have no comment to make as to the fair presentation and as well as evaluating the overall financial statement presentation. consistency with the financial statements of the information given We believe that our audit provides a reasonable basis for our in the Management Board’s Report and in the documents opinion. addressed to the shareholders with respect to the financial position and financial statements. In our opinion, the financial statements give a true and fair view of the company’s financial position and of its assets and liabilities In accordance with the Law, we have verified that the Management as of December 31, 2003, and of the results of its operations for Board’s Report contains the appropriate disclosures as to the the year then ended in accordance with rules and accounting acquisition of shares and controlling interests and to the identity principles generally accepted in France. of the principal shareholders in terms of capital and voting rights.

Neuilly-sur-Seine, April 8, 2004

The Statutory Auditors

Barbier Frinault & Autres Deloitte Touche Tohmatsu – Audit Ernst & Young

Christian Chochon Alain Pons

This is a free translation into English of the original statutory auditors' report signed and issued in the French language and is provided solely for the convenience of English speaking readers. The statutory auditors' report includes for the information of the reader, as required under French law in any auditor's report, whether qualified or not, an explanatory paragraph separate from and presented below the audit opinion discussing the auditor's assessments of certain significant accounting and auditing matters. These assessments were considered for the purpose of issuing the audit opinion on the financial statements of the parent company only taken as a whole and not to provide separate assurance on individual account caption or on information taken outside of the financial statements. Such report should be read in conjunction and construed in accordance with French law and French auditing professional standards.

82 I parent company subsidiaries inEgypt,SaudiArabia,Argentina, Tunisia andItaly. Other smallertransactionswere carriedoutincertainhotel • • • for • Acquisition, • • • • • • • for theyearinHotelsbusinesswere asfollows: investment strategyinFranceandabroad. Themaintransactions During theyear, theCompanycontinuedtoimplementits r In 2003,AccorSAhadrevenues of ON THECOMPANY’S 2003RESULTS REPORT OFTHEMANAGEMENT BOARD q oyalties, paymentsfrom leasesandmiscellaneousservicefees. operating inthetourismbusiness,mainlySpain. Acquisition, for operateshotelsinTunisia.International raisingourinterest to37.5%fromInternational, 35.0%.Tanit Acquisition, for a 99.9%-ownedsubsidiaryofAccor. Acquisition, for Belgium, whichwasalready asubsidiaryoftheAccorGroup. Denmark, awholly-ownedsubsidiaryofAccor. Acquisition, for interest to38.0%from 33.7%. (Luxembourg), themajorityshareholder ofPannonia,raisingour Acquisition, for (Poland), raisingourinterest to35.6%. Acquisition, for raising ourinterest closeto 70%. Acquisition, for 85.1%-owned subsidiary. Acquisition, for Dorint AG(Germany),raisingourinterest to40.2%from 16.8%. Acquisition, for Lodging NorthAmerica,raisingourinterest to56.8%from 40.6%. Acquisition, for BUSINESS REVIEW € € € € € € € 37.2 million,ofnewshares issued byAccor.com, 7.2 million,of10%thecapitalGoVoyages, € 4.6 million,ofnewshares issued byAccorHotel 30 million,ofshares inAccorHotelBelgium,an € € € 53.4 million,oftheentire capital ofIbisHotel 19.9 million,of8.4%thecapitalOrbis 335 million,ofnewshares issuedbyAccor 49.2 million,ofnewandexistingshares of 6.8 million,ofa2.5%interest inGlobalia, 4.1 million,ofnewshares issuedbyTanit 4.1 million,of4%thecapitalHolpa € 504 million,consistingof • 46% of GoldenLotus(Egypt)andothersmallinterests• inEgypt, • Shares inTamaris, a99%-ownedsubsidiaryofAccor, soldfor • • 10% ofFresh Mind,soldfor • • Divestments fortheyearwere asfollows: Argentina. equity capitalofsubsidiaries,mainlyinEurope, Lebanon,Mexicoand of business inthesecountries.Inaddition,ourCompanyinvestedatotal year, oneinPeruandtheotherPanama,todevelop theServices In addition,two98.3%-ownedsubsidiarieswere setupduringthe • • Acquisition ofexistingandnewshares ofAccentivHouse,for • for • Acquisition, for • Acquisition, In theServicesbusiness,maintransactionswere asfollows: sold for € subsidiary, Holpa. 35.8% ofPannonia,soldfor r 30% ofCentre Auvergne Hébergement soldfor € 45% ofthecapitalNiceCentre, ahotelcompany, soldfor Bulgaria whichis98.3%-ownedbyAccor. Contribution of 96.8%-owned byAccor. € which is97.9%-ownedbyAccor. Acquisition, for voucher subsidiaryinRomania,raisingourinterest to86.8%. (Venezuela), raisingourinterest to54.5%. educing ourinterest to20%. € 0.6 milliontoSIET, also99%-ownedbytheCompany. 1.6 million. 0.3 millionand 5.3 milliontobuyoutminorityshareholders orstrengthen the € 8.7 milliontoMacor, aGroup subsidiary. € € € € 1.5 million,ofnewshares issuedbyEAPFrance, 1.3 milliontotheinitialcapitalofAccorServices 3.9 million,of4%thecapitalourservice 5.8 million,of3.6%thecapitalSeremca € 1.9 millionrespectively. AccentivHouseis € € 0.6 million. 23.7 milliontoanotherGroup p arent company € 2 million, I 83

q PARENT COMPANY Accor did not trade in its own shares during the year and therefore The operating loss amounted to €30 million in 2003 compared still directly holds 1,528,731 Accor SA shares in treasury, with €16 million in 2002. representing 0.77% of capital stock at December 31, 2003. All of Other income, reversals of depreciation, amortization and provisions the 3,956,965 Accor SA shares held at March 7, 2003 by CIWLT, and expense transfers credited to the income statement contracted our 99%-owned subsidiary, were sold during the year. These shares to €22.6 million from €23.9 million. represented 1.99% of our capital stock at December 31, 2003. Operating expense increased 5.7% to €556 million from Capital stock was increased slightly following the exercise of €526 million, including depreciation and amortization expense of 1,000 employee stock options at a price of €32.47 per share. €34.7 million versus €29.9 million, primarily reflecting amortization There were few changes in ownership structure and no of development costs and debt issuance costs. Additional shareholders notified us that they had crossed a disclosure provisions of €14.3 million were set aside during the year for threshold, except for increases or decreases in interests above or pensions and other post-retirement benefits. Considerable amounts below the 2% threshold for the Société Générale Group and 4% of work were carried out in 2003 to finish installing the common for the Caisse des Dépôts et Consignations Group. statutory and management accounting system at all units, leading At December 31, 2003, members of the Supervisory Board and to certain systems development costs for the Company. Management Board held shares representing 12.6% of capital Net financial income amounted to €151 million versus €180 stock and Group employees held 1.9%. million. The €29 million decline was due to lower dividend income, In February 2003, Accor contracted a €70 million, 5-year bank partly offset by lower provision charges. loan due February 18, 2008. Interest on the loan is indexed to the Total provision movements included in net financial income, 6-month Euribor. corresponding mainly to provisions for impairment in value of In October 2003, we carried out a €616 million 1.75% OCEANE investments in subsidiaries, represented a net charge of bond issue, represented by 15,304,348 bonds with a face value of €108 million compared with a net charge of €216 million in 2002. €40.25 each. Interest is payable annually in arrears, on January 1. The main write-down concerned CIWLT shares, for €50 million. At Any bonds not converted into new shares or exchanged for existing the same time, €10.7 million were reversed from provisions for shares will be redeemed at par on January 1, 2008. The conversion impairment of Accor shares held in treasury. and early redemption terms are described in note 26 to the Dividend income came to €324 million, an amount significantly consolidated financial statements. below the previous year’s €459 million. In 2002, Accor received €105 million in dividends from CIWLT and €43 million from Accor Lodging North America. Neither of these companies paid a dividend 2003 FINANCIAL RESULTS q in 2003. Profit before tax amounted to €121 million compared with €163 Total revenues from all of the Company’s activities increased by million in 2002. 3.6% to €504 million in 2003 from €486 million the previous year. Net non-recurring income fell to €27 million from €138 million. They include hotel royalties, payments from business leases and The 2002 figure included the €116 million profit realized on the service fees. sale of 44% of the capital of Accor Casinos. € BREAKDOWN OF ACCOR SA REVENUES The corporate tax benefit amounted to 30 million compared with a benefit of €36 million in 2002, reflecting the results of the in € millions 2002 2003 % of total entities in the tax group headed by the Company. The number of Hotel revenues 15 15 3% companies in the tax group increased to 117 in 2003 from 113 in 2002. Rent and payments Non-deductible provision charges and accrued expenses amounted from business leases 79 72 14% to €58.2 million in 2003. Royalties from subsidiaries 180 175 35% Other service fees from subsidiaries 136 161 32% Guarantee fees 12 19 4% Royalties from non-Group companies 59 55 11% Other revenues from non-Group companies 5 7 1%

Total 486 504 100%

84 I parent company Net income for the year came to €178 million versus €337 million • IBL (€1,052 million): IBL owns 43.2% of Accor Lodging North in 2002. America, the holding company for the Group’s hotels business The Management Board recommends paying a dividend of €1.05 in the United States. IBL does not have any other activities and per share, giving rise to an avoir fiscal tax credit of €0.525 for its income consists essentially of dividends received from Accor eligible shareholders, and also proposes bringing forward the Lodging North America. In 2003, IBL had net income of €4.7 payment date to May 17 from June 2. The dividend amounted to million versus €69.9 million the previous year, and paid dividends €1.0 in 2000, giving rise to an avoir fiscal tax credit of €0.50, and of €66.7 million to Accor SA. to €1.05 in both 2001 and 2002, giving rise to a tax credit of • Cobefin (€418 million): Cobefin is a Belgian holding company €0.525. which owns 1.28% of Compass and 74.5% of AAPC, the parent Details of management compensation and the other directorships company of the Australian hotels business. Cobefin does not held by the members of the Supervisory Board and Management yet receive any dividends from its Australian subsidiary. Its 2003 € Board are provided in the Corporate Governance section of the net income of 5.5 million corresponded mainly to the profit on € Accor financial report. the sale of Granada shares and 4 million in dividends from Compass less €4.3 million in interest expense. Cobefin ended 2002 at close to break-even. • Accor Services France (€412 million): In 2003, Ticket Restaurant q ROLE OF THE PARENT COMPANY TOWARDS SUBSIDIARIES service voucher issuing volume rose 1.5% compared with the Accor SA owns the Sofitel, Novotel, Mercure, Ibis, Etap Hotel, previous year. Operating income climbed to €14.5 million from Formule 1 and Ticket Restaurant brands. The Company also owns €13.7 million. Financial income contracted to €14.5 million from the business rights corresponding to hotel properties, and holds €15.8 million, reflecting the impact of lower interest rates on hotel management and franchise contracts. investment income. Net income remained stable at €18.5 million Since January 1, 1999, the Company has leased to several versus €18.9 million. Accor Services France paid €17.6 million subsidiaries, set up for this purpose in France, all of the hotels in dividends to Accor SA in 2003. that it previously operated directly. Its other business rights • Accor Lodging North America (€739 million): Accor Lodging remained managed under lease contracts, covering a total of 64 North America is the holding company for the hotels business in Novotel hotels, 3 Mercure hotels, 2 Ibis hotels, the complexes in the United States. In December 2003, it received a capital injection Quiberon and Oléron, and 4 other Thalassa hotels. The two to finance development projects and debt repayments, as well remaining hotels managed directly by Accor SA are Paris Bercy and as to reduce its interest costs. The company ended the year

Paris Etoile. with a loss of US$ 17 million. ARENT COMPANY P The services provided to Group companies by Accor SA include The other interests held by Accor SA are listed in the table of information systems, purchasing, cash management and guarantee, subsidiaries and affiliates presented after the condensed financial advertising, marketing and advisory services, as well as the lending statements. q of staff. In January 2004, Accor signed an agreement with the Barrière Accor has around 245 subsidiaries that are at least 50%-owned. family and Colony Capital to combine the casino and hotel assets The largest interests, in terms of value, are as follows: of Société Hôtelière de la Chaîne Lucien Barrière, Société des Hôtels et Casino de Deauville and Accor Casinos. Details of the • CIWLT (€1,149 million): CIWLT (Compagnie Internationale des agreement are provided in note 2.A.3. to the consolidated financial Wagons-Lits et du Tourisme) is a Belgian company that offers statements. onboard train services in Europe, directly or through subsidiaries. It owns 50% of the capital of CWT Holding BV, the holding company for the Carlson Wagonlit Travel agency network. In 2003, revenues totaled €129 million. During the year, the 3,956,965 Accor shares held by CIWLT were sold, generating a profit of €22.7 million. Net income for 2003 is expected to amount to €41 million (estimated as of February 25), compared with €24.3 million in 2002.

parent company I 85 q SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES • The historical data used to value the investment at the time of acquisition. The financial statements have been prepared in accordance with • Current profitability data and the current value of underlying net French generally accepted accounting principles, including the assets. principles of prudence and segregation of accounting periods. • Projections of future profitability, realizable values and economic They are presented on a going concern basis and accounting trends. methods have been applied consistently from one year to the next. The valuation process also takes into account the maturity of the Assets recorded in the balance sheet are stated at historical cost, business (for example, no provision is recorded for investments contributed value or revalued cost, as applicable. in companies that are in the start-up phase and whose future The main accounting policies applied are as follows. profitability is assured). Additional provisions may be recorded to write down advances to the company concerned and, where necessary, a provision for a) Intangible assets contingencies is also recorded. Intangible assets are stated at cost. Organization expense is amortized over five years. Business rights, networks and brands d) Inventories are not amortized. Their value is assessed at each year-end and more frequently if events or circumstances indicate a possible All inventories are stated at the lower of cost and probable realizable impairment in value. If an assessment of fair value based on the value. Cost is determined by the weighted average cost method. same criteria as at the time of acquisition indicates the existence of an other-than-temporary impairment in value, a provision is e) Deferred charges recorded. Computer software is amortized over the estimated The costs of acquiring property and equipment and investments period of benefit, generally between two and four years. are amortized over five years. Debt issuance costs are amortized over the life of the debt. Information system development costs are b) Property and equipment amortized over the estimated useful life of the systems. Property and equipment are stated at cost and depreciated on a straight-line basis over their estimated useful lives, as follows: f) Receivables • Buildings: 30 to 45 years. Receivables are stated at nominal value. A provision is recorded • Fixtures and fittings: 5 to 10 years. to cover any risk of non-recovery. • Other assets: 3 to 10 years. a) and b) Fair values of intangible assets and property and equipment g) Marketable securities At each year-end, the Group determines whether there are any Marketable securities are stated at the lower of cost and market. indicators of an impairment in value of intangible assets or property, plant and equipment. Where there is an indication that the value of an asset may be impaired, its fair value is assessed for the h) Untaxed provisions purpose of calculating the possible impairment charge. Hotel fixed assets are depreciated by the reducing balance method for tax purposes. The difference between straight-line depreciation c) Investments recorded in the accounts and reducing balance depreciation calculated for tax purposes is taken to shareholders’ equity under Shares in subsidiaries and affiliates and other investments are “Excess tax depreciation”. stated at cost. They are written down to an amount corresponding to the Company’s equity in the underlying net assets, where the company concerned is not certain of operating profitability in the future. The fair value of investments is assessed using a range of indicators, including:

86 I parent company bonds. bonds isamortizedonastraightlinebasisoverthelifeof difference betweentheissueproceeds andthefacevalueof For plainvanillabondsissuedatadiscounttofacevalue,the l) Plainvanillabonds is beingaccruedoverthelifeofbonds. The probable redemption premium ontheMay2002OCEANEs or existingshares heldintreasury orpurchased onthemarket. exchanging thebondsforeithernewshares issuedforthispurpose Actions Nouvelleset/ouExistantes)offer theissueroptionof OCEANEs (ObligationsàoptiondeConversionoud’Echangeen k) OCEANEbonds taken totheincomestatementinyearwhichtheyarise. benefit obligation,plusorminusanyactuarialdifferences whichare in thebalancesheetisequaltodiscountedvalueofdefined leaving theCompanybefore retirement age.Theprovision recorded vesting period,takingintoaccounttheprobability ofemployees benefit obligationisrecognized onastraight-linebasisoverthe payable inFranceandotherdefinedbenefitplans.Theprojected statutorylength-of-serviceawardssheet. Theseobligationsconcern and otherpost-retirement benefitsisprovided forinthebalance 1, 2003,theCompany’s totalobligationforthepaymentofpensions In accordance withrecommendation CNC2203-RO1dated April benefit obligations j) Provisions forpensionsandotherpost-retirement equivalent valuebeingexpected. r is probable orcertainofgivingrisetoanoutfloweconomic when theCompanyhasanobligationtowards athird party, which accordance withstandard CRC2000-06.Aprovision isrecorded Provisions forcontingenciesandcharges are determinedin i) Provisions forcontingenciesandcharges esources withoutanyinflowofeconomicresource ofatleastan sheet ofAccorastheentityatheadtaxgroup. alone basis.Thegroup relief profit orlossisrecorded inthebalance charge itwouldhaveincurred ifithadbeentaxedonastand- Each companyinthetaxgroup records initsaccountsthetax 223 A conditions are met.Theapplicable taxrulesare setdowninarticles the profits ofothercompanies inthegroup, provided thatcertain of certaincompaniesinthetaxgroup canbenettedoff against December 31,1987.Underthegroup relief system,thetaxlosses Accor haselectedforgroup relief inapplicationoftheAct o) Corporateincometax as theloanstosubsidiaries. foreign subsidiariesare hedgedbyswapswiththesame maturities into foreign currencies tomeetpartofthefinancingneeds of Currency risksarisingontheconversionofeuro cashreserves n) Currency risks broadly equivalentmaturities. for loansandborrowings denominatedinthesamecurrency with in thebalancesheet.Noprovision forexchangelossesisrecorded at theyear-end exchangerate.Conversiondifferences are recorded re euros attheexchangeraterulingontransactiondate.Payables, Income andexpensesinforeign currencies are convertedinto m) Foreign currency transactions ceivables andcashbalancesinforeign currencies are converted et seq . oftheGeneralTax Code. p arent company I 87

q PARENT COMPANY CONDENSED FINANCIAL STATEMENTS OF THE PARENT COMPANY The following parent company financial statements are condensed versions. The full statements, including the notes, are available upon request. There are no items not reflected in the financial statements that would assist an investor in assessing the Company.

Condensed income statement in € millions 2001 2002 2003 Operating revenues 502 510 526 Operating expenses (468) (487) (453) Depreciation and amortization (38) (39) (103) Ebit (4) (16) (30) Other gains (losses) (1) (1) Investment income 476 587 422 Other financial income 45 128 138 Financial expenses (267) (319) (301) Allowances to and recoveries of provisions - net (356) (216) (108) Net financial (expense) income (102) 180 151 Exceptional items 375 138 27 Tax 47 36 31 Net income 316 337 178

Condensed balance sheet in € millions 2001 2002 2003 ASSETS Intangible fixed assets 99 109 112 Property, plant and equipment 123 128 112 Financial assets 7,166 7,114 6,656 Receivables 726 1,282 1,326 Reserve funds Cash and cash equivalents 4 101 98

Total assets 8,118 8,734 8,304

LIABILITIES AND EQUITY Share capital 597 598 598 Additional paid-in capital and retained earnings 2,496 2,531 2,611 Net income 316 337 178 Other equity (T.S.D.I) (1) 466 459 453 Provisions for contingencies and charges 91 55 74 Convertible bonds (2) 437 574 1,194 Other debt 3,555 3,963 2,984 Other liabilities 160 217 212 Service vouchers in issue

Total liabilities 8,118 8,734 8,304

(1) Including interest of €0.32 million in 2001, €0.29 million in 2002 and €0.14 million in 2003, due on June 27 of the following year. (2) In 2001: 433,484 bonds with a face value of €1,000 each, issued in March 1999, plus accrued interest of €3.30 million due on March 29, 2002. The bonds were redeemed in full in April 2002. In 2002 : 3,415,424 bonds with a face value of €166.89 each, issued in May 2002, plus accrued interest of €3,8 million due on January 1, 2003. In 2003 : a) 3,415,424 bonds with a face value of €166.89 each, issued in May 2002, plus accrued interest of €5.7 million due on January 1, 2004. b) 15,304,348 bonds with a face value of €40.25 each, issued in October 2003, plus accrued interest of €2.03 million due on January 1, 2004.

88 I parent company btaprsae08 .334 .61.63 2.96 3.49 2.03 0.89 pershare Earnings Ebitda pershare ubro mlye ,9 ,2 8 0 1,225 902 1.05 887 268,223 1.05 (30,634) 258,291 1,025 1.05 (35,709) 503,980 293,338 1,095 (47,274) 486,546 246,017 1.00 597,779 (19,803) 478,743 224,009 0.90 18,719,772 597,776 (3) NumberofemployeesontheAccorSApayroll asofDecember31,2003. (23,040) 464,944 (2) Subjecttoshareholder approval. 3,415,424 (1) Parvalue 596,680 To 374,584 0 Number ofemployees 594,974 4- Employees Dividend pershare before taxcredit 556,446 0 198,324,605 3- Pershare data Dividends 185,481,982 Net income 1,990,639 Income tax Eb Net revenues 2 -Resultsofoperations Number ofconvertiblebondsinissue Number ofshares inissue Share capital 8 1- Capitalatyear-end T 45 610 178 Five-year financialsummary 78 62 598 1,808 To Untaxed provisions Net incomefortheyear Retained earnings Other reserves Untaxed reserves Legal reserve Additional paid-incapital Share capital in Shareholders’ equityatDecember31,2003 ascin 9920 0120 2003 2002 2001 2000 1999 ransactions € a arl n mlyebnft 8247,7 4357,8 112,942 78,781 74,335 75,479 68,294 tal payroll andemployeebenefits a eoeaporain3,387 tal before appropriation itd millions a € 3. (in € ) ( in € ( in thousands) € thousands) 4,8 0,8 1,0 3,4 178,462 293,509 337,244 554,292 315,905 647,712 406,385 382,545 243,983 142,240 .220 .916 0.90 1.69 1.59 2.05 1.32 ortie anns520 209 0 59 178 T – To retained earnings – To the“Précompte”dividendwithholdingtax – To dividends – To thelegalreserve 2 As follows: To 608 – Prioryeardividendsnotpaidoutontreasury stock brought forward– Retainedearnings from theprioryear plus – 2003netincome that shareholders appropriate The ManagementBoard willrecommend in Proposed appropriation ofincome tl788 otal € a noeaalbefrdsrbto 788 tal incomeavailablefordistribution millions (1) 198,893,415 (1) 199,258,550 p arent company (1) 199,259,550 I 89 (3) (2) (2) (1)

q PARENT COMPANY Main Subsidiaries and Affiliates (in thousands of local currency units) at December 31, 2003 Reserves Subsidiaries and Affiliates Currency Share capital (retained earnings) % interest A- Investments in subsidiaries with a carrying value in excess of 1% of Accor’s capital 1- Subsidiaries (at least 50%-owned) a) French subsidiaries SPFH – 33, avenue du Maine – 75015 Paris EURO 29,796 12,188 100.00% SPCA – 5, esplanade Charles-de-Gaulle – 92000 Nanterre EURO 17,779 3,972 100.00% ACCOR SERVICES PARTICIPATIONS – 33, avenue du Maine – 75015 Paris EURO 7,950 (15) 100.00% P.I.H. – 2, rue de la Mare-Neuve – 91021 Évry EURO 32,236 22,300 100.00% SHTG – Montauban – 97190 Gosier EURO 957 (62) 100.00% IBL – 33, avenue du Maine – 75015 Paris EURO 863,010 177,711 99.99% S.I.H.N. – 2, rue de la Mare-Neuve – 91080 Évry EURO 55,500 4,877 99.99% FINEXHOR – 2,rue de la Mare-Neuve – 91021 Évry EURO 18,245 4,002 99.99% SDHE – 33, avenue du Maine – 75015 Paris EURO 22,500 (2,823) 99.99% SIET – 3/3 bis, villa Thoreton – 75015 Paris EURO 15,603 (30,391) 99.99% FRANTOUR – 3/3 bis, villa Thoreton – 75015 Paris EURO 30,493 34,548 99.99% SEPHI – 6-8, rue du Bois Briard – 91021 Évry EURO 8,000 17,851 99.99% SAHRA – 2, rue de la Mare-Neuve – 91000 Évry EURO 7,854 1,649 99.99% SH BORDEAUX AQUITANIA – 2,rue de la Mare-Neuve – 91080 Évry EURO 2,550 1,998 99.99% HOTEXCO – 6-8, rue du Bois briard – 91021 Courcouronnes EURO 39,071 79,238 99.99% FIMAKER – 6-8, rue du Bois Briard – 91 000 Évry EURO 1,102 2,868 99.99% GENOMER – 2, rue de la Mare-Neuve – 91021 Évry EURO 995 (430) 99.99% CIE HÔTELIÈRE DE LYON – 2, rue de la Mare-Neuve – 91021 Évry EURO 6,045 509 99.98% CEPIH – 33, avenue du Maine – 75015 Paris EURO 688 6,262 99.98 % ACCOR.COM – 2,rue de la Mare-Neuve – 91000 Évry EURO 522 (1,390) 99.98% PRADOTEL – 6-8, rue du Bois Briard – 91021 Évry EURO 447 13,407 99.97% PRESTOTEL – 2, rue de la Mare-Neuve – 91021 Évry EURO 192 1 079 99.96% SCHE – 6-8, rue du Bois Briard – 91080 Courcouronnes EURO 35,427 21,818 98.86% SH CHAMMANS – RN 10 – 16430 Champniers EURO 48 (393) 99.80% STÉ D’EXPLOITATION DES HÔTELS SUITES – 33, av. du Maine – 75015 Paris EURO 6,900 (10,646) 98.35% ACCOR SERVICE France – 62, avenue de Saxe – 75738 Paris EURO 388,037 51,613 98.30% ACCENTIV’TRAVEL – Villa Thoreton – 75737 Paris EURO 2,400 606 98.30% LENÔTRE – 44, rue d’Auteuil – 75016 Paris EURO 2,606 6,566 98.00% SCI PRESTIGE DE BORDEAUX – 2, rue de la Mare-Neuve – 91000 Évry EURO 8,690 (22) 96.85% SH BERNICA RÉUNION – 97434 Saint-Gilles-les-Bains EURO 3,283 8,083 96.71% SH BAS DU FORT – Novotel Fleur d’épée – 97190 Gosier EURO 6,536 (4,790) 95.82% ACCOR AFRIQUE – 2, rue de la Mare-Neuve – 91000 Évry EURO 16,048 (7,929) 94.85% MERCURE INTERNATIONAL HÔTEL – 2, rue de la Mare-Neuve – 91021 Évry EURO 54,336 77,357 71.79% SEORIM – 2, rue de la Mare-Neuve – 91021 Évry EURO 31,359 4,113 70.94% GO VOYAGES – 14, rue de Cléry – 75002 Paris (2) EURO 150 13,117 69.95% ACCOR CASINOS SA – 33, avenue du Maine – 75015 Paris (2) EURO 23,194 61,582 50.00% b) Foreign subsidiaries ACCOR POLSKA (Poland) PLN 260,962 109,341 100.00% ACCOR SUISSE SA (Switzerland) CHF 14,300 56,015 100.00% NOVOTEL NEDERLAND BV (Netherlands) EURO 3,086 19,123 100.00% KATERINSKA HOTEL (Czech Republic) (4) CZK 300,000 122,734 100.00% ACCOR HOTEL DENMARK (Denmark) DKK 800 (33,352) 100.00% HOTELES ACCOR DE ARGENTINA (Argentina) AR$ 51,400 (15,737) 100.00% ACCOR UK LTD (United Kingdom) GBP 32,530 32,154 100.00% COBEFIN (Belgium) EURO 369,884 (6,668) 100.00% IBIS HOTEL BELGIUM (Belgium) EURO 2,624 4,853 100.00% SOGEDETU (Dominican Republic) DOP 402,642 14,639 100.00% NOVOTEL CANADA INC (Canada) CAD 64,999 (9,820) 100.00% ACCOR HOTEL GMBH (Germany) (1) EURO 25,570 65,566 99.98% STE IMMOBILIARIA HOT. DE MEXICO (Mexico) MXN 278,159 (36,798) 99.98% MARARA S.A. (French Polynesia) XPF 160,000 852,150 99.96% CI DES WAGONS LITS (Belgium) EURO 50,676 420,238 99.49% HOTELES AUSTRALES (Argentina) AR$ 10,344 (13,354) 99.12% CHP Maeva (French Polynesia) XPF 160,000 132,214 98.92% ACCOR TRB (Belgium) EURO 5,965 19,753 98.30% ACCOR AUSTRIA (Austria) EURO 5,542 32,522 98.00% ASESORIA (Mexico) MXN 11,255 11,995 91.11% ACCOR SERVICE SA (Romania) ROL 8,877,000 578,436,956 86.80% ACCOR HOTELES ESPAÑA (Spain) EURO 27,983 31,827 86.79% CLUB MOOREA (French Polynesia) XPF 172,000 2,079,824 85.92% ACCOR HOTEL BELGIUM (Belgium) EURO 34,531 (6,210) 85.11% SERVICIOS TICKET (Argentina) AR$ 2,110 55,515 80.00% ACCOR SERVICES AUSTRALIA (Australia) AUD 15,000 (1,603) 78.30% SHERATON GEZIRAH LE CAIRE (Egypt) USD 29,775 10,303 64.93% ACCOR LODGING NORTH AMERICA (Unites States) USD 1,396,285 234,264 56.83% CESTATICKET ACCOR SERVICES C.A. (Venezuela) VEB 86,250 26,205,297 54.50% AMORIM HOTELS SERVICOS (Portugal) (1) EURO 14,300 28,272 50.00% CARLSON WL TRAVEL (Unites States) USD 104,746 131,108 50.00% 2- Affiliates (10-50%-owned) a) French affiliates GOLF MEDOC PIAN - Chemin de Courmateau - 33290 LE PIAN MÉDOC-LOUENS (1) EURO 411 3,329 44.97% FRONT DE SEINE PARTICIPATION - 61 quai de Grenelle - 75015 PARIS (3) EURO 15,500 (11,197) 40.00% SHCD (CASINO DEAUVILLE) - 2,rue Edmond-Blanc - 14800 DEAUVILLE (2) EURO 4,852 120,378 28.04% b) Sociétés étrangères RISMA (Morocco) (4) MAD 489,077 147,342 43.55% DORINT AG (Germany) EURO 19,200 (5,908) 40.19% HOLPA (Luxembourg) EURO 53,245 4,162 38.00% TANIT INTERNATIONAL (Tunisia) TND 60,000 (20,606) 37.50% ORBIS (Poland) PLN 92,154 1,099,533 35.58% SIFALBERGHI (Italy) EURO 13,000 17,261 30.65% AAPC (Australia) AUD 371,330 (176,587) 25.46% PROGETTO VENEZIA (Italy) (1) EURO 12,911 (1,178) 20.00% CIE ITALIENNE DE TOURISME HOLDING SPA (Italy) (1) EURO 51,700 15,337 10.00% 3- Other investments (less than 10%-owned) GLOBALIA (Spain) EURO 16,894 16,939 2.50% B- Other investments in subsidiaries with a carrying value of less than 1% of Accor’s capital 1- Subsidiaries (at least 10%-owned) a) French subsidiaries (aggregate) b) Foreign subsidiaries (aggregate) 2- Other investments (less than 10%-owned) a) French companies (aggregate) b) Foreign companies (aggregate) Total (1) Balance sheet at December 31, 2002. (2) Balance sheet at October 31, 2003. (3) Balance sheet at june 30, 2003. (4) Provisional or unaudited balance sheet. ,9,5 ,5,3 ,3,3 56,580 0 1,130,737 5,057,335 41,352 6,097,553 129,054 292 0 552,542 1,148,909 1,051,70 1,051,705 1,5 1,5 2,1 ,7 1,002 8,870 122,316 13,657 0 420,610 0 124,095 222,213 117,750 17,642 117,750 738,85 18,524 17,724 738,850 51,141 3,439 604 357,67 9,295 417,774 704 0 411,767 0 411,767 104,365 104,365 6786,5 5,9 ,9 188 0 0 0 0 510 0 (1,848) 0 (5,828) 0 (51,329) 1,955 (3,983) 1,791 3,997 15,960 0 (808) 1,153 1,280 0 376,299 1,787 20,412 8,292 80,109 0 (7,379) 0 0 0 149,215 0 0 49,436 0 2,848 29,427 0 0 5,952 0 9,958 115 0 72,665 (2,036) 0 0 158,793 63,905 12,500 5,535 0 (628) 73,572 0 6,775 0 1,673 0 22,308 5,340 4,279 3,979 0 1,399 2,322 0 12,860 0 (2,605) 28,377 9,009 66,758 0 92,572 5,880 4,899 0 0 7,893 5,454 2,083 0 21,926 18,015 0 5,320 62,664 579 425,365 37,620 23,756 0 5,064 3,052 38,376 45,111 2,896 21,165 66,758 0 0 (26) 44,394 0 5,311 0 5 31 0 24,955 0 0 3,843 (4,151) 0 28, 19,810 62,664 0 9,963 14,290 0 1,812 23,756 2,089 27 184,837 0 4,096 45,111 39,779 59,069 0 10,744 0 44,055 0 0 361 (1,639) 0 7,245 0 19,810 30,240 (6) 912 0 0 (3,029) 1,985 14,290 0 25,000 11,000 9,875 0 0 80,516 0 431 20,751 0 39,779 23,035 0 0 182 8,388 44,055 403 0 0 0 30,240 1,260 28,170 0 1,251 120,640 68,725 2,939 14,718 99 6,081 43 1,235 26,256 (30,673) 0 (139) 20,751 10,789 440 23,035 55,666 0 1,580 16,747 0 1,364 89,750 20,150 11,839 28,170 4,688 56,114 10,060 68,725 89,624 16,825 0 1,584 0 41,895 16 26,256 0 25,907 0 18,082 21,334 64,840 55,666 18,525 0 1,984 66,880 92, 31,411 50 25,860 22,164 0 65,114 15,706 26,682 0 18 16,825 0 7,795 25,907 0 64,840 10,395 0 8,715 139 30,644 2,950 66,880 564 31,411 0 22,164 65,114 29,198 15,706 42,514 6,726 175 29,803 0 10,395 3,410 6,521 48,193 3,966 14,183 580 0 14,812 12,468 4,963 42,514 19,748 40,399 61,175 5,890 11,799 45,529 22,867 13,665 19,947 56,241 12,468 14,885 29,263 40,399 70,973 29,796 22,867 19,947 56,241 29,263 29,796 ,5 ,5 6 123 0 0 0 1,176 (1,233) (493) 0 (2,376) 0 3,447 369 0 148 973 117,032 0 (4,055) (585) 0 27 81,282 0 11,342 0 0 (180) 0 0 12,767 0 0 1,233 3,920 0 35,796 (203) 13,849 0 19,434 175 0 (126) (535) 0 0 0 10,155 2,335 0 (264) 0 8,098 3,513 17,774 0 6,758 0 8,081 930 8,985 0 0 9,568 3,558 5,075 530 108 22,520 0 9,388 (5,346) 3,287 0 0 6,758 1,299 443 0 9 316 293 8,985 9,568 6,200 198 180 360 12,493 1,503 0 9,388 12,849 0 (2,613) 375 164 0 (119) 8,253 0 1 216 (5,415) 7,101 6,200 1,047 0 9,646 0 7,373 0 6,389 8,817 7,030 369 1,633 6,943 8,253 936 849 0 12,615 0 4,488 968 7,101 1,254 3,772 9,646 0 9,688 5 7,610 7,030 5,554 11,685 1,517 6,943 7, 0 2,872 0 (713) 6,688 3,594 0 6,340 (10) 8,742 7,610 9,125 0 11 4,693 0 0 273 6,123 52,922 0 0 0 8,742 9,125 2,632 3,011 8,461 0 53 103 0 0 0 0 6374 7,132 2,930 8,461 6,668 7,240 6,906 536 6 163 7,982 6 374 25,061 7,356 6,668 7,240 1,317 7,982 7,950 8,206 7,950 6, otNtavne ie e ae ls)duringtheryear (loss) netsales given advances Net Cost 1 9 1 5000 113 193 812 471 997 259 790 okvleo hrsOttnigLs ulse Dividends Lastpublished Outstanding Book valueofshares 28, 92, 7, 6, 47 99 25 79 1000(2)0 70001,8530 9000(3, 00001,8320 0000(13,30005,5430 50004,730 (in euros thousand) on n urnesLs ulse e noereceived netincome Lastpublished Guarantees loans and 6)24,503 563) 5)0 956)

324,226 PARENT COMPANY 55,405 28,048 66,739 q 252

27 STATUTORY AUDITORS’ SPECIAL REPORT ON REGULATED AGREEMENTS YEAR ENDED DECEMBER 31, 2003

To the shareholders, Agreements entered into in prior years, which In our capacity as statutory auditors of your company, we present remained in force during the year below our report on regulated agreements. In application of the decree of March 23, 1967, we were advised In application of article L. 225-88 of the Commercial Code, we of the following agreements entered into in prior years, which have been informed of the agreements approved by the Supervisory remained in force during the year. Board. Our responsibility does not include identifying any 3. With Europcar International undisclosed agreements. We are required to report to shareholders, Person concerned: John Du Monceau. based on the information provided, about the main terms and The marketing partnership agreement signed with Europcar conditions of agreements that have been disclosed to us, without International when the Company’s 50% interest in Europcar commenting on their relevance or substance. Under the provisions International was sold to Volkswagen, was authorized by the of article 117 of the March 23, 1967 decree, it is the responsibility Supervisory Board on December 15, 1999. The 10-year contract of shareholders to determine whether the agreements are provided that in exchange for a minimum guaranteed annual fee appropriate and should be approved. of €5.1 million, your Company agreed to maintain its programs We conducted our review in accordance with the professional promoting Europcar in all its business activities. standards applicable in France. Those standards require that we On January 8, 2002, the Supervisory Board authorized the carry out the necessary procedures to verify the consistency of Management Board to sign an addendum to this contract extending the information disclosed to us with the source documents. it for an additional year and changing the terms of Accor’s remuneration. Under the new terms, the variable portion of the Agreements authorized during the year remuneration, which was capped at €2.5 million a year, was 1. With a member of the Management Board replaced by an additional fixed fee of €1.5 million a year. Person concerned: Jean-Marc Espalioux In fiscal year 2003, your Company received €5,112,900 in fees On March 4, 2003, the Supervisory Board authorized an agreement from this contract. concerning the signature of a contract between Compagnie 4. With Compagnie Internationale des Wagons-Lits et du Internationale des Wagons-Lits et du Tourisme – CIWLT (a Tourisme (CIWLT) subsidiary of Accor) and SERVAIR (a subsidiary of Air France) for An addendum to the technical support agreement with Compagnie the submission of joint bids for European onboard train services Internationale des Wagons-Lits et du Tourisme was signed on contracts and the creation of joint ventures to supply such services. April 10, 2003, setting the annual fee for 2003 at €100,000.

2. With BNP Paribas and Société Générale 5. With BNP-Paribas and Société Générale Persons concerned: Philippe Citerne and Baudoin Prot, permanent The €1 billion syndicated line of bank credit negotiated in 2000 was representatives of, respectively, Société Générale and BNP Paribas not utilized during the 2003 fiscal year and therefore no interest was on the Supervisory Board. charged. On October 9, 2003, the Supervisory Board authorized the Management Board to carry out an OCEANE convertible bond Neuilly, April 8, 2004 issue with the following characteristics: – Life: 4 years and 3 months; Barbier Frinault & Autres Deloitte Touche Tohmatsu Audit – Maximum nominal amount: approximately €700 million (final Ernst & Young amount: €616 million); Christian Chochon Alain Pons – Interest rate: within the range of 1.8% to 2.5% (final rate: 1.75%). The Company paid fees of €7,280,000 to the banks that arranged the issue.

This is a free translation into English of the original statutory auditors' report signed and issued in the French language and is provided solely for the convenience of English speaking readers.

92 I parent company Governance Corporate 108 106 105 104 on the Internal Control Procedureson theInternal Auditors’ ReportontheofChairmanSupervisoryBoard Fees paidtotheAuditors Directors’ andEmployees’Interests Management Compensation 100 94 on theOrganization Control Procedures andInternal Report oftheChairmanSupervisoryBoard Governance Structures Governance corporate governance I 93

q CORPORATE GOVERNANCE GOVERNANCE STRUCTURES

q STRUCTURES According to this definition, members of the Supervisory Board who are in any of the following situations are not considered as independent: Accor is a limited liability company with a two-tier governance • Directors who have – or have had at any time in the five years structure, comprising a Management Board and a Supervisory preceding their election to the Supervisory Board – an employment Board. This structure, which has also been adopted by many other contract with the Company or any other Group entity. French companies, complies fully with the principles of good • Directors who have personal ties with the Company or any other corporate governance as currently embodied in French law. It Group entity in the form of a business contract. encourages a clear separation between the financial and strategic • Directors who have any ties whatever with a significant and regular management functions, which are handled by a five-member business or financial partner of the Company or any other Group Management Board, and oversight and control functions, which entity. are the responsibility of an eleven-member* Supervisory Board, • Directors who have close family ties with the Chairman or the acting on behalf of shareholders. This segregation of powers members of the Company’s Management Board. provides shareholders with the assurance that their interests are • Directors who have worked on the audit of the accounts of the protected, by guaranteeing transparency and ongoing effective Company or any other Group entity in any of the five years supervision of the Company’s business activities. preceding their election to the Supervisory Board. The respective roles and responsibilities of the Supervisory Board • Directors who control the Company’s capital, alone or in concert and the Management Board are set out in the bylaws and in formal with other shareholders, or who represent any such shareholders. rules. These rules define the composition and terms of reference of • Directors who are Chairman, Chief Executive Officer, Chairman each board, the procedures to be followed at their respective or member of the Management Board of a listed subsidiary or of meetings and their rights to information. They also set out the rights any affiliated company not controlled by the Group. and obligations of members, dealing with such issues as conflicts • Directors who are Chairman, Chief Executive Officer, Chairman of interest, confidentiality, personal shareholdings, compliance with or member of the Management Board of a non-Group company stock exchange guidelines concerning transactions in Accor shares, of which the Company is a director or member of the Supervisory the obligation of diligence and the limit on the number of Board or of which the Chairman or any member of the Management directorships in other companies. The bylaws stipulate that each Board is a director or member of the Supervisory Board. Supervisory Board member is required to hold at least 500 Accor The Supervisory Board has reviewed the situation of each of its shares. To promote high attendance rates at Supervisory Board members, based on the above criteria, and decided that Isabelle meetings, 50% of the total fees awarded to the Board is allocated Bouillot, Etienne Davignon, Renaud d’Elissagaray, Gabriele Galateri among the members based on their attendance record. di Genola, Franck Riboud, Jérôme Seydoux and Maurice Simond In practice, at Accor, the Supervisory Board and the Management are independent directors. Board interact on a regular, ongoing basis in a mutual commitment The Supervisory Board’s procedures are described in the report of to good governance practices. The Supervisory Board fulfils its the Chairman of the Supervisory Board on the organization and oversight role by reviewing in detail quarterly business reports procedures of the Supervisory Board, drawn up pursuant to article prepared by the Management Board. The Supervisory Board is L. 225-68 of the Commercial Code (see page 100). also responsible for authorizing significant investments and strategic In accordance with the principles of sound corporate governance, transactions, based on detailed and objective analyses of the the Supervisory Board has formed two committees, whose activities proposed projects. Corporate actions, including shareholder- are governed by specific charters: approved stock option plans proposed by the Management Board, • The Compensation and Nominations Committee. The are also subject to Supervisory Board approval. The composition Committee’s three members include the Chairman of the of the Supervisory Board helps to ensure that the Board is objective Supervisory Board, Gérard Pélisson, and two independent and exercises effective control over the running of the Company. members, Etienne Davignon and Jérôme Seydoux, who serves Seven of its eleven members are independent; i.e. directors with no as Committee Chairman. The Committee makes recommendations ties to the Group or its management that would be likely to influence to the Supervisory Board regarding the appointment of the their judgment. The Supervisory Board’s definition of an independent Chairman and members of the Management Board, candidates director is consistent with the criteria set out in the AFEP-MEDEF for election to the Supervisory Board, the compensation to be report on corporate governance, taking into account the Company’s paid to the Chairman of the Supervisory Board and the two-tier management structure. Chairman and members of the Management Board, and the Group’s executive stock option policy; * Including one member proposed for election at the Annual Shareholders’ Meeting of April 26, 2004 (on first call) or of May 4, 2004 (on second call).

94 I corporate governance Supervisory Board ofCaisseNationaledesCaissesd’Epargne. Committee ofAirFrance,and non-votingmemberofthe Véolia Environnement, Director andChairmanoftheCompensation member oftheAccounts,AuditandCommitmentsCommittee of Board onJanuary7,1997.Jean-Marc EspaliouxisalsoDirector and Gérard Pélisson,tobecometheChairmanofManagement Accor since1988,chosenbytheCo-Founders,PaulDubruleand Committee (1994)andExecutiveVice-President (1996).Director of served asChiefFinancialOfficer (1987),MemberoftheExecutive Générale desEaux(nowVivendi Universal)in1984,where he French MinistryofFinancefrom 1978to1982.JoinedCompagnie d’Administration, Paris(1978).InspecteurdesFinancesatthe ;France’s EcoleNationale d’Etudes PolitiquesdeParis onMarch 18,1952.LawandEconomicsdegreeBorn from Institut Jean-Marc Espalioux,Chairman Management Board (1990-1996). and President oftheEcole Supérieure deCommerce ofLyon and Vice-Chairman oftheWorld Travel andTourism Council(WTTC) and Co-FounderoftheBrillat-SavarinFoundation, of theUnionFrench CitizensAbroad (UFE),Honorary Chairman of theCouncilonFrench InvestmentinAfrica(CIAN),Chairman of theAccorGroup (1983-1997). Gérard PélissonisalsoChairman Novotel S.I.E.H.Group (1971-1983). Co-FounderandCo-Chairman the Novotelchainin1963withPaulDubrule,Co-Chairmanof Institute ofTechnology (USA).Co-FounderandCo-Chairmanof Master ofScienceinIndustrialManagement,Massachusetts from theEcoleCentraledes ArtsetManufactures, Paris,and onFebruary9,1932inLyonBorn (France).Engineeringdegree Gérard Pélisson Founder oftheWorld Travel andTourism Council(WTTC). (France),ChairmanofEntreprise etProgrèset-Marne andCo- Accor Group (1983-1997).PaulDubruleisalsoSenatorofSeine- S.I.E.H. Group (1971-1983).Co-FounderandCo-Chairmanofthe Pélisson, Co-ChairmanandChiefExecutiveOfficer oftheNovotel Founder andCo-ChairmanoftheNovotelchainin1963withGérard des HautesEtudesCommerciales, UniversityofGeneva.Co- onJuly6,1934inTourcoingBorn (France).GraduateoftheInstitut Paul Dubrule Co-Chairmen andCo-Founders • q Board (seepage100). described inthereport oftheChairmanSupervisory d’Elissagaray. TheAuditCommittee’s termsofreference are Committee Chairman,IsabelleBouillotandRenaud independent members,EtienneDavignon,whoservesas Chairman oftheSupervisoryBoard, Gérard Pélisson,and three The MEMBERSHIP Audit Committee , whosefourmembersincludethe and theMiddleEastsinceJanuary3,2003. Management Board incharge ofhoteloperationsinEurope, Africa Chief ExecutiveOfficer Economy Hotels(2002).Memberofthe V of CompagniedesWagons-Lits (1997-2002),Group Executive (1991-1995). SincejoiningAccorin1997,ChiefExecutiveOfficer des HôtelsMéridien,where hebecameChiefExecutiveOfficer (1977). JoinedAirbusIndustriesin1979before movingtoSociété (1977), MastersinEconomicsfrom theAssasParisIIFacultyofLaw Etudes Commerciales (1975), Institutd’EtudesPolitiquesdeParis onJanuary10,1953.GraduateoftheEcoledesHautes Born André Martinez Sustainable DevelopmentandOnboard Train Services. Management Board incharge ofServices,HumanResources, and, sinceJanuary3,2003,DeputyVice-Chairman ofthe been MemberoftheManagementBoard sinceJanuary7,1997 President, ServiceVouchers andEurest. JohnDuMonceauhas Managing Director, ServiceVouchers andGroup ExecutiveVice- France (1978-1983).AtAccor, since1983hehas servedas Belgium (1973-1977);ManagingDirector ofTicketRestaurant (1961-1973), ManagingDirector ofJacquesBorel International, V and MaritimeScience,Saint-IgnaceCollege,Antwerp(Belgium). onApril6,1938inMortsel(Belgium). Degree inCommercialBorn John DuMonceau Hotels business. and Tourism business,Casinos,Brazil,andtheSouthAmerican Board incharge ofFinanceand DevelopmentoftheHotel,Leisure and, sinceJanuary3,2003,Vice-Chairman oftheManagement 7,1997 a MemberoftheAccorManagementBoard sinceJanuary Carlson Wagonlit Travel HoldingsBV. BenjaminCohenhasbeen Lits etduTourisme, Co-ChairmanoftheBoard ofDirectors of desWagons-Chief ExecutiveOfficer ofCompagnieInternationale Executive Vice-President (1992-1997),Director (1994)Chairmanand Managing Director oftheAccorGroup (1989-1992),Accor Group Group (1983-1988),ChairmanofCroisières Paquet(1987-1994), Hotels andMemberoftheManagementCommitteeAccor et d’ExploitationHôtelière) (1982-1983),ExecutiveVice-President, BusinessforNovotelS.I.E.H.(Sociétéd’Investissement International et Hôtelière (U.T.H.) (1979-1985),ExecutiveVice-President, Chief ExecutiveOfficer ofSofitel(1977)andUnionTouristique (1972-1975), ManagingDirector (1975-1977),thenChairmanand Chief ExecutiveOfficer ofCompagniedesHôtelsJacquesBorel GroupJacques Borel (1975),Vice-Chairman International and of theManagementCommitteeandChiefExecutiveOfficer ofthe (1964-1968),Member Restaurants atJacquesBorel International des HautesEtudesCommerciales (1961).Vice-President, Public onApril29,1939inCastres (France).GraduateoftheEcole Born Benjamin Cohen Pierre Todorov Secretary oftheManagementBoard arious responsibilities infoodproduct marketingforUnilever ice-President, HotelDevelopmentandStrategy(1999-2001), corporate governance I 95

q CORPORATE GOVERNANCE Supervisory Board • Francis Mayer (2), Chief Executive Officer of Caisse des Dépôts et Consignations. Francis Mayer is Vice-Chairman and Member of • Chairman: Gérard Pélisson the Supervisory Board of Caisse Nationale des Caisses Gérard Pélisson’s term of office expires at the end of the Annual d’Epargne, and Director of Casino Guichard-Perrachon, Dexia and Meeting called to approve the accounts for the year ended Véolia Environnement. December 31, 2008. (2) Election proposed at the Annual Shareholders’ Meeting of April 26, 2004 (on • Vice-Chairman: Etienne Davignon*, Member of the Board since first call) or of May 4, 2004 (on second call). May 16, 1990. Etienne Davignon, 71, is Vice-Chairman of Suez • Franck Riboud*, Chairman and Chief Executive Officer of the Tractebel and Fortis. He owns 648 Accor shares. His term of Danone Group, Member of the Board since July 3, 2001. Franck office expires at the end of the Annual Meeting called to approve Riboud, 48, is Director of L’Oréal and Renault and member of the accounts for the year ended December 31, 2008. the Supervisory Board of . He owns 500 Accor shares. • BNP-Paribas, Member of the Board since May 16, 1990, His term of office expires at the end of the Annual Meeting called represented by Baudouin Prot, Director and Chief Operating to approve the accounts for the year ended December 31, 2004. Officer of BNP-Paribas. Baudouin Prot, 53, is a Director of Véolia • Jérôme Seydoux*, Chairman and Member of the Executive Board Environnement and Member of the Supervisory Board of Pinault- of Pathé SAS, Member of the Board since January 7, 1997. Printemps-Redoute. He owns 500 Accor shares. BNP-Paribas’s Jérôme Seydoux, 69, is Director of Danone and Vice-Chairman term of office expires at the end of the Annual Meeting called to and Chief Executive Officer of Chargeurs. He owns 1,000 Accor approve the accounts for the year ended December 31, 2006. shares. His term of office expires at the end of the Annual Meeting • Isabelle Bouillot*, Director of Compagnie de Saint-Gobain, has called to approve the accounts for the year ended December been a Member of the Board since February 14, 1996. Isabelle 31, 2008. Bouillot, 55, owns 500 Accor shares. Isabelle Bouillot’s term of • Maurice Simond*, 72, former Group Director of IBM Europe, office expires at the end of the Annual Meeting called to approve Member of the Board since January 7, 1997 (he had served as the accounts for the year ended December 31, 2008. censor since June 28, 1983). He owns 33,720 Accor shares. His • Renaud d’Elissagaray*, Member of the Board since January 7, 1997 term of office expires at the end of the Annual Meeting called to (he had served as censor since January 27, 1988). Renaud approve the accounts for the year ended December 31, 2006. d’Elissagaray, 71, a former Member of the Management Board of • Société Générale, Member of the Board since June 28, 1983, Banque Louis-Dreyfus, is a Director of Arca-Banque du Pays basque represented by Philippe Citerne (3), member of the Board and and various mutual funds. He owns 500 Accor shares. His term of Chief Operating Officer of Société Générale. Philippe Citerne, office expires at the end of the Annual Meeting called to approve the 55, is Director of Unicredito Italiano (Italy) and Crédit du Nord. accounts for the year ended December 31, 2004. Société Générale’s term of office expires at the end of the Annual • Gabriele Galateri di Genola*, Chairman of Mediobanca SpA, Meeting called to approve the accounts for the year ended appointed to the Board on July 2, 2003 (1) to replace IFIL December 31, 2006. Finanziaria di Partecipazioni SpA, following the latter’s resignation. (3) Philippe Citerne replaced Patrick Duverger as permanent representative of Gabriele Galateri di Genola, 55, is Vice-Chairman of Assicurazioni Société Générale on January 7, 2004. Generali SpA, and Director of IFI SpA and Pirelli & C SpA. He owns 500 Accor shares. His term of office expires at the end of Secretary of the Supervisory Board the Annual Meeting called to approve the accounts for the year ended December 31, 2006. Pierre Todorov

(1) Appointment decided by the Supervisory Board, subject to ratification at the Annual Shareholders’ Meeting of April 26, 2004 (on first call) or of May 4, 2004 (on second call).

* Independent members.

96 I corporate governance nr atnz–MemberoftheManagementBoard ofAccor André Martinez –MemberoftheManagementBoard ofAccor John DuMonceau ten ainn –Vice-Chairman oftheSupervisoryBoard ofAccor Etienne Davignon* Supervisory Board –Memberofthe ManagementBoard ofAccor –ChairmanoftheManagementBoard ofAccor Benjamin Cohen Jean-Marc Espalioux Management Board éadPlso –ChairmanoftheSupervisoryBoard ofAccor –MemberoftheManagementBoard ofAccor Gérard Pélisson Paul Dubrule Co-Chairmen andCo-Founders OTHER DIRECTORSHIPSHELDBYTHEMEMBERSOFSUPERVISORY BOARDANDMANAGEMENTIN2003 – Permanent representative ofAccorontheBoard ofDirectors ofAccor.com andofSIP ontheBoard of – Chairman ofthe Board ofDirectors ofEtapHotel(untilNovember15,2003),SociétéCommerciale des deServicesdesHôtelsEconomiquesSAS – Chairman ofSociétéInternationale – Chairman andChiefExecutiveOfficer ofDéveloppementdesHôtelsEconomiques – Permanent representative ofAccorServicesFranceontheSupervisoryBoard ofServepar – ChairmanoftheBoard ofDirectors ofWLDiffusion – ChairmanofAccorServicesParticipationsSAS – ChairmanandChiefExecutiveOfficer ofAccorServices France – Director ofEuropcar International • Directorships outsideFrance: – Director ofSuez,Pechiney(untilDecember16,2003) – ChairmanofCustomPublishingFrance(SAS) – Permanent representative ofSaminvestontheBoard ofDirectors ofAccor.com, ofSodetis – Permanent representative desWagons-Lits ofCompagnieInternationale etduTourisme ontheBoard – Permanent representative ofAccorontheBoard ofDirectors ofSociétédesHôtelsetCasinode – Permanentrepresentative ofAccorontheSupervisoryBoard ofLenôtre – Director ofVéoliaEnvironnement, AirFrance – Permanent representative ofUgeparServicesontheBoard ofDirectors ofBanqueTransatlantique – Director ofSociétéd’InvestissementsFonciersdeProvence, SociétéFrancaised’Etudede – MemberoftheSupervisoryBoard ofLenôtre – Vice-Chairman oftheSupervisoryBoard ofOhada.com – Director ofCréditCommercial deFrance – MemberoftheSupervisoryBoard ofBasf(Germany)(untilMay6,2003) November 17,2003),WLDiffusion (untilFebruary3,2003) Hôtels Economiques(untilNovember17,2003),SociétéHôtelière d’ExploitationEconomique(until (until October28,2003) (until November24,2003) Permanent representative ofSaminvestontheBoard ofDirectors ofCompagnieduGrandExpress Permanent representative ofAccorReservationServicesontheBoard ofDirectors ofAccor.com – Belgium: Chairman of Compagnie Internationale desWagons-Lits– Belgium: ChairmanofCompagnieInternationale etduTourisme, Directors ofSociétéHôtelière Sophia Antipolis(untilDecember18,2003) et deParticipations–Sogepar ontheBoard ofDirectors ofSociétédeGestion on theBoard ofDirectors ofGoVoyages, ofSPIF of Directors ofWLDiffusion andontheBoard ofDirectors ofCompagnie duGrandExpress Deauville, AccorServicesFrance,Devimco,IBL,SFPIE,STI,UTH,SACT and ofAccorontheBoard ofDirectors ofSociétéFoncière duGolf Développement etd’Investissement,SociétéduGolfMédocPian • Directorships outsideFrance: Director ofSofina, Solvay(untilJune5,2003),Biac (until May9,2003),Tractebel (untilOctober31,2003),Fortis,Umicore (since October31,2003),Recticel, SociétéGénéraledeBelgique(untilOctober31,2003),Petrofina of CompagnieMaritimeBelgeand ofSibeka;Vice-Chairman ofSuezTractebel – ChairmanoftheBoard ofDirectors ofComp – Co-ChairmanoftheBoard ofDirectors ofCarlsonWagonlit Travel HoldingsBV CIWLT (Belgium),ofHotelariaAccorBrasilSA,andSA gi nentoaedesWagons-Lits etduTourisme – Internationale agnie corporate governance I 97

q CORPORATE GOVERNANCE BNP-Paribas – Member of the Supervisory Board of Accor, Compagnie Laitière Européenne, Elso Magyar Koncesszios Autopalya, Ezus Lyon 1, Locindus, Robertet SA – Director of Agys, Airinvest, Assurances Mediforce, Assu Vie, B*Capital, Balinvest, Banque Financière Cardif, Banque Franco-Roumaine, Banque Internationale pour le Commerce et l’Industrie du Sénégal, Banque Internationale pour le Commerce et l’industrie au Mali, Banque Internationale pour le Commerce et l’Industrie de la Côte d’Ivoire, Banque Internationale pour le Commerce et l’Industrie de la Guinée, Banque Internationale pour le Commerce et l’Industrie du Gabon, Banque Togolaise pour le Commerce et l’Industrie, Bici Bourse, Bici Consultants, BNP-Paribas El Djazair, BNP-Paribas Epargne Entreprise, BNP-Paribas Equities France, BNP Paribas Guadeloupe, BNP-Paribas Martinique, BNP-Paribas Nouvelle- Calédonie, BNP-Paribas Private Bank, BNP-Paribas Private Equities, BNP-Paribas Réunion, BNP- Paribas Sécurities Services, BNP-Paribas Securities Services International Holding, Bollore Shangai Dialectric, Cie Financière de la Côte d’Ivoire “Sofinici”, Cie Monégasque de Banque, Civi Pol Conseil – Société de Conseil et de Service, Compagnie Saint-Honoré de Construction et de Participations Immobilières, Consortium Auxiliaire de Participations, Cortal Bank, Cortal Consors, Crédit Logement, Crédit Logement Assurance, CRH – Caisse de Refinancement de l’Habitat, Finaero, Financière du Marché Saint-Honoré, France Garantie, GCPS L.L.C., Gerfonds, Gimages, Gimages 2, Gimages 3, Gimages 4, Gimages 5, Gimages 6, Industelec Ouest, Institut de Telemarketing, Invest Export, Kléber Quantamerica, Natio Vie, Novespace, Obligations Convertibles (SICAV), Parcadia Asset Management, Parking de la Porterne, Powernext SA, President Investment Trust Corp., Projenor, Prominnofi, Promo Residences, S.E.M. Immobilière de la Porte des Alpes (Semipa), S.E.M. Zone France Epinal Mirecourt, SA d’Economie Mixte de la Garenne-Colombes, Saem de Rénovation et d’Aménagement Urbain de Montigny-les-Metz, Securi-Taux, Servicio de Compensacion y Liquidacion de Valores, Société de Gestion de Garanties Immobilières Sogrim, Société de Gestion du Fonds de Garantie de l’Accession Sociale à la Propriété, Société de Promotion et de Participations pour la Coopération Economique, Société d’Economie Mixte de la Ville de Paris, Société Financière des Pays de l’Adour, Société Française Auxiliaire, Société Française d’Etudes et de Réalisations d’Equipements Aéronautiques, Société Gessienne de Participations, Société Givetoise de Participations, Société Immobilière du 15/17 Avenue d’Ostende, Société Jovacienne de Participations, Sofibus, Sofinergie 4, Sofinergie 5, Sofineurope, Sofygram, Sofygram 2, Sofygram 3, SPS Reassurance, Studio Images 3, Studio Images 4, Studio Images 5, Studio Images 7, Studio Images 8, Transvalor, Tresor-Real, Union de Crédit pour le Bâtiment, Valeuro

Isabelle Bouillot* – Member of the Supervisory Board of Accor and CNP Assurances (until July 16, 2003) – Director of Compagnie de Saint-Gobain – Chairman of the Management Board, Director in charge of Central Functions of CDC Finance-CDC Ixis (until July 16, 2003) – Chairman of the Supervisory Board of CDC-Ixis Capital Market (until August 4, 2003), CDC Ixis Financial Guaranty Holding (until August 4, 2003) – Vice-Chairman of the Supervisory Board of CDC Ixis Asset Management (until August 4, 2003) – Director of Compagnie Financière Eulia (until August 4, 2003), Ixis Aew Europe (until November 25, 2002) – Permanent representative of CDC Finance-CDC Ixis on the Supervisory Board of CDC Ixis Italia Holding (until July 17, 2003), CDC Ixis Securities (until July 17, 2003), CDC Ixis Private Capital Management (until August 4, 2003) – Permanent representative of CDC Finance-CDC Ixis on the Board of Directors of CDC Ixis Private Equity (until July 17, 2003) – Permanent representative of CDC on the Supervisory Board of CNCE (until November 6, 2003) • Directorships outside France: – Chairman of CDC Ixis North America (USA) (until August 4, 2003) and CDC Ixis Financial Guaranty North America Inc. (until August 4, 2003), Director of CDC Ixis AM US Corporation (USA) (until August 4, 2003) and of San Paolo IMI (until August 4, 2003), Chairman (permanent representative of CDC) of the Board of Directors, Société de Gestion de CDC Euro Obligations (Luxembourg) (until August 4, 2003)

98 I corporate governance *I –MemberoftheSupervisoryBoard ofAccor, SGAlgérie – No directorships apartfrom memberoftheSupervisoryBoard ofAccor Société Générale Maurice Simond* –ChairmanandmemberoftheExecutiveBoard ofPathéSAS Jérôme Seydoux* –ChairmanandChiefExecutiveOfficer andmemberoftheExecutiveCommitteeGroupe Danone Franck Riboud* –MemberoftheSupervisoryBoard ofAccor Gabriele GalateridiGenola* –MemberoftheSupervisoryBoard ofAccor Renaud d’Elissagaray* ndependent members – Chairman ofComiper, M.S.B.M.Participations, Primafair, Vinea Holding,SASCarteBleue – – Director ofAfti,Answork,BanqueFranco-Roumaine(BFR),Barep, Barep AssetManagement,BFV – – LegalmanagerofJMSFilmsSNC,OJEJSC,PathéImageSojerEdjerEURL – Permanent representative ofPathéontheBoard ofDirectors ofS.P.C.S. SAandofSoparic – Director ofGroupe DanoneSA,Vice-Chairman ofTelemonte CarloSAandVice-Chairman andChief – Chairman oftheSupervisoryBoard ofMont-Blanc&CompagnieSA,Vice-Chairman ofthe – ChairmanofPathéDistributionSASandRennProduction SAS • Directorships outsideFrance: – Permanentrepresentative ofGroupe DanoneontheBoard ofDirectors ofLUFrance – Director ofDanoneFinance,RenaultSA,SAS,L’Oréal, Ansa,AssociationNationaledes – MemberoftheSupervisoryBoard ofAccor, Eurazeo – ChairmanoftheBoard ofDirectors ofCompagnieGervaisDanone,GénéraleBiscuit • Directorships outsideFrance: – Vice-Chairman ofWorms &CieSA (untilApril13,2003) – Permanent representative ofFinancesConseil ontheBoard ofSicavCaamConvertiblesEurope – Legal managerofSARLFinances-ConseilandPermanentrepresentative ofSARLFinancesConseilon – Director ofArca-Banque duPaysBasque – Non-votingdirector ofProparco – Member oftheBoard ofDirectors ofIfiS.p.A.,Pirelli &CS.p.A.,BancaEsperiaCRS Sogeservice, Sogessur, Sogexcel,Sogiinvest,Soginfo Monde, SogeobligMondeDevises, SogeobligRevenuAnnuel,SogesectorImmobilierEurope, Sogeactions Monde,Sogebail,Sogefinance,SogenalCourtTerme, SogeobligEuro CT, Sogeoblig SGFGAS, SNPE,SociétéFoncière deTouraine, Socogefi,Sofrantem,SogeactionsFrancediversifiée, Guinée Équatoriale,SGEnergie, SGTchadienne deBanque,SGAM,SGAMPremière Associa, Banque auSénégal,SGdeenCôted’Ivoire, SGdeBanqueenGuinée, Salvepar, SGdeBanqueauBurkina, auCameroun, SGdeBanqueauLiban, Genesis 1,II,Investima,Odiprom SA,Pareli, ParisTitrisation,Partifa,Pervalor, Pronerg, Limited, FimatBanque,SociétéImmobilière delaGarenne Bezons(SIGB),Genefim,Genefinance, SG, Boursorama,Bremany, CGA,CGL,Cirra,Cofiroute, CréditLogementAssurance,ECS,Fazford PathéRennProduction SAS,PricelSAS Distribution SAS, Member oftheManagementCommitteeArena FilmsSAS,GalfinProductions SAS,Pathé Participations ontheBoard ofOlympiqueLyonnais SAOS Executive Officer ofChargeurs SA Supervisory Board ofCompagnieduMont-BlancSA, MemberoftheSupervisoryBoard ofAccor – Chairman andDirector deDanoneAsiaPTELimited,Administrateur de:ABIHoldingsLimited, Industries agro-alimentaires, AdvisoryBoard HEC International – Vice-Chairman ofthefollowingcompaniesuntilApril13,2003:FiatS.p.A.,SanpaolaImi – Vice-Chairman ofAssicurazionioGeneraliS.p.A., – ChairmanofMediobancaS.p.A.,InstitutoEuropeo diOncologia (non-voting director) Ccam ActionsEuroland (untilJune2003) the Board ofDirectors ofthefollowingSicav:Unigestion,CaamActionsEurope (untilJune2003), Legal managerofFimatSNC S.p.A., UtetS.p.A. Investama (Indonesia). SA Espagne,Wadia BSNIndiaLimited,Sofina,Quicksilver, Ona,CommissionerdeP.T-Titra LTD,Associated BiscuitsInternational Scottish&NewcastlePLC(untilNovember27,2003),Danone Giovanni AgnellieC.Sapaz,Toro Assicurazioni corporate governance I 99

q CORPORATE GOVERNANCE REPORT OF THE CHAIRMAN OF THE SUPERVISORY BOARD TO THE ANNUAL SHAREHOLDERS’ MEETING on the preparation and organization of Supervisory Board meetings and internal control procedures (report prepared in application of article L. 225-68 of the French Commercial Code)

PREPARATION AND ORGANIZATION OF SUPERVISORY The Compensation and Nominations Committee also met three BOARD MEETINGS times in 2003. In accordance with its terms of reference, as defined The preparation and organization of Supervisory Board meetings in its charter and in the Supervisory Board’s rules, during its are governed by the laws and regulations applicable to companies meetings the Committee formulated proposals to the Supervisory with a two-tier management structure (Supervisory Board and Board concerning the compensation awarded to the Chairman Management Board), the Company’s bylaws, the formal and members of the Management Board. It also reviewed the Supervisory Board rules, and the charters of the two committees terms of the January 3, 2003 stock option plan, and considered of the Board – the Audit Committee and the Compensation and issues related to the membership of the Supervisory Board. Nominations Committee. The attendance rate at Compensation and Nominations Committee meetings was close to 100%. The Accor Supervisory Board met six times in 2003. In accordance with the Board’s rules, the proposed dates of these meetings were sent to its members before October 31, 2002. The agenda of each INTERNAL CONTROL PROCEDURES meeting was sent to all the members by mail, generally around ten days before the meeting date. In the period between two meetings, members were kept regularly informed of significant Internal control objectives events and transactions involving the Company and were sent Internal control is a process implemented by the Management copies of all press releases published by the Company. Board, executives and employees to provide reasonable assurance Each meeting lasted three hours on average and the average that the following objectives are fulfilled: attendance rate was 75%. – Execution and optimization of transactions. In addition to fulfilling the duties attributed to it by law or in the – Production of reliable financial information. Company’s bylaws, the Supervisory Board was informed by the – Compliance with the applicable laws and regulations. Chairman and members of the Management Board and, in some One of the aims of the internal control system is to anticipate and cases, by the senior executives concerned, of the many significant control the risks arising in the course of the Company’s business, business achievements and projects. as well as the risk of accounting errors or fraud and of other errors. However, no control system can provide absolute assurance that The Audit Committee met three times in 2003, in each case at these risks have been completely eliminated. least two days before the corresponding Supervisory Board This report has been prepared mainly on the basis of information meeting. In accordance with its terms of reference, as defined in provided to the Audit Committee to prepare the Supervisory Board its charter and in the Supervisory Board’s rules, during two of meetings. The Audit Committee’s procedures are described below. these meetings the Committee prepared the Supervisory Board’s review of the annual and interim financial statements approved by the Management Board. The third meeting was devoted to Summary description of internal control procedures reviewing the internal control system, including the methods used Overall organization of the internal control system to identify risks, the Internal Audit department’s organizational Internal control procedures fall within the general framework of principles and operating procedures, as well as to discussing the the policy drawn up by the Management Board and are department’s report on the internal audits performed during the implemented under the direct responsibility of the Chief Executive year. Meetings of the Audit Committee are also attended by the Officers and Chief Financial Officers of the operating divisions and Chairman and Vice-Chairman of the Management Board, the Chief corporate functions. They are regularly reviewed to ensure that Financial Officer who acts as Committee secretary, the external they adequately address the specific risks incurred by each activity auditors and, where necessary, the internal auditors. and are cost effective.

100 I corporate governance Financial Officers ofthemaindivisions. V Audit, theChiefExecutiveOfficers ofthedivisions,Executive Audit,theHeadofGroup InformationSystemsInternal Internal of theManagementBoard, theChiefFinancialOfficer, theHeadof Chairman oftheManagementBoard andcomprisestheChairman ControlThe Group Committee ischaired Internal bytheVice- Control• Group Committee Internal being present. the ChairmanorVice-Chairman oftheManagementBoard Controlmembers oftheGroup Committee,withorwithout Internal Officer. TheAudit Committeemayalsomakeenquiriesofthe presented totheAuditCommittee bytheGroup ChiefFinancial A report Control ontheworkofGroup Committee is Internal control auditors. systemare alsoattendedbytheexternal Audit Committeemeetingsheldtoreview theGroup’s internal key incomestatementitemsandthechoiceofaccountingoptions. Board andtheChiefFinancial Officer. Thepresentation coversthe attended bytheChairmanandVice-Chairman oftheManagement statements totheAuditCommitteeinmeetingsthatare also auditorspresent theirconclusionsonthefinancial The external Management Board incharge ofFinancebeingpresent. Chairman oftheManagementBoard ortheVice-Chairman ofthe r The AuditCommitteecanmakeenquiriesofthemainpersons Interlocutors andsourcesofinformation of thetypesissuesdiscussedandoptionsselected. of awrittenreport totheSupervisory Board whichincludesdetails executives ofthecompany. Thiscommunicationtakestheform meetings, andtheanswersprovided bytheManagementBoard or the mainquestionsraisedorobservationsmadeduringits r the SupervisoryBoard onallmaterialissueswhichmayneedtobe and control functions,theAuditCommitteereports regularly to To auditsperformedduringtheyear.internal Auditdepartmentandthedepartment’sInternal report onthe identify risks,theorganizational principlesandprocedures ofthe control system.Thisreviewinternal coversthemethodsusedto The AuditCommitteeisresponsible forreviewing theGroup’s Review oftheinternalcontrolsystem its review oftheGroup’s control system. internal statements oftheCompanyandGroup andtheconclusionsof thefinancial to theSupervisoryBoard itsobservationsconcerning charter approved bytheSupervisoryBoard. TheCommitteereports The termsofreference oftheAuditCommitteeare setoutina • TheAuditCommittee control areinternal asfollows: The mainstructures responsible foroverseeingthesystemof esolved orcallforaspecificdecision.ItalsoinformstheBoard of esponsible forpreparing theaccounts,withorwithout ice-Presidents responsible corporatefunctions,andtheChief

facilitate theexercise, bytheSupervisoryBoard, ofitsoversight month. Executive Vice-President, CorporateFinance.Itmeets oncea the ExecutiveVice-President, RealEstateFinancingandthe the ExecutiveVice-President, HotelDevelopmentandStrategy, The InvestmentsCommitteecomprisestheChiefFinancialOfficer, Management Board. Committee makesarecommendation totheVice-Chairman ofthe Management Board. Based on theresults oftheseanalyses,the r for expansioncapitalexpenditure, byanalyzingprojects The InvestmentsCommitteeintervenesintheauthorizationprocess • InvestmentsCommittee experts. andexternal concerned theheadsofcorporatefunctions – depending onthetopics – necessary, byworkgroups madeupoflinemanagersand The Committeemeetstwiceayearandisassisted,where operating divisionsandcorporatefunctions. Europe-Africa-Middle Eastregion, andrepresentatives ofthemain Management Board responsible fortheHotelbusinessin Chairman oftheManagementBoard, thememberof The RiskPrevention Committee comprisestheChairmanandVice- – Organize thedistributionandimplementationwithinGroup – – Draw upriskprevention actionplans. Determine themainlinesofglobalsecuritypolicy,– including – Regularly identifythemainsecurityandsafetyrisks. The Group hassetupaRiskPrevention Committeeto: • RiskPrevention Committee ControlThe Group Committeemeetsonceortwiceayear. Internal – Auditfunction,intermsof Oversee theactivitiesofInternal – Track control organization. changesininternal Review thesignificantauditissuesforcurrent– year, foreach – Validate auditprogram. theannualinternal auditfunction.Itsresponsibilities areof theinternal to: ControlThe Group Committee guaranteestheindependence Internal epresenting amountsinexcess ofacertainthreshold setbythe of thecore principlesofthe security policy. circumstances. Decide anyemergency measures madenecessarybythe the applicablestandards andprocedures. r audit efficiency/optimization andtheadequacyoffunction’s audited entity. of theauditedareas, andapprove theactionplansfor each esources. corporate governance I 101

q CORPORATE GOVERNANCE • Group Finance As of December 31, 2003, Group Internal Audit had a staff of 23 The Group Finance function, which reports directly to the Vice- auditors, Group Information Systems Internal Audit had 5 auditors Chairman of the Management Board, is responsible for and the local internal audit departments in the divisions had a total implementing the Group’s financial policy, including by circulating of 33 auditors. to the divisions the accounting principles and standards used to • The local internal audit departments in the divisions prepare the consolidated financial statements. It is organized The local internal audit departments set up in the main divisions around several departments, as follows: report to their division’s Chief Financial Officer and have a dotted- – Corporate Finance, responsible for Group investments and line reporting relationship with Group Internal Audit. divestments. These departments perform internal audits, alone or jointly with – Group Consolidation and Information Systems, responsible for Group Internal Audit, based on the program approved by their producing the consolidated financial statements and assisting the division’s Internal Control Committee. They also provide ongoing divisions in managing their accounting and financial information assistance to staff and line departments in managing and systems. monitoring internal control issues within the division’s operating – Management Accounting, responsible for monthly reporting, units. forecasts, budgets and business plans. In accordance with ethical principles, the local internal auditors – Tax, responsible for managing the Group’s tax affairs. do not audit headquarters or cross-functional departments, due to – Treasury, responsible for managing the cash pool and circulating possible conflicts of interest arising from the fact that the auditors specific internal control standards to the divisions. work in the divisions. – Internal Audit and Information Systems Internal Audit. Reports on the work of the internal audit departments are also Group Finance maintains regular contact with the external auditors, presented to the Group Internal Control Committee. who audit the financial statements of the Company and the Group in accordance with legal and regulatory requirements. • Divisional Internal Control Committees Local Internal Control Committees have been set up in the main • Group Internal Audit divisions. Each committee is chaired by the division’s Chief Group Internal Audit reports directly to the Chief Financial Officer Executive Officer and comprises members of the operating units and has a dotted-line reporting relationship with the Group Internal and Finance Department, as well as a representative of Group Control Committee. As the cornerstone of the internal audit system, Internal Audit. The Committees meet at least once a year to draw it is responsible for contributing to the development of internal up the work program for the local internal audit departments – control tools and standards, and for performing internal audits where appropriate, based on the instructions issued by the Group based on the annual audit program approved by the Group Internal Internal Control Committee –, review the reports on the internal Control Committee. audits performed during the period and review the action taken Internal audit reports, including details of the corrective action to implement recommendations made following previous audits. planned by the audited entity in response to the internal auditors’ recommendations, are issued to the entity’s Chief Executive Officer Internal control standards and Chief Financial Officer. Formal descriptions have been drawn up of internal control Group Internal Audit coordinates its audit plans with the statutory principles and the procedures followed by the main structures audit work performed by the external auditors. It is also responsible involved in managing the internal control system, the composition for coordinating the activities of the local internal audit departments of these structures and the ways in which they interact. The main within the divisions. documents are as follows: Group Internal Audit has direct ties with the local internal audit • Audit Committee Charter departments. This helps to ensure that these departments comply The Audit Committee Charter, which has been approved by the with the fundamental principle of independence and follow the Supervisory Board, describes the Committee’s terms of reference, standards of the internal audit profession, as well as the methods its composition, the procedure to be followed to appoint members recommended by the Group. These ties also guarantee that the and its rules of procedure. local internal audit departments are given adequate resources to • Internal Audit Charter fulfill their objectives. The Internal Audit Charter has been approved by the Chairman and Vice-Chairman of the Management Board, the Chief Financial Officer, the General Secretary and the Head of Internal Audit. The Charter has also been formally validated by the Chief Executive Officers and Chief Financial Officers of the main divisions.

102 I corporate governance to staff training. control andcontributing of trackingchangesinthelevelinternal implementation ofeffective controls, aswellproviding ameans control standards. Theself-assessmentsalsofacilitatethe operating unitsandrepresent anaturalextensionofexistinginternal casinos. Theycontributefullytotheprocess ofmanagingthe majority ofhoteloperatingunits,AccorServicessubsidiariesand procedures. Theseprocedures havenowbeenrolled outtothe control self-assessment drawing up,issuingandmonitoringinternal In recent years,theGroup hasplacedconsiderableemphasison control self-assessments • Internal control proceduresmain internal are asfollows: control systemsmustbebasedonGroupinternal standards. The managers andChiefFinancialOfficers ineachdivision.Inallcases, procedures represent akeyresponsibility ofoperatingunit authority, control theimplementationandmonitoringofinternal Under theManagementBoard’s policyregarding delegationsof in placebytheCompany control proceduresSummary informationaboutinternal put control risksofeachbusiness. an assessmentofthespecificinternal establish theprocedures recommended bytheGroup, basedon businesses. Thepurposeofthesemanualsistostructure andfirmly procedureInternal manualshavebeenproduced forthemain procedure• Internal manuals and canbeaccessedbyallmembersofstaff. The manual,whichisupdatedregularly, isavailableonintranet expenditures, therole andorganization ofcashpooling systems. the holdingofpaymentinstrumentsandapproval of management procedures, theprinciplestobefollowedconcerning Lastly, itincludestheTreasury Charterwhichdescribescash specific issuesrelated totheinvestmentapproval procedure. principles, accountingstandards andpolicies.Italsoaddresses accounts, aswelltheGroup accountingplans,consolidation manual describestheclosingprocess forthemonthlymanagement Issued toallGroup FinanceDepartments,thefinancereference • Financereference manual departments. audit Audit tocoordinate theactivitiesoflocalinternal Lastly, itdescribestheprocedure tobefollowedbyGroup Internal r and rulesofprocedure Control Committeeand oftheInternal and otherbodies.TheCharteralsodescribestherole, composition the Group, basedontheprofessional standards issuedbyIFACI auditactivitieswithin this end,itdefinestheframeworkforinternal audits.Tomethods usedtocommunicatetheresults ofinternal functional viewofresources andmethodologies,aswellofthe AuditCharteraimstoprovide aGroupThe Internal levelcross- epresents anaturaloffshoot from theAuditCommitteeCharter. Board’s review. r Officer priortotheirapproval bytheManagementBoard andtheir Chairman oftheManagementBoard andtheGroup ChiefFinancial The consolidatedfinancialstatementsare reviewed bytheVice- issues identifiedduringthereview. and policies,report totheGroup ChiefFinancialOfficer any application bythesubsidiariesofGroup accountingstandards AuditalsoreviewsGroup from Internal timetotheproper transmitted bythesubsidiariesincludedinscopeoftheiraudit. auditorsreview theconsolidationpackages statements, theexternal In connectionwiththeirauditoftheconsolidatedfinancial standards andpolicies. ofreporting dataanditsconformitywithGroupfairness accounting r their consolidationpackagesandare required tomakeformal The subsidiariesare responsible fortheinformationcontainedin of theconsolidationpackagesisdeterminedbyGroup. Chief ExecutiveOfficers and ChiefFinancialOfficers. Theformat Department basedoninformationreported bythesubsidiaries’ The consolidatedfinancialstatementsare prepared bytheFinance • Consolidationprocess efficiency ofthevariousorganizations. r Board withadetailedanalysis ofchangesinfinancialandoperating The reporting procedure isdesignedtoprovide the Management analyzable according toboth formandsubstance. Group. Allreporting datasubmittedbythedivisionsmustbe the maincomponentsofincome,informatprescribed bythe packages comprisingananalysisofkeybusinessindicatorsand r procedure specifiedinthefinancereference manual.Theprocedure Management Accountingisresponsible foroverseeingthereporting • Reportingprocedure established asimilarauthorizationprocedure fordisposals. staff managers,inastandard format.TheManagementBoard has formal authorizationstobeobtainedfrom theappropriate lineand oninvestmentcriteria.Theprocedurestrategy andreturn requires expenditure projects, toensure thattheycomplywithGroup A procedure hasbeensetupforthepriorauthorization of capital disposals • Authorizationprocess forexpansioncapitalexpenditure and where auditors. appropriate withtheassistanceofinternal assessment dataare periodicallycentralizedatDivisionlevel, unit manager’s control. Self- assessmentofthequalityinternal analyzing thesegaps,itispossibletoevaluatethequalityof control. auditors’assessmentofthelevelinternal By internal rating system,ofthegapbetweenself-assessmentand has beendeployedincludeaquantitativemeasurement, viaa auditplansforunitswhere theself-assessmentsystem Internal esults, tosupportresource allocationdecisionsandmeasure the eview bytheAuditCommitteeinpreparation fortheSupervisory epresentations totheGroup ChiefFinancialOfficer aboutthe equires submission,bythe divisions,ofmonthlyreporting corporate governance I 103

q CORPORATE GOVERNANCE AUDITORS’ REPORT prepared in accordance with the last paragraph of article L. 225-235 of the Code de Commerce (French Commercial Code), on the report of the Chairman of the Supervisory Board of Accor on internal control procedures related to the preparation and processing of accounting and financial information YEAR ENDED DECEMBER 31, 2003

To the shareholders, Our responsibility is to report to you our comments on the information and representations contained in the Chairman’s report In our capacity as Statutory Auditors of Accor and in accordance concerning the internal control procedures related to the preparation with the requirements of the last paragraph of article L. 225-235 and processing of accounting and financial information. of the Code de Commerce (French Commercial Code), we present below our report on the report prepared by the Chairman of the In accordance with the professional guidelines applicable in France, Accor Supervisory Board in application of article L. 225-68 of the we have examined the objectives and general organization of the Code de Commerce for the year ended December 31, 2003. Company’s internal control system environment and the internal control procedures related to the preparation and processing of Under the responsibility of the Supervisory Board, the Company’s accounting and financial information, as described in the management is required to define and implement adequate and Chairman’s report. efficient internal control procedures. In his report, the Chairman of the Supervisory Board is required to comment on the conditions Based on procedures performed, we have no matters to report applicable for the preparation and organization of the work carried concerning the description of the Company’s internal control out by the Supervisory Board and the internal control procedures procedures related to the preparation and processing of accounting implemented within the Company. and financial information, as contained in the report of the Chairman of the Supervisory Board prepared in accordance with the last paragraph of article L. 225-68 of the Code de Commerce.

Neuilly, April 8, 2004

Barbier Frinault & Autres Deloitte Touche Tohmatsu Audit Ernst & Young

Christian Chochon Alain Pons

This is a free translation into English of the original auditors' report signed and issued in the French language and is provided solely for the convenience of English speaking readers.

104 I corporate governance • Out oftheremaining balance,50%isshared equallyamongall • Members ofeachthetwoBoard Committeesreceive afixed Board onthefollowingbasis: The totalfeeisallocatedamongthemembersofSupervisory been changedsince.Thefeeswere paidinJune2003. € T of theSupervisoryBoard Directors’ feespaidto members schemes opentootherseniorexecutivesoftheGroup. Management Board participate inthesupplementarypension The ChairmanoftheSupervisoryBoard andthemembersof amount equalto100%oftheindividual’s fixedcompensation. compensation andthetotalvariableiscappedatan objectives maynotexceed80%oftheindividual’s fixed Management Board. Thevariable compensationbasedonpersonal achievement ofpersonalobjectivessetbytheChairman pershare,the amountandgrowth andonthe in earnings paid dependsonAccor’s financialperformance,asreflected in For theothermembersofManagementBoard, theamount decrease inEPS,judgedthe prevailing businessenvironment. pershare fortheyear,on earnings aswelltheincrease or Chairman oftheManagementBoard, thevariableportiondepends of theCompensationandNominationsCommittee.For variable portion,alsosetannuallybasedontherecommendations This compensationcomprisesafixedportion,setannually, anda companies, performedbyanindependentfirmofconsultants. of compensationpracticesamongmajorFrench andEuropean Committee, asformulatedafterreviewing theresults of asurvey on therecommendations oftheCompensationandNominations Management Board isdeterminedbytheSupervisoryBoard based Compensation paidtotheChairmanandmembersof compensation. of theSupervisoryBoard doesnotreceive anyvariable of theCompensationandNominationsCommittee.TheChairman annually bytheSupervisoryBoard basedontherecommendations addition tothedirectors’ feespaidbyAccorSA,isdetermined Compensation paidtotheChairmanofSupervisoryBoard, in Management compensationpolicy MANAGEMENT otal directors’ feespaidbyAccor SAwere setbyshareholders at 276,000 attheAnnualMeetingofMay29,2001andhavenot prorata toeachmember’s attendancerecord atBoard meetings. the membersofSupervisory Board and50%isallocated amount forservingontheseCommittees. COMPENSATION Maurice Simond Jérôme Seydoux Franck Riboud IFIL Renaud d’Elissagaray Isabelle Bouillot BNP-Paribas Étienne Davignon(Vice-Chairman) Gérard Pélisson(Chairman) Supervisory Board André Martinez Paul Dubrule (Deputy Vice-Chairman) John DuMonceau Benjamin Cohen(Vice-Chairman) Jean-Marc Espalioux(Chairman) Management Board by theCompanyandvariousotherGroup entitiesisasfollows: The totalcompensationandbenefitspaidtodirectors ofAccorSA Directors’ compensation amounts paidduring2003. the ChairmanandmembersofSupervisoryBoard represent the compensation paidinrespect of2003.Theamountsshownfor Management Board correspond tothefixedand variable The amountsshownfortheChairmanandmembersof (2 (1) Compensation paidtoPaulDubruleinrespect to2002tookintoaccounta Société Générale ) period. temporary reduction, athisrequest, inhisprofessional activitiesduringthe January 3,2003. André MartinezbecameamemberoftheAccorManagementBoard on (1) (2) corporate governance € € 1,018,557 1,606,827 € € € € € € € € € € € € 101,928 856,600 922,734 712,439 21,963 26,637 14,591 16,434 30,323 26,637 16,434 21,963 022003 2002 – € € € 1,030,716 1,531,264 1,021,159 € € € € € € € € € € € € 851,464 913,819 724,464 I 80,743 21,748 30,108 19,573 17,398 32,282 32,282 21,748 23,922 105

q CORPORATE GOVERNANCE DIRECTORS’ AND EMPLOYEES’ INTERESTS

Stock options The number of options granted to Management Board members, Group officers, executives and middle-level line managers are if any, is decided by the Supervisory Board based on the periodically granted options to purchase new shares of Accor stock. recommendation of the Compensation and Nominations Committee. These grants are not made systematically to a given category of The restricted plan launched in 2003 mainly concerned newly hired employees, but are designed to reward personal performance, or promoted senior executives or members of middle management. measured in terms of the results obtained or individual achievements. Stock options were granted to 67 individuals. The exercise price Options generally have an eight-year life. They may be subject to a of €31.83 corresponds to the average opening Accor share price vesting period or to restrictions on the sale of the shares acquired over the 20 trading days preceding the date of grant. during a certain period, depending on applicable tax and labor laws.

Stock Options Granted to Employees and/or Corporate Officers at December 31, 2003

Plan Number of options granted Total Exercisable Option Exercise Number Number of shares Outstanding Date of Total O/w to O/w to number from expiry price of options issued at December 31, 2003 options Management Management top 10 of grantees date (in €) exercised Total O/w to O/w to at December Board Board employee in 2003 Management top 10 31, 2003 Meeting Members grantees Board employee Members grantees

Options to suscribe for new shares issued under Accor stock option plans

01/07/1997 1,000,000 550,000 280,000 25 01/07/99 01/07/05 15.46 0 915,000 550,000 225,000 85,000

01/07/1998 1,378,950 395,000 215,000 228 01/07/03 01/07/06 32.47 1,000 26,000 0 0 1,352,950

01/06/1999 581,525 0 535,000 639 01/06/04 01/06/07 33.95 0 1,000 0 0 580,525

03/30/2000 690,125 0 98,900 809 03/30/05 03/30/08 37.00 0 0 690,125

01/04/2001 1,957,000 650,000 (1) 575,000 32 01/04/04 01/04/09 40.58 0 0 1,957,000

01/08/2002 3,438,840 435,000 290,000 2,032 01/08/05 01/08/10 37.77 0 0 3,438,840 01/03/2003 148,900 30,000 96,000 67 01/04/06 01/03/11 31.83 0 0 148,900 Sub-total options 9,195,340 8,253,340 Stock savings warrants (BEA) program

12/22/2000 757,322 15,725 12/22/03 12/22/07 43.40 0 0 757,322

07/12/2002 104,361 3,890 07/12/05 07/12/09 39.10 0 0 104,361 Sub-total BEA 861,683 0 861,683

Total 10,057,023 9,115,023 (2)

(1) In addition to these 650,000 unrestricted options, in January 2001, the members of the Management Board were awarded 320,000 restricted options. At the start of the exercise period, the Supervisory Board was to determine whether the vesting conditions for these restricted options had been met, based on a report prepared by the Compensation and Nominations Committee. A certain proportion of the restricted options granted to the Chairman of the Management Board are exercisable only if the Accor share price outperformed the CAC 40 index over the period 2001-2004. The right to exercise the remaining options depended on Accor’s share performance compared with that of the Group’s main international competitors. The vesting conditions applicable to restricted options granted to the other members of the Management Board were based on Accor’s share performance, and also on the results of the businesses that report to each grantee. After the 2003 year- end, the Supervisory Board compared actual performance with the objectives governing the exercise of the options and determined that 245,000 of the restricted options (out of a potential total of 320,000) could in fact be exercised. (2) Representing 4.57% of Accor capital stock at December 31, 2003.

106 I corporate governance fteMngmn or oe––– – – – 01/03/2011 € 01/03/2011 31.83 Profit-shares paidinrespect ofthelastfouryearswere asfollows: The specialprofit-sharing reserve for2003amountsto – – employee representatives atAccoranditsFrench subsidiaries. 31.83 A Group-level profit-sharing agreement hasbeennegotiatedwith Employee profit-sharing andincentivebonusplans 96,000 30,000 other thandirectors whoexercised thelargest numberofoptions None Options exercised in2003bythetenemployees other thandirectors whoreceived thelargest numberofoptions AndréMartinez Options grantedin2003tothetenemployees Stock optionsgrantedtothetenemployeesotherthandirectors whoreceived thelargestnumberofoptions of theManagementBoard Options exercised duringtheyearbymembers of theManagementBoard Options grantedduringtheyeartomembers Stock optionsgrantedtoandexercised bycorporateofficers during2003 – 2002and2003plans:AnnualMeetingofMay29,2001 – 1997to2001plans:AnnualMeetingofJanuary7, The stockoptionplanswere approved byshareholders asfollows: € 11 millionin1999, 12 millionin2002. € 12 millionin2000, € 9 millionin2001and ae ubro pin Price( Numberofoptions Names € 12 million. the aggregate, more than8%ofcapitalstock. may notbeexercisable forneworexistingshares representing, in Annual MeetingofMay20,2003,thenumberoutstandingoptions Under thetermsofauthorizationsapproved byshareholders atthe quantitative criteriathatvaryaccording totheplan. The methodusedtocalculateincentivebonusesisbasedon level ofAccorSA,itssubsidiariesandtheGroup’s variousfacilities. a large numberofincentivebonusplanshavebeensetupatthe Due totheGroup’s organization structure andcompensationpolicy, ubro pin Price( Number ofoptions corporate governance € € ) ) Expiry date Expiry date I 107

q CORPORATE GOVERNANCE FEES PAID TO THE AUDITORS

in € million Ernst & Young Deloitte Touche Tohmatsu Total

2003 2002 2003 2002 2003 2002 Audit services – Statutory and contractual audits 2.2 96% 2.1 90% 6.3 72% 6.8 72% 8.5 77% 8.9 76% – Other assignments 0.0 0% 0.1 6% 0.9 10% 1.3 14% 0.9 8% 1.4 12%

Sub-total 2.2 96% 2.2 96% 7.2 82% 8.1 86% 9.4 85% 10.3 88%

Other services – Legal and tax advice 0.1 4% 0.1 4% 1.6 18% 1.0 10% 1.7 15% 1.1 9% – IT consulting 0.0 0% 0.0 0% 0.0 0% 0.2 2% 0.0 0% 0.2 2% – Internal audit assistance 0.0 0% 0.0 0% 0.0 0% 0.0 0% 0.0 0% 0.0 0% – Other 0.0 0% 0.0 0% 0.0 0% 0.1 1% 0.0 0% 0.1 0%

Sub-total 0.1 4% 0.1 4% 1.6 18% 1.3 14% 1.7 15% 1.4 12%

TOTAL 2.3 100% 2.3 100% 8.8 100% 9.4 100% 11.1 100% 11.7 100%

108 I corporate governance Resolutions 113 110 Proposed Resolutions Presentation oftheResolutions resolutions I 109

q RESOLUTIONS PRESENTATION OF THE RESOLUTIONS

This report presents the texts of the resolutions to be submitted Dividends for the last three years were as follows: for shareholder approval at the Annual Meeting and explains their in € 2000 2001 2002 purpose. Dividend 1.00 1.050 1.050 Avoir fiscal tax credit 0.50 0.525 0.525 Annual Shareholders’ Meeting Total revenue 1.50 1.575 1.575 The purpose of the first resolution is to approve the 2003 financial statements of the Company. The fifth and sixth resolutions concern the ratification The purpose of the second resolution, submitted in application appointment/election of two new members of the Supervisory of the provisions of article L. 225-100, paragraph 3, of the Board. Commercial Code, is to approve the 2003 consolidated financial The purpose of the fifth resolution is to ratify the appointment statements. to the Supervisory Board of Gabriele Galateri di Genola to replace IFIL Finanziaria Di Partecipazioni SpA, following the latter’s The third resolution concerns regulated agreements governed resignation. Gabriele Galateri di Genola will hold office for the by article L. 225-86 of the Commercial Code, which were approved remainder of his predecessor’s term, expiring at the close of the by the Supervisory Board during 2003 and are described in the Annual Shareholders’ Meeting to be held to approve the 2006 Auditors’ Special Report. financial statements. He is Chairman of Mediabanca SpA, as well The purpose of the fourth resolution is to appropriate net as Vice-Chairman of Assicurazioni Generali SpA, and Director of income for the year and set the amount of the dividend. IFI SpA and Pirelli & C SpA. The dividend per share recommended by the Management Board The sixth resolution concerns the election to the Supervisory amounts to €1.05, unchanged from the previous year. Income Board of Francis Mayer, for a period of six years expiring at the available for distribution and the recommended appropriations close of the Annual Meeting to be held to approve the 2009 financial are as follows: statements. Francis Mayer is Chief Executive Officer of Caisse Income available for distribution: des Dépôts et Consignations, as well as Vice-Chairman and in € member of the Supervisory Board of Caisse Nationale des Caisses 2003 net income 178,461,773.22 d’Epargne and Director of Casino Guichard-Perrachon, Dexia and Veolia Environnement. plus: The seventh resolution is intended to give the Management – Retained earnings brought forward Board the necessary authorizations to trade in the Company’s from the prior year 608,180,748.45 shares. – Prior year dividends not paid out The Annual Meeting of May 20, 2003 authorized the Management on treasury stock 1,605,167.55 Board to trade in the Company’s shares in accordance with articles Total income available for distribution 788,247,689.22 L. 225-209 et seq. of the Commercial Code. The Management Board did not use this authorization in 2003, Recommended appropriations: with the result that the number of Accor shares directly held in – To dividends 209,222,527.50 treasury at December 31, 2003 was unchanged from the previous – To dividend withholding tax 59,000,000.00 year-end, i.e. 1,528,731 shares with a par value of €3. Shareholders are being asked to renew the authorization given to – To retained earnings 520,025,161.72 the Management Board to trade in the Company’s shares, subject The legal reserve already stands at the amount required by law to compliance with the laws and regulations applicable to this and, therefore, no appropriation will be made to this reserve out of type of transaction. Details of the proposed transactions are 2003 income. provided in the information memorandum approved by the Autorité The dividend per share will amount to €1.05, unchanged from the des Marchés Financiers (AMF) and published by the Company. 2002 dividend. It will be paid as of May 17, 2004 on the 199,259,550 The purposes of the share purchases and sales are described in shares carrying dividend rights as of January 1, 2003 (excluding the resolution submitted at the Annual Meeting and also in the treasury stock). information memorandum approved by the AMF, which is available for consultation on the Company’s web site, www.accor.com.

110 I resolutions transactions carriedoutundertheauthorization. The ManagementBoard willreport totheAnnualMeeting onthe a maximumtotalinvestmentof more than18millionshares undertheauthorization,representing sale priceat r or someoftheshares boughtbackpursuanttotheseventh The ManagementBoard isseekinganauthorizationtocancel by cancelingshares. given totheManagementBoard toreduce theCompany’s capital The purposeoftheeighthresolution istorenew theauthorization Extraordinary The maximumpurchase pricewillbesetat The authorizationisbeingsoughtforaperiodofeighteenmonths. to beissuedpursuant tothelawprotect therightsofexisting capped at The aggregate parvalueofshares issuedunderthisresolution is • • Stand-alone stockwarrants,withorwithout consideration. • Convertible bonds,bondswithstockwarrants,exchangeable • Common stock,withorwithoutstockwarrants. This authorizationmaybeusedtoissue: for existingshareholders. shares andshare equivalentswithpre-emptive subscriptionrights The shareholders. and according tothebest interests oftheCompanyandits markets, basedontheopportunitiesoffered bythefinancialmarkets private placementsinFrance,abroad and/oroninternational shareholders, orwithoutsuch rights,andthuseffect publicor equivalents withpre-emptive subscriptionrightsforexisting They willenabletheManagementBoard toissueshares andshare flexibility toactswiftlyimplementtheGroup’s financialstrategy. These authorizationswillgivetheManagementBoard thenecessary its shareholders. market conditionsandinthebestinterests oftheCompanyand 2003 meeting,toissueappropriate typesofsecurities,basedon the authorizationsgiventoManagementBoard attheMay20, In viewofthisissue,shareholders are askedtorenew, inadvance, or exchangeableforexistingshares. due January2008.Thebondsare convertiblefornewAccorshares 2003 tocarryouta The ManagementBoard usedthisauthorizationonOctober24, Code. provided forinarticleL.225-129 IIIparagraph2oftheCommercial the ManagementBoard toissueshares andshare equivalents,as At theAnnualMeetingofMay20,2003,shareholders authorized share equivalents. is toauthorizetheManagementBoard toissueshares and The purposeoftheninth,tenth,eleventhandtwelfthresolutions with thelaw. subject ofaspecialreport issuedbytheAuditorsinaccordance authorization isbeingsoughtforaperiodof18monthsandthe period maynotexceed10%ofthetotalshares outstanding.The esolution able, redeemable orotherwiseexercisable forshares. Any andallothertypesofdebtsecurities convertible,exchange- bonds andequitynotes. ninth resolution . Thenumberofshares canceledinanygiven24-month € € 200 million,notincludingthepar valueofanyshares 30. TheCompanywillnotbeauthorizedtopurchase Shareholders’ Meeting € authorizes theManagementBoard toissue 616,000,007 1.75%OCEANEbondissue € 900 million. € 50 andtheminimum all any issues. the priorapproval oftheSupervisoryBoard before carryingout of May20,2003.TheManagement Board willberequired toobtain r date oftheMeetingandwillsupersede theonegivenineleventh The authorizationwillbevalidfor aperiodof26monthsfrom the currency. authorization iscappedat The aggregate nominalvalueofdebtsecuritiesissuedunderthe Company willbesetoff againstthisceiling. for shares tendered toastock-for-stock offer madebythe at December31,2003.Anyshares issuedbyAccorinpayment new shares representing around 16.6%oftheCompany’s capital will becappedat The aggregate parvalueof shares issuedunderthisauthorization • • Shares issuedonexercise ofrightsattachedtoanysecurities • • Stand-alone stockwarrants,withorwithoutconsideration. • Convertible bonds,bondswithstockwarrants,exchangeable • Common stock,withorwithoutstockwarrants. This authorizationmaybeusedtoissue: to shareholders inaccordance withthelegalrequirements. in connectionwithanysuchissues,whichwillbemadeavailable Management Board andthe StatutoryAuditorswillissuereports bystrictrules,asrequiredwill begoverned bylaw. The The pricingandothertermsconditionsofanysuchissues Board basedonmarketpractices. during aperiodandontermstobedecidedbytheManagement opportunity tosubscribeforthesecuritiesonaprioritybasis, If theauthorizationisused,shareholders maybeoffered the for shareholders toexercise theirpre-emptive rights. to beinapositionoffer thesecuritiestoinvestorswithoutwaiting instruments. To beabletodoso,theManagementBoard needs can beplacedwithinvestorsinterested incertaintypesoffinancial markets inFranceandabroad, byswiftlymountingissuesthat financial opportunityarisinginrapidlychanginganddiverse The ManagementBoard wantstobeablereact quickly toany rights forexistingshareholders. shares andshare equivalentswithoutpre-emptive subscription The any issues. the priorapproval oftheSupervisoryBoard before carryingout of May20,2003.TheManagementBoard willberequired toobtain r date oftheMeetingandwillsupersedeonegivenintenth The authorizationwillbevalidforaperiodof26monthsfrom the currency. equity notes–iscappedat convertible bonds,bondswithwarrants,exchangeableor securities issuedundertheauthorization–whichmayinclude holders ofshare equivalents.Theaggregate nominalvalue ofdebt esolution oftheAnnualandExtraordinary Shareholders’ Meeting esolution oftheAnnualandExtraordinary Shareholders’ Meeting provided forinarticleL.225-148oftheCommercial Code. to Accorinconnectionwithastock-for-stock offer, onthebasis Shares tobeexchangedfor shares ofanothercompanytendered subsidiaries. issued byanyoftheCompany’s more than 50%-owned able, redeemable orotherwise exercisable forshares. Any andallothertypesofdebtsecuritiesconvertible,exchange- bonds andequitynotes. tenth resolution € 100 million,corresponding totheissuanceof authorizes theManagementBoard toissue € € 1 billionortheequivalentinforeign 2 billionortheequivalentinforeign resolutions I 111

q RESOLUTIONS The purpose of the eleventh resolution is to authorize the The operation is described in an information memorandum Management Board to issue shares to be paid up by capitalizing approved by the French stock exchange authorities (Autorité des retained earnings, income, additional paid-in capital or any other Marchés Financiers) on February 23, 2004, which is available for eligible amounts. The Management Board may use this consultation on the Accor website, www.accor.com. authorization in tandem with a share issue for cash carried out According to the provisions of the Act of February 19, 2001 (article pursuant to the ninth and tenth resolutions. The authorization may 29-1-1), whenever companies seek an authorization to issue shares, also be used to raise the par value of existing shares, rather than they must also submit to shareholders a resolution authorizing an issuing bonus shares. employee share issue. The aggregate amount by which the capital will be increased under The Management Board is therefore asking shareholders to vote this authorization is capped at €200 million, and the prior approval the thirteenth resolution renewing, on the same terms and for the of the Supervisory Board will be required before the authorization same amount, the authorization given at the Extraordinary Meeting is used. As for the previous two resolutions, the authorization is of May 20, 2003. This authorization will cover the same period of being sought for a period of 26 months and supersedes that given 26 months during which the Management Board will be authorized in the twelfth resolution of the Annual Shareholders’ Meeting of to issue shares and share equivalents under the ninth, tenth, May 20, 2003. eleventh and twelfth resolutions. The shares will be offered for subscription by employees through The twelfth resolution sets a cap of €300 million on the aggregate a Group employee stock ownership plan or directly in cases where par value of share issues carried out directly or on conversion, this is not possible. The total number of shares and share redemption, exchange or exercise of share equivalents, with or equivalents that may be issued under this authorization and any without pre-emptive subscription rights, pursuant to the ninth, similar authorizations given earlier will be limited to the equivalent tenth and eleventh resolutions, within the next 26 months. This of 2% of the Company’s capital on the date the issue is decided ceiling does not include the par value of any shares to be issued by the Management Board. to protect the rights of current holders of share equivalents, as As stipulated in article L. 443-5 of the Labor Code, the shares will required by law. be offered at a price not exceeding the average of the prices The thirteenth resolution authorizes the Management Board to quoted for Accor shares over the twenty trading days preceding issue shares and/or share equivalents to employees who are the date of the Management Board’s decision, or at a discount to members of an Accor Group employee stock ownership plan (“Plan this average price. The maximum discount that may be granted is d’Epargne d’Entreprise” or “Plan Partenarial d’Epargne Salariale set by law. Volontaire”). The Management Board will be required to seek the prior approval With the approval of the Supervisory Board, given on January 7, of the Supervisory Board before using this authorization. 2004, the Management Board decided to carry out an employee This authorization supersedes the one given at the Extraordinary share issue pursuant to the authorization given in the fourteenth Shareholders’ Meeting of May 20, 2003, except as regards issues resolution of the Extraordinary Meeting of May 20, 2003. The issue, already initiated under the May 20, 2003 authorization. to be carried out no later than July 31, 2004, will be capped at the equivalent of 0.35% of the Company’s capital at December 31, 2003. The pricing and other terms of the issue will be decided by the Management Board.

112 I resolutions in prioryears. and thetransactionscarriedoutunderagreements approved the Commercial Codeapproves theagreements referred totherein Report onregulated byarticleL.225-86of agreements governed The AnnualMeeting,havingconsidered theAuditors’Special Approval ofregulated agreements Third resolution 31, 2003,aspresented. the consolidatedfinancialstatementsforyearendedDecember Auditors’ report ontheconsolidated financialstatements,approves Management Board andtheSupervisoryBoard aswell as the The AnnualMeeting,havingconsidered thereports ofthe Approval ofthe2003financialstatementsGroup Second resolution Board duringtheyear. the financialstatementsandactiontakenbyManagement The AnnualMeetingalsoapproves thetransactionsreflected in presented. of theCompanyforyearendedDecember31,2003,as of theManagementBoard initsentirety andthefinancialstatements Auditors’ report onthefinancialstatements,approves the report Management Board andtheSupervisoryBoard aswellthe The AnnualMeeting,havingconsidered thereports ofthe Approval ofthe2003financialstatementsCompany First resolution voting rulesapplicabletoOrdinary Shareholders’ Meetings The followingresolutions are subjecttothequorumand majority Annual Shareholders’ Meeting AT PROPOSED RESOLUTIONS

THE COMBINEDANNUALANDEXTRAORDINARY MEETING TO BESUBMITTED in the yearinamountof: Management Board andresolves toappropriate netincomefor The AnnualMeetingapproves therecommendation ofthe Appropriation of2003netincome Fourth resolution iied10 .5 1.050 1.050 1.00 To Avoir fiscal Dividend in three yearswere asfollows: The AnnualMeetingnotesthatdividendspershare forthelast May 17,2004. the share, representing totalrevenue pershare of dividend rightsasofJanuary1,2003ishereby setat 788,247,689.22 The dividendpayableonthe199,259,550commonshares carrying As follows: for distribution Representing totalincomeavailable plus: € € a eeu .01551.575 1.575 1.50 tal revenue odvdns209,222,527.50 59,000,000.00 – To dividendwithholdingtax – To dividends ortie anns520,025,161.72 – To retained earnings – No appropriation tothelegalreserve, – Prior yeardividendsnotpaidout brought– forwardRetained earnings € r which already standsattheamount ntesr tc 1,605,167.55 on treasury stock rmtepirya 608,180,748.45 from theprioryear equired bylaw. 0.525 avoirfiscaltaxcredit. Thedividendwillbepaidasof a rdt05 .2 0.525 0.525 0.50 tax credit 0020 2002 2001 2000 resolutions € 1.575 including 178,461,773.22 € 1.05 per I 113

q RESOLUTIONS Fifth resolution • For allocation on exercise of stock options granted to employees and officers of the Company and/or the Group. Ratification of the appointment as member of the Supervisory • For allocation in settlement of amounts due under the employee Board of Gabriele Galateri di Genola profit-sharing plan. The Annual Meeting ratifies the decision of the Supervisory Board, • For remittance in payment or exchange for shares of another at its meeting on July 2, 2003, to appoint Gabriele Galateri di company, in connection with an acquisition or otherwise. Genola as member of the Supervisory Board to replace IFIL • For allocation on exercise of rights attached to securities Finanziaria Di Partecipazioni S.p.A, following the latter’s resignation. redeemable, convertible, exchangeable or otherwise exercisable Gabriele Galateri di Genola will hold office for the remainder of for shares of the Company. his predecessor’s term, expiring at the close of the Annual • To facilitate the unwinding of cross-shareholdings. Shareholders’ Meeting to be held to approve the 2006 financial The shares acquired under this authorization may be retained, statements. sold or transferred. They may also be cancelled under the authorization given in the eighth resolution. This authorization is given for a maximum period of eighteen Sixth resolution months. It cancels and replaces an earlier authorization given to the Management Board in the ninth resolution of the Annual Meeting Election as member of the Supervisory Board of Francis Mayer of May 20, 2003. The Annual Meeting elects Francis Meyer as member of the Full powers are given to the Management Board to act on this Supervisory Board for a period of six years expiring at the close of authorization. the Annual Meeting to be held to approve the 2009 financial statements. Extraordinary Shareholders’ Meeting The following resolutions are subject to the quorum and majority Seventh resolution voting rules applicable to Extraordinary Shareholders’ Meetings.

Authorization given to the Management Board to trade in the Company’s shares Eighth resolution The Annual Meeting, having considered the report of the Management Board and the information memorandum approved Authorization given to the Management Board to reduce the by the Autorité des Marchés Financiers, authorizes the Management capital by canceling shares Board, pursuant to article L. 225-209 of the Commercial Code, to The Extraordinary Meeting, having considered the report of the trade in the Company’s shares. Management Board and the Auditors’ special report, authorizes the The shares may be purchased, sold or transferred by any Management Board to: appropriate method on the market or over-the-counter, including • Cancel the shares bought back under the authorization given in through the sale or granting of put options or the use of any other the seventh resolution, provided that the number of shares derivative financial instrument traded on a regulated market or canceled in any twenty-four month period does not exceed 10% over-the-counter. of the capital, reduce the Company’s capital accordingly and The maximum purchase price is set at €50 and the minimum sale charge the difference between the purchase price of the canceled price at €30. shares and their par value against additional paid-in capital or In the case of a bonus share issue paid up by capitalizing reserves, reserves available for distribution. or a stock-split or reverse stock-split, the above prices per share • Effect the capital reduction, place on record the capital reduction will be adjusted based on the ratio between the number of shares or reductions resulting from the cancellation of shares under this issued and outstanding before and after the transaction. resolution, amend the bylaws to reflect the new capital and In application of article 179-1 of the decree of March 23, 1967 on generally carry out any necessary formalities. trading companies, the Annual Meeting sets at 18 million the This authorization is given for a maximum period of eighteen maximum number of shares that may be acquired under this months. It cancels and replaces the earlier authorization given to authorization, corresponding to a total investment of no more than the Management Board in the sixteenth resolution of the €900 million based on the maximum purchase price of €50 per Extraordinary Meeting of May 20, 2003. The authorization may be share authorized above. used by the Management Board subject to the prior approval of the Supervisory Board, in accordance with article 15 of the bylaws. Shares may be purchased by any method: • To optimize the management of the Company’s financial position and assets and liabilities. • To stabilize the Company’s share price. • For cancellation, including for the purpose of offsetting the shares issued or that may be issued on exercise of employee stock options or in connection with a share offer to employees who are members of an employee stock ownership plan.

114 I resolutions • • That warrants tosubscribefortheCompany’s shares maybe That shareholders• willhaveapre-emptive righttosubscribefor • • • To givetheManagementBoard thenecessarypowerstoissue (paragraph 3): accordance witharticleL.225-129oftheCommercial Code Management Board andtheAuditors’specialreport resolves, in The Extraordinary Meeting,havingconsidered thereport ofthe rights shares andshare equivalentswithpre-emptive subscription Authorization tobegiventheManagementBoard toissue Ninth resolution – – – Limit theamountofcapitalincrease tothesubscriptions order ofitschoice: may takeoneorotherofthefollowingcoursesaction,in pre-emptive rightsasdescribed above,theManagementBoard If theissueisnottakenupinfullbyshareholders exercising their the share equivalents. be issuedonconversion,exchange,redemption orexercise of shareholders’ pre-emptive righttosubscribefortheshares to That thisauthorizationwillautomaticallyentailthewaiverof holders ofexistingshares withoutconsideration. offered forsubscriptionontheabovebasisorallocatedamong Company’s capitaloftheshareholders concerned. shall alsobeexercisable pro ratatotheexistinginterest inthe the issueisoversubscribed,suchadditionalpre-emptive rights and/or share equivalentsnot takenupbyothershareholders. If shareholders apre-emptive righttosubscribeforanyshares holdings. Inaddition,theManagementBoard maygrant authorization, asprovided forbylaw, pro ratatotheirexisting the shares and/orshare equivalentsissuedunder this foreign currencies. this authorizationmaynotexceed That theaggregate nominalvalueofdebtsecuritiesissuedunder existing holdersofshare equivalents. shares tobeissuedpursuantthelawprotect therights of € r authorization, directly and/oronconversion,exchange, That theaggregate parvalueoftheshares issuedunder this market. the international r shares, stockwarrantsandsecuritiesconvertible,exchangeable, edeemable orotherwiseexercisable forshares, inFranceoron edemption orexercise ofshare equivalents,maynotexceed equivalents forsubscriptionbythepublic. equivalents amongshareholders. taken up. r Offer allorsomeofthe unsubscribedshares orshare Freely allocateallorsomeof theunsubscribedshares orshare 200 million.Thisceilingshallnotincludetheparvalueofany eceived provided thatatleast three-quarters oftheissueis € 2 billionortheequivalentin • • That theManagementBoard shallhavefullpowerstousethis r which thedebtsecuritiesare convertible,exchangeable, r and mayornotincludeacallpremium–the termsofearly securities, theredemption price–whichmaybefixedorvariable or unsubordinated debt,to set theinterest rate,thelifeof shall havefullpowerstodecidewhetherissuesubordinated In thecaseofissuedebtsecurities,ManagementBoard article 15ofthebylaws. the priorapproval oftheSupervisory Board, inaccordance with authorization maybeusedbytheManagementBoard subjectto of twenty-sixmonthsasfrom thedateofthisMeeting.The This authorizationisgiventotheManagementBoard foraperiod emptive subscriptionrights. authorizations toissueshares andshare equivalentswithpre- That thisauthorizationcancelsandreplaces allearlier amend thebylawstoreflect thenewcapital. increases resulting from theuseofthisauthorization,andto Board shallhavefullpowerstoplaceonrecord thecapital underwriting agreements related totheissues.TheManagement discretion. TheManagementBoard mayenterintoany and all premiums, aswellanyothercosts,attheManagementBoard’s out underthisauthorizationmaybecharged againsttherelated Any andallcostsincurred inconnectionwithanyissuescarried protected, inaccordance withtheapplicablelawsandregulations. that therightsofexistingholdersshare equivalentsare Management Board willsettherulestobeappliedensure the securitiesforaperiodnotexceedingthree months.The Management Board mayalsosuspendtherightsattachedto may besetretroactively–and thebuybackterms,ifapplicable. The date from whichthesecuritieswillcarrycouponrights–which price andothertermsofissue,theamounteach including theformandcharacteristicsofsecurities,issue Board shalldecideonthetimingandothertermsofissues, subject tocompliancewiththelaw. Accordingly, theManagement authorization andtodelegatesaidpowerstheChairman edeemable orotherwiseexercisable forshares oftheCompany. edemption dependingonmarketconditionsandthebasis resolutions I 115

q RESOLUTIONS Tenth resolution • That the Management Board may issue shares in payment for shares of another company tendered to a stock-for-stock offer Authorization to be given to the Management Board to issue made by the Company, within the limit set in paragraph 2 above shares and share equivalents without pre-emptive subscription and subject to compliance with the provisions of Article L. 225-148 rights of the Commercial Code. The Extraordinary Meeting, having considered the report of the • That the Management Board shall have full powers to use this Management Board and the Auditors’ special report, resolves, in authorization and to delegate said powers to the Chairman subject accordance with Article L. 225-129 (paragraph 3) of the Commercial to compliance with the law. Accordingly, the Management Board Code: shall decide on the timing and other terms of the issues, including • To give the Management Board the necessary powers to issue the form and characteristics of the securities, the issue price and shares and securities convertible, exchangeable, redeemable or other terms of issue, the amount of each issue, the date from otherwise exercisable for shares, in France or on the international which the securities will carry coupon rights–which may be set market, and to determine the timing and amounts of said issues retroactively–and the redemption terms, if applicable. The within the limits prescribed below. Management Board may also suspend the rights attached to the • That the aggregate par value of the shares issued under this securities for a period not exceeding three months. The authorization, directly and/or on conversion, exchange, Management Board will set the rules to be applied to ensure that redemption or exercise of share equivalents, may not exceed the rights of existing holders of share equivalents are protected, €100 million. in accordance with the applicable laws and regulations. Any and • That shares may be issued on exercise of rights attached to all costs incurred in connection with any issues carried out under securities issued by any entity in which the Company holds over this authorization may be charged against the related premiums, one half of the capital, directly or indirectly, that are convertible, as well as any other costs, at the Management Board’s discretion. exchangeable, redeemable or otherwise exercisable for the The Management Board may enter into any and all underwriting Company’s shares, subject to the latter’s approval. agreements related to the issues. The Management Board shall • That the aggregate nominal value of debt securities issued under have full powers to place on record the capital increases resulting this authorization may not exceed €1 billion or the equivalent in from the use of this authorization, and to amend the bylaws to foreign currencies. reflect the new capital. • To waive shareholders’ pre-emptive rights to subscribe for the In the case of issue of debt securities, the Management Board shall shares or share equivalents to be issued under this authorization. have full powers to decide whether to issue subordinated or The Management Board may, however, offer shareholders a unsubordinated debt, to set the interest rate, the life of the priority right to subscribe for all or part of the issue, within a securities, the redemption price–which may be fixed or variable period and on terms to be decided by the Board. This priority and may or may not include a call premium–the terms of early subscription right will not be transferable. redemption depending on market conditions and the basis on • That if the issue is not taken up in full by shareholders exercising which the debt securities are convertible, exchangeable, their pre-emptive rights as described above, the Management redeemable or otherwise exercisable for shares of the Company. Board may take one or other of the following courses of action, • That this authorization cancels and replaces the unused portion in the order of its choice: of the authorization given to the Management Board in the eleventh – Limit the amount of the capital increase to the subscriptions resolution of the Extraordinary Shareholders’ Meeting of May 20, received provided that at least three-quarters of the issue is 2003. taken up. This authorization is given to the Management Board for a period – Freely allocate all or some of the unsubscribed shares or share of twenty-six months as from the date of this Meeting. The equivalents among shareholders. authorization may be used by the Management Board subject to • That this authorization will automatically entail the waiver of the prior approval of the Supervisory Board, in accordance with shareholders’ pre-emptive rights to subscribe for the shares to be Article 15 of the bylaws. issued on conversion, exchange, redemption or exercise of the share equivalents. • That the amount received by the Company for each share issued under this authorization either directly or on conversion, exchange, redemption or exercise of share equivalents shall be at least equal to the average of the opening prices quoted for the Company’s shares over ten consecutive trading days selected from among the twenty trading days preceding the issue of the share equivalents, as adjusted for any differences in cum-dividend dates, provided that in the case of issue of stock warrants, the amount received by the Company when the warrants are subscribed will be taken into account in the calculation.

116 I resolutions • That theManagementBoard shallhavefullpowerstousethis That themaximumaggregate• amountbywhichthecapitalmay • Management Board, resolves: The Extraordinary Meeting,havingconsidered thereport ofthe additional paid-incapitalorothereligibleamounts shares income, tobepaidupbycapitalizingretained earnings, Authorization tobegiventheManagementBoard toissue Eleventh resolution – – – Board shallbeauthorizedto: subject tocompliancewiththelaw. Accordingly, theManagement authorization andtodelegatesaidpowerstheChairman € be increased underthisauthorizationmaynotexceed timing ofsuchissues. value ofexistingshares, aswelltodeterminetheamountand r share issueforcashcarriedoutundertheninthantenth capital orothereligibleamounts,includinginconjunctionwitha income,additionalpaid-in by capitalizingretained earnings, To esolution, andtoissuebonusshares and/orincrease thepar amend thebylawstoreflect thenewcapital. increase orincreases carriedoutunderthisauthorizationand out allactionsandformalitiesrequired toimplementthe capital or transactions,andgenerallydowhateverisnecessary, carry agreements topermittheexecution oftheplannedtransaction T account. whole numberofshares awarded tothemisrecorded intheir rights nolaterthan30daysfollowingthedateonwhich be sold,withtheproceeds of suchsaleattributedtoholdersof will benon-transferableandthatthecorresponding shares will 225-149oftheCommercial Code,rightstofractionsofshares L. Decide that,asanexceptiontotheprovisions ofarticle issuance costsandanyotheragainsttherelated premium. increase inparvaluewillbe effective, andtocharge theshare carry dividendandvotingrightsorthedateonwhich r the parvalueofexistingshares istobeincreased, setthe number ofnewshares tobe issuedortheamountbywhich decide theamountandtypesofitemstobecapitalized, Set thetermsandconditionsofauthorizedoperations, 200 million.

etrospective orfuture datefrom whichthenewshares will ake allnecessarymeasures andenterintoanyall give theManagementBoard fullpowerstoincrease thecapital • That this authorizationsupersedesallearlierauthorizationsto r to protect therightsofexisting holdersofshare equivalentsas shall notincludetheparvalueofanyadditionalshares tobeissued pursuant totheaboveauthorizations,provided thatsaidceiling conversion, exchange,redemption orexercise ofshare equivalents maximum aggregate parvalueofshares tobeissueddirectly oron tenth andeleventhresolutions, resolves tosetat Management Board andbyvirtueoftheadoptionninth, The Extraordinary Meeting,havingconsidered thereport ofthe equivalents Blanket ceilingontheauthorizationstoissueshares andshare Tw equired bylaw. article 15ofthebylaws. the priorapproval oftheSupervisoryBoard, inaccordance with authorization maybeusedbytheManagementBoard subjectto of twenty-sixmonthsasfrom thedateofthisMeeting.The This authorizationisgiventotheManagementBoard foraperiod additional paid-incapitalorothereligibleamounts. increase income, thecapitalbycapitalizingretained earnings, elfth resolution resolutions € 300 millionthe I 117

q RESOLUTIONS Thirteenth resolution • Gives full powers to the Management Board to: – Prepare the list of companies whose employees may be entitled Authorization to be given to the Management Board to issue to subscribe for the shares. shares and share equivalents to employees who are members – Decide that the shares may be acquired either through a of an Accor Group employee stock ownership plan (“Plan corporate mutual fund or directly, and to allow employees a d’Epargne d’Entreprise” or “Plan Partenarial d’Epargne specified period of time to pay up their shares. Salariale Volontaire”) – Set the terms and conditions of membership of the PEE or The Extraordinary Meeting, having considered the report of the PPESV employee stock ownership plan, as well as draw up or Management Board and the Statutory Auditors’ special report, amend the plan rules. and as provided for in articles L. 443-1 et seq. of the Labor Code – Set the opening and closing dates of the subscription period dealing with employee share ownership and article L. 225-138 of and the issue price of the shares. the Commercial Code: – Determine the number of new shares to be issued. • Gives the Management Board a twenty-six month authorization, – Place on record the capital increases. as from the date of this Meeting, to issue shares and share – Carry out any and all transactions and formalities, directly or equivalents to employees of the Company and French and foreign through a duly authorized representative. related companies within the meaning of Article L. 225-180 of the – Amend the Company’s bylaws to reflect the new capital and Commercial Code, who are members of an Accor Group generally, take all appropriate action and do whatever is employee stock ownership plan. necessary to comply with the applicable laws and regulations. • Authorizes the Management Board to grant shares or share The authorization may be used by the Management Board subject equivalents to employees without consideration, within the limits to the prior approval of the Supervisory Board, in accordance prescribed in Article L. 443-5 paragraph 4 of the Labor Code. with article 15 of the bylaws • Resolves that the total number of shares that may be issued This authorization supersedes the one given to the Management under this or any earlier authorization may not exceed the Board in the fourteenth resolution of the Extraordinary Meeting of equivalent of 2% of the Company’s capital on the date of the May 20, 2003, except as regards issues already initiated under the Management Board’s decision. said resolution. • Resolves that the new shares may not be issued at a price in excess of the average of the prices quoted for Accor shares over the twenty trading days preceding the date of the Management Fourteenth resolution Board’s decision setting the opening date of the subscription period, or at a discount to this average price which exceeds the Powers to carry out formalities maximum discount allowed by law, and that the characteristics The Annual Meeting gives full powers to the bearer of an original, of the share equivalents will be set by the Management Board in extract or copy of the minutes of this Meeting to carry out any accordance with the applicable regulations. and all filing and other formalities required by law. • Notes that these decisions automatically entail the waiver by shareholders of their pre-emptive rights to subscribe for the shares to be offered to employees for subscription.

118 I resolutions Information General 130 128 128 126 124 Responsible forthe“Reference Document” Investor Relations Dividends The MarketforAccorSecurities Ownership Structure 122 120 Information abouttheCompany’s Capital Information abouttheCompany general informationgeneral I 119

q GENERAL INFORMATION GENERAL INFORMATION

q INFORMATION ABOUT THE COMPANY • All civil, commercial, industrial and financial transactions, involving both securities and property, related to the purposes of the Company name Company and all similar or related purposes in France and other countries. Accor

Registered office Trade Register 2, rue de la Mare-Neuve - 91000 Évry France 602 036 444 RCS Évry Business Identification (APE) Code: 551A Primary business office Tour Maine-Montparnasse - 33, avenue du Maine – 75015 Paris Consultation of corporate documents

Corporate documents, including the by-laws, balance sheets, income Legal form statements, Management Board reports, auditors’ reports and the Joint stock company with a Management Board and a Supervisory annual accounts ledger, are available for consultation at Tour Maine- Board, as governed by applicable laws and regulations, in particular Montparnasse - 33, avenue du Maine - 75755 Paris Cedex 15 - France. articles L. 225-57 to L. 225-93 of the Commercial Code.

Fiscal year Governing law The Company’s fiscal year begins on January 1 and ends on The laws and regulations of France. December 31.

Term Appropriation of income The Company was incorporated on April 22, 1960 and will be dissolved on April 22, 2059 unless it is wound up in advance or its (article 24 of the by-laws) term is extended. Income available for distribution consists of net income for the year, less any losses from prior years and any other amounts to be credited to reserves pursuant to the law, plus any unappropriated retained Corporate purpose earnings brought forward from prior years. After approving the (article 3 of the by-laws) accounts for the year, the Annual Meeting may decide to appropriate The Company was established to engage in the following activities for all or part of the income available for distribution, if any, to the its own account, on behalf of third parties, or jointly with third parties: payment of a dividend. In the event of partial distribution, the Annual • The ownership, financing and management, directly, indirectly, Meeting may decide to appropriate the remaining income to one or within specified mandates, of restaurants, bars, hotels of any or more reserve accounts. Alternatively, the Annual Meeting may nature or category and, more generally, any establishment related decide to appropriate all of the income available for distribution to to food, lodging, tourism, leisure, and services. said reserve accounts. • The economic, financial, and technical review of projects and, generally, all services related to the development, organization and management of above-mentioned establishments, including all Annual Meetings actions related to their construction or the provision of any related Notice of meeting consulting services. • The review and provision of services intended to facilitate the (article 21 of the by-laws) supply of meals to employees in companies, institutions and Annual Meetings are called pursuant to applicable legislation, i.e. other organizations. by notice of meeting sent to registered shareholders and by • The creation of any new company and the acquisition of interests announcement in the Bulletin des Annonces Légales Obligatoires by any method in any company operating in any business. after prior approval by the Autorité des Marchés Financiers.

120 I general information Extraordinary Meetings. voting rightsare granted totheusufructuaryinAnnualand company allowfortheirexercise. Whenshares are heldinusufruct, double voting-rights,provided thattheby-lawsofacquiring r spouse ordirect parent donotresult inthelossofrightsor through inheritance,liquidationofmaritalassetsortransferstoa different holderlosetheirdoublevotingrights.However, transfer Registered shares transformedintobearer shares orsoldtoa double votingrights. shareholders enjoyingdouble votingrightswillsimilarlycarry paid-in capital,theresulting bonus shares distributedtoregistered increase through thecapitalizationofreserves, incomeoradditional years shallcarrydoublevotingrights.Intheeventofacapital shares registered inthenameofsameholderforatleasttwo The AnnualMeetingofJune28,1983decidedthatallfullypaid (article 22oftheby-laws) Double votingrights of quorumandmajorityexercise thepowersgrantedbylaw. Annual andExtraordinary Meetingsfulfillingtherelevant requirements the Vice-Chairman, ortheMeeting Secretary. minutes are certifiedbythe Chairman oftheSupervisoryBoard, maintained pursuanttothelaw. CopiesorexcerptsoftheMeeting who doesnotneedtobeashareholder. Alistofparticipantsis number ofvotingrights.TheBureau thusformednamesaSecretary, shareholders present attheMeetingandrepresenting thelargest The functionofScrutineertheMeetingisfulfilledbytwo elects itsownChairman. Supervisory Board mandatedbytheBoard. Otherwise,theMeeting the Vice-Chairman, orintheirabsence,amemberofthe Meetings are chaired bytheChairmanofSupervisory Board, share carriesonevote,exceptwhenotherwisedictatedbylaw. in accordance witharticle225-107oftheCommercial Code.Each Meetings, withintheconditionssetbylaw. Theymayvotebyproxy All shareholders havetherighttoattendorberepresented atAnnual (article 22oftheby-laws) Meeting organization shares, inaccordance withtheapplicableregulations. However, anyshareholder mayrecover thefree dispositionofthe or otherintermediaryattestingtotheirownershipofsaidshares. stock certificatesoracertificateissuedbytheirstockbroker, bank at leasttwodayspriortothedateofMeeting,theirbearer Meeting, orlodgeattheaddress specifiedinthenoticeofmeeting, kept bytheCompanyatleasttwodayspriortodateof must eitherhavetheirshareholdings recorded intheshare register be entitledtoattendorrepresented atMeetings,shareholders In accordance witharticle136ofthedecree ofMarch 23,1967,to (article 21oftheby-laws) Attendance andrepresentation egistered status.Themerger oftheCompanyhasnoimpacton for votingshares. convertible, exchangeable,redeemable, orotherwiseexercisable identification ofholdersvotingshares andanysecurities Company maymakeuseoflegalprocedures relative tothe following thedateatwhichnon-disclosure wasnotified.The threshold willbestrippedof voting rightsforaperiodoftwoyears least 3%ofthevotingrights,shares inexcessoftherelevant upon request ofoneorseveral shareholders togetherholdingat In thecaseoffailure tocomply withdisclosure requirements and (article 9oftheby-laws) Restrictions onvotingrights article L.233-14oftheCommercial Code. disclosures andthepenaltiesfornon-disclosure are regulated by or votingrightsheldthrough thefundsundermanagement.These made, pursuanttoarticle9oftheby-laws,forallCompanyshares case ofmutualfundmanagementcompanies,disclosure mustbe rights attachedtotheshares heldortothesesecurities.Inthe exercisable forshares oftheCompany, aswelltothevoting that are convertible,exchangeable,redeemable orotherwise Meeting ofDecember15,1999.Theyalsoapplytoanysecurities Annual MeetingofMay26,1987andmodifiedatthe disclosureRules concerning thresholds were firstapproved atthe must alsobedisclosed. increase of0.5%ordecrease of1%inthenumbershares held disclosure threshold wascrossed. Abovethis1%threshold, any to theheadoffice, withinfivetradingdaysofthedateonwhich Company, byregistered receipt letterwithreturn requested, sent Company’s capitalisrequired todisclosetheacquisition or indirectly acquires anumberofshares representing 1%ofthe Any shareholder, actingaloneorinconcertwithothers,thatdirectly (article 9oftheby-laws) Disclosure thresholds general informationgeneral I 121

q GENERAL INFORMATION q INFORMATION ABOUT THE COMPANY’S CAPITAL Accor did not use the authorization to trade in its own shares during the year ended December 31, 2003 or the post-balance sheet period Capital stock ended April 2, 2004. At December 31, 2003, the Company’s capital stock amounted to Authorized, unissued capital €597,778,650, divided into 199,259,550 common shares with a par value of €3.00, all fully paid-up and all in the same class. Shares Issue of shares and/or share equivalents may be held in either registered or bearer form. The Company avails Date of authorization: May 20, 2003 itself of legal procedures to identify its shareholders. Shares are Expiration date: July 20, 2005 freely transferable within legal and regulatory limits. The transfer of shares, regardless of price or terms, is made by account transfer, Nominal amount authorized: pursuant to regulations in force. – With pre-emptive subscription rights €200,000,000 – Without pre-emptive subscription rights €150,000,000 Amount used: – Authorization to trade in the Company’s shares

The Annual Shareholders’ Meeting of May 20, 2003 authorized Bonus share issue paid up by capitalizing reserves the Management Board to trade in the Company’s shares on the stock market for a period expiring at the next Annual Meeting, Date of authorization: May 20, 2003 called to approve the 2003 accounts. The information memorandum Expiration date: July 20, 2005 concerning this share buyback program was registered on April 22, Nominal amount authorized: €200,000,000 2003 with the Commission des Opérations de Bourse under visa Amount used: – no. 03-295. € Shares may not be purchased at a price of more than 60 per Convertible bonds share or sold at a price of less than €35 per share. The number of shares acquired and held in treasury may not exceed 14 million. Date of authorization: May 20, 2003 Shares may be purchased for the following purposes, by declining Expiration date: July 20, 2005 order of priority: Nominal amount authorized: €200,000,000 • To optimize the management of the Company’s financial position Amount used: – and assets and liabilities. • To stabilize the Company’s share price. The cumulative par value of shares issued under these authorizations • For cancellation, including for the purpose of offsetting the shares may not exceed €350 million. issued or that may be issued on exercise of employee stock options or in connection with a share offer to employees who Employee share ownership are members of an employee stock ownership plan. The first “Accor en Actions” employee share issue, open to Group • For allocation on exercise of stock options granted to employees employees in France, was launched in 1999. A total of 7,900 and officers of the Company and/or the Group. employees subscribed to the issue. • For allocation in settlement of amounts due under the employee In 2000, an international employee share issue was launched for profit-sharing plan. Group employees in a total of 23 countries. The information • For remittance in payment or exchange for shares of another memorandum covering the offer to employees in France was regis- company, in connection with an acquisition or otherwise. tered with the COB on October 16, 2000 under visa no. 00-1665. • For allocation on exercise of rights attached to securities The purpose of the issue was to offer a majority of employees redeemable, convertible, exchangeable or otherwise exercisable worldwide the opportunity to become Accor shareholders, by tailoring for shares of the Company. the plan rules to comply with legal and tax restrictions in each • To facilitate the unwinding of cross-shareholdings. country. A total of 16,000 employees participated in the operation. As of December 31, 2003, Accor held 1,528,731 of its own shares, In 2002, Accor carried out another international employee share which are recorded in financial assets in the Accor SA balance sheet issue, for Group employees in 25 countries. The information and as a reduction in shareholders’ equity in the consolidated balance memorandum covering the offer to employees in France was sheet. The main purpose of holding these shares is to anticipate registered with the COB on May 17, 2002 under visa no. 02-577. the dilution that will arise upon exercise of stock options. A total of 12,700 employees took part in the operation. As of December 31, 2003, 0.88% of the Company’s capital was The 3,956,965 Accor shares held by the CIWLT were sold during held by 22,853 employees through employee stock ownership plans. 2003 (see note 11 to the consolidated financial statements, page 61) A new international employee share issue is planned for May and in line with the policy of strengthening the consolidated financial June 2004, with a four-week subscription period. The issue will position. The shares were carried in the balance sheet of CIWLT be opened to employees in around twenty countries. In France, a and in the Accor Group consolidated balance sheet under preliminary information memorandum related to the issue was “Marketable securities”. registered with the Autorité des Marchés Financiers on February 23, 2004 under visa no. 04-118.

122 I general information 02Exercise ofstockoptionsat 2002 01Exercise ofstockoptionsat 2001 03Exercise ofstockoptionsat Note: There are nooptionstopurchase existingshares oftheCompany. Alloptionsoutstandingare topurchase newshares. 2003 542,114,985 8,850,993 (8,850,99) Conversionofshare capitalintoeuros 1999 Y Changes inshare capital • • Convertible bonds: Share equivalents 00Cneso f1946019 od 38099236095503685196,778,965 590,336,895 253,650,965 33,890,949 Conversionof1,964,6701991bonds 2000 a hne ncptl nrae(euto)NwcptlNewnumber Newcapital Increase (reduction) Changesincapital ear 31, 2003. shares representing 7.68%oftheCompany’s capitalatDecember January 1,2008,thiswouldresult intheissuanceof15,304,348 If allofthesebondswere tobeconvertedintonewshares before (15,304,348 bonds),ISINcodeFR0010026765: bonds,dueJanuary2008 October 20031.75%OCEANE 31, 2003. shares representing 5.14%oftheCompany’s capitalatDecember January 1,2005,thiswouldresult intheissuanceof10,246,272 If allofthesebondswere tobeconvertedintonewshares before shares), ISINcodeFR0000180192: bonds convertibleand/orexchangeableforneworexistingAccor bonds,dueJanuary2007(3,415,424 May 20021%OCEANE Accor holds1,528,731ofitsownshares. Five-for-one stock-split( Employee share issueat Exercise ofstockoptionsat Exercise ofstockoptionsat Employee share issueat Exercise ofstockoptionsat vrtels ieyas(in over thelastfiveyears amn fcnrbtdast ,7,4 9,5,0 5,4,4 37,096,396 556,445,946 294,258,604 8,271,045 36,265,659 543,984,891 13,991,347 1,869,906 Payment ofcontributedassets Employee share issueat Exercise ofstockoptionsat Exercise ofstockoptionsat Exercise ofstockoptionsat Conversion of108,3901991bonds Exercise ofstockoptionsat Exercise ofstockoptionsat Exercise ofstockoptionsat Exercise ofstockoptionsat € € € € 3 from 71 4,0 07026577560199,258,550 597,775,650 10,740,276 942,405 198,324,605 594,973,815 25,149,421 2,298,150 37.19 35.83 9 8,1 1742658149136,544,993 548,174,901 11,784,286 987,510 194 € € € € € € € € € € € € € 39 ,0 090568325198,944,415 596,833,245 198,943,415 198,893,415 30,950 596,830,245 596,680,245 623,000 3,000 1,359,850 150,000 258,000 33.95 15.46 18.81 32 9,3 ,5,8 9,2,4 198,807,415 198,674,605 596,422,245 596,023,815 1,358,988 4,360,416 398,430 1,050,000 13.23 15.46 40 ,2,0 ,6,1 4,8,9 36,479,159 36,370,859 36,300,859 547,187,391 545,562,891 544,512,891 8,562,311 4,360,416 2,101,441 1,624,500 1,050,000 528,000 94.06 77.29 74.70 24 ,0 940577860199,259,550 597,778,650 29,470 3,000 32.47 24 7503835526565197,558,555 197,546,055 592,675,665 197,489,555 592,638,165 368,395 197,324,555 592,468,665 893,390 591,973,665 2,055,625 37,500 169,500 5,582,790 495,000 1,636,770 32.47 18.81 15.46 13.23 € 15) a au Premium Par value at December31,2003. of 9,115,023shares representing 4.57%oftheCompany’s capital outstanding. Exercise ofalltheseoptionswouldleadtotheissuance As ofDecember31,2003,atotal9,115,023stockoptionswere Employee stockoptions There are noothershare equivalentsoutstanding. None. in thecapital Securities notcarryingrightstoashare € ) general informationgeneral (in € ) 185,481,982 of shares I 123

q GENERAL INFORMATION q OWNERSHIP STRUCTURE

Ownership structure as of December 31, 2003

Number of shares Number of % Capital % Voting rights voting rights Caisse des Dépôts et Consignations 8,976,435 8,976,435 4.5% 4.2% Co-Founders 7,346,368 14,191,220 3.7% 6.6% Société Générale 4,158,416 4,158,916 2.1% 1.9% BNP-Paribas 1,227,580 2,455,160 0.6% 1.2% Worms & Cie (IFIL) 1,270,500 2,479,808 0.6% 1.2% Other shareholders (1) 176,280,251 181,329,689 88.5% 84.9%

Total 199,259,550 213,591,228 100.0% 100.0%

(1) Including 1,528,731 shares directly held (treasury stock), which are stripped of voting rights. Source: Accor share register and Euroclear France

Shareholders at December 31, 2003 A Euroclear France survey of financial institutions holding at least The Company estimates that, on the basis of prior year figures, 200,000 shares and of shareholders holding more than 250 shares Accor has approximately 160,000 shareholders in all. as of December 31, 2003 identified 18,864 shareholders owning As of December 31, 2003, Accor’s ownership structure broke down an aggregate 92.95% of the Company’s capital. as follows:

ANALYSIS BY SHAREHOLDER CATEGORY AS OF DECEMBER 31, 2003

53.9 % International institutions o/w 21.3 % French institutions UK 16.8% Denmark 0.8% (o/w mutual funds: 15.4%) USA 16.0% Netherlands 0.7% Germany 5.3% Austria 0.6% Belgium 4.9% Sweden 0.3% Luxembourg 3.7% 0.3% 12.6 % Supervisory Board and Management Board Switzerland 2.3% Finland 0.3% Caisse des Dépôts et Consignations 4.5% Italy 1.3% Other 0.6% Co-Founders 3.7% Société Générale 2.1% Worms & Cie 0.6% 12.2 % Private shareholders BNP-Paribas 0.6% Others 0.3% Treasury stock 0.8%

Source: Accor share register and Euroclear France

Members of the Management Board together held 2,888,685 Accor At that date, Group employees (23,190 individuals) held 3,801,746 shares (representing 1.45% of the capital) and 5,400,725 voting shares and 6,793,895 voting rights – representing 1.91% of the capital rights (2.53% of the total) as of December 31, 2003. and 3.18% of the voting rights. Of the total, shares representing 0.88% of the capital and 1.47% of the voting rights were held through employee stock ownership plan (22,853 employees).

124 I general information N-aia ,2,8 .%12 ,2,8 .%12 ,2,8 .%1.2% 0.6% 1.9% 6.6% 1,227,580 84.9% 2.1% 3.7% 1.2% 88.5% 4,158,416 7,346,368 0.6% 176,280,251 84.4% 2.2% 6.9% 1,227,080 controls orisinapositionto control 88.3% Accor. 2.3% 3.7% 1.2% directly orindirectly andaloneorinconcertwithothershareholders, 175,896,787 85.9% To 4,570,890 7,445,368 0.6% 89.9% 4.2% structure duringthepastthree years. 1.8% 5.9% 1,227,080 178,764,297 Accor hasnotidentifiedanymaterialchangesinitsownership 4.5% 1.9% 3.2% 4.6% 8,976,435 3,773,177 6,407,995 Source: Accorshare register andEuroclear France-atDecember31 4.2% T 4.5% 4.8% Other shareholders 9,795,816 8,908,617 Wo 3.0% BNP-Paribas 4.9% 3.2% Société Générale 10,194,925 %Voting 6,343,226 Co-Founders 5.1% Caisse desDépôtsetConsignations 9,795,816 Numberof Putnam %Capital 10,194,925 Changes inownershipstructure overthepastthree years Putnam 203C0956 Number Consignations Group. Société GénéraleGroup and4%fortheCaissedesDépôtset Registered 203C0346 decreases ininterests aboveorbelowthe2%threshold forthe had crossed adisclosure threshold, exceptforincreases or AMF(ex-CMF) In 2003,noothershareholders notifiedtheCompanythatthey June 20,2003 February 27,2003 Disclosure date managers notifiedtheFrench stockexchangeauthorities During theyear, thefollowingregistered intermediaries orfund tl188345100 0.%192850100 0.%192950100 100.0% 100.0% 199,259,550 100.0% 100.0% 199,258,550 100.0% 100.0% 198,893,415 otal thebestofCompany’s knowledge,noindividualorcompany, m i II)2376012 .%1298806 .%1205006 1.2% 0.6% 1,270,500 1.1% 0.6% 1,209,808 2.2% 1.2% 2,377,640 rms &Cie(IFIL) r frnenme nemdayo fsae oigrgt rights votingrights ofshares intermediaryor eference number fsae aia ihso hrsCptlrgt fsae aia rights Capital ofshares rights Capital ofshares rights Capital of shares ubr%%Vtn Nme oig ubr% Voting Number % Voting Number % Voting Number fund manager 0120 2003 2002 2001 (Autorité No shareholder pactsare inforce. holds 1%ormore oftheshare capitalorvotingrights. directly orindirectly andaloneorinconcertwithothershareholders, To with disclosure threshold rules: des MarchésFinanciers) these shares represented 0.08%ofthecapital. material percentage ofthetotal capital.AtDecember31,2003, Registered shares thatare subjecttoliensdonotrepresent a shareholders owningover5% ofthecapital). shares heldbytheGroup’s mainshareholders (definedas No liensonregistered shares havebeenidentifiedamongthe Liens onregistered shares thebestofCompany’s knowledge,noindividualorcompany, of changesintheirinterests, inaccordance general informationgeneral I 125

q GENERAL INFORMATION q THE MARKET FOR ACCOR SECURITIES

The market for Accor shares Accor shares are traded on the Paris first market and In the United States, Accor has a Level 1 American Depositary are included in the CAC 40 index. Receipt (ADR) program. The ADRs are traded on the over-the- Accor shares are also included in the three main socially responsible counter market under code ACRFY, CUSIP 00435 F 101. The investment stock indexes, the Vigeo ASPI index, the FTSE4Good program qualifies for 12g3-2(b) exemption and does not fall within index and the Dow Jones Sustainability Index. the scope of application of the Sarbanes-Oxley Act.

ACCOR SHARE PRICES AND TRADING VOLUMES (ISIN CODE FR0000120404) In € Average price High Low Trading volume 2002 October 30.92 35.85 26.75 27,798,671 November 34.59 36.68 32.47 24,127,989 December 31.79 36.69 28.20 19,698,756

2003 January 28.25 31.00 25.38 26,941,802 February 28.89 30.88 27.39 22,743,624 March 27.69 31.00 25.01 22,287,216 April 27.70 29.90 25.10 25,575,266 May 31.19 33.04 28.73 31,761,989 June 32.46 33.84 30.10 34,738,886 July 32.53 34.63 30.76 24,749,607 August 34.42 36.64 32.51 20,103,973 September 33.75 37.43 31.32 27,083,021 October 33.00 34.75 31.40 30,487,461 November 34.93 36.47 33.50 24,451,064 December 35.77 36.95 34.81 17,210,090

2004 January 36.19 37.36 34.85 19,981,377 February 35.62 36.72 34.76 17,005,865 March 34.07 36.60 31.78 29,893,597

Source: Euronext, Accor

Registrar Shareholder services, including transfers and dividend payments, are provided by: Société Générale 32, rue du Champ-de-Tir – BP 81236 44312 Nantes Cedex 3 – France

126 I general information ac 18 52 03 ,2 36,547 236,683 158,371 1,524 9,822 6,663 384,394 17,613 187,828 40.30 41.25 16,236 41.55 7,772 720 45.20 41.90 185 42.00 40.80 42.65 40.28 41.80 26,316 32 42.50 117,175 41.50 42.10 42.09 40.80 4,537 99,794 20,338 35,320 173.00 71 42.00 92,398 41.25 40.51 163.00 12,233 8,800 17,392 172.40 2,465 6,115 911 15,956 174.50 12 Source: Fininfo 2,129 571 173.60 12,001 1,524 173.25 March 430 172.89 175.00 172.40 February 156 3,058 January 173.95 5,585 2,013 173.00 173.80 160.20 2004 95 175.40 172.96 172.50 December 174.00 173.65 173.35 168.50 November 506 919 167.70 25,564 October 180.00 176.10 173.90 29,426 174.31 2003 165.10 56,911 175.10 173.12 172.51 In 171.50 163.40 4,224 PRICES ANDTRADINGVOLUMESOFOCTOBER20031.75%ACCOROCEANEBONDS,DUEJANUARY 2008 163.50 167.70 4,881 173.98 175.66 171.29 9,195 Source: Fininfo 168.00 174.56 March 161.50 171.35 166.00 February 164.60 176.00 167.70 154.00 January 166.42 2004 168.00 December 165.38 167.69 167.16 November 165.25 October September 165.13 August 165.90 July 162.50 June May April March February January 2003 December November October 2002 In PRICES ANDTRADINGVOLUMESOFAPRIL20021%ACCOROCEANEBONDS,DUEJANUARY 2007 The marketforAccorOCEANEbonds € € A A eaepieHg o Trading volume Low High verage price Trading volume Low High verage price general informationgeneral (ISIN CODEFR0000180192) (ISIN CODEFR0010026765) € € ilosnumberofbonds millions ilosnumberofbonds millions I 127

q GENERAL INFORMATION q DIVIDENDS

Numbe of shares Dividend for Paid on Share price Dividend with the year (in €) (in €)yield based dividend rights Before Tax Total High Low Year- on year-end tax credit credit revenue end price (2) 1998 180,704,995 0.80 0.40 1.20 June 14, 99 54.42 27.48 36.90 3.25% 1999 185,481,982 0.90 0.45 1.35 June 14, 00 50.36 34.40 47.97 2.81% 2000 198,324,605 1.00 0.50 1.50 June 14, 01 51.00 35.39 45.00 3.33% 2001 198,893,415 1.05 0.525 1.575 June 3, 02 52.40 25.72 40.83 3.86% 2002 199,258,550 1.05 0.525 1.575 June 2, 03 49.00 26.75 28.86 5.46% 2003 (1) 199,259,550 1.05 0.525 1.575 May 17, 04 37.43 25.01 35.90 4.39%

(1) recommended (2) dividend yield including tax credit

The recommended 2003 dividend, payable on all shares carrying Accor’s dividend policy is to maintain a high payout rate and to dividend rights as of January 1, 2003 (199,259,550 shares), amounts steadily increase the dividend per share. No interim dividend was to €1.05, representing a total revenue of €1.575 including the tax paid in 2003. Dividends are paid through Euroclear France. credit for eligible shareholders. Dividends not claimed within five years from the date of payment are forfeited.

q INVESTOR RELATIONS • The Letter to Shareholders, mailed twice a year to shareholders owning at least 250 bearer shares and to all shareholders listed Shareholder contact in the Company’s share register, as well as to members of the Accor Shareholders Club. A special edition translated into eight Shareholders in France can call 0 811 01 02 03 (calls charged at languages is sent to employee-shareholders. local rate) to obtain general information about the Group, the latest • Revenues, earnings and other financial announcements published share price and practical guidelines for private shareholders, or in the press. to speak to an investor relations manager. • Information memoranda filed with the Autorité des Marchés Financiers (AMF) concerning corporate actions. • The Shareholder Guide. Investor publications • Notices of shareholder meetings, sent personally to registered Accor’s investor relations process is designed to provide shareholders and members of the Accor Shareholders Club. increasingly transparent information. Institutional and individual investors, employees, customers, suppliers and partners can find everything they need to form an opinion about the quality of Accor’s The www.accor.com/gb/finance website fundamentals. www.accor.com/gb/finance is designed as a practical guide and extensive library. It carries live and deferred webcasts of A wide array of documents, whose information exceeds regulatory annual and interim earnings presentations and of the Annual requirements, is available to stakeholders upon request or on the Meeting, as well as audio retransmissions of conference calls Accor investor relations website, www.accor.com/gb/finance: held in conjunction with revenue releases. Visitors can download • The annual report and the financial statements filed with the a variety of corporate publications, track the Accor share price Autorité des Marchés Financiers (AMF), France’s securities (updated every twenty minutes), review the calendar of Group regulator. These publications were awarded prizes by the French events and financial releases, browse through the “shareholder financial community in, respectively, 2000 and 1997. information” page. The latest version of the site has been on line • The Identity Card, which provides a brief introduction to Accor since February 2003. along with illustrations.

128 I general information and theDowJonesSustainabilityIndex. published byVigeo (formerly Arese), FTSE4Goodfrom FTSEGroup included inthethree leading sociallyresponsible indexes:ASPI, in thearea ofsustainabledevelopment. Thecompany’s stockis Rating agenciesappreciate Accor’s commitmentsandachievements indexes Accor insociallyresponsible investmentstock Bouygues Telecom. with networkpartnerslikeTotal, Europcar, Courtepailleand particular, pointsnotonlyinAccorhotels,butalso theycanearn from theadvantagesoffered bytheMouvangonetwork.In Since 2002,themembershipcard alsoallowsholderstobenefit • • Invitations toonsitevisits.In2003,190Clubmembershadthe • Regular newsaboutAccor, through theLettertoShareholders, at least50registered orbearer Accorshares anumber ofbenefits: members asofDecember31,2003.Itoffers shareholders owning Created inMay2000,theAccor Shareholders Clubhad5,500 The AccorShareholders Club at thetimeofannualandinterimresults announcements. Meetings are alsoorganized inParisforemployeeshareholders, to Accorsites. Strasbourg, witheacheventincludingaShareholders Clubvisit told, some700shareholders attendedthemeetingsinMarseilleand Clubs andtheFrench InvestorRelationsAssociation(CLIFF).All in associationwithEuronext, theFrench FederationofInvestment In addition,shareholder meetingswere organized intheregions, by BenjaminCohen,Vice-Chairman oftheManagementBoard. people attendedaspecialmeetingwithshareholders inParis,led Accor remains veryclosetoitsindividualshareholders. Some250 hotelindustryconferences duringtheyear.international the UnitedStatesandJapan.Accoralsotookpartinfour with 353institutionsand33roadshows were organized inEurope, financial analysts,investorsandshareholders. Meetingswere held In 2003,Accorexpandeditsalready extensivecontactswith Meetings withinvestors A specialwelcomedeskforClubmembersattheAnnualMeeting. and otherFrench cities,aswell asattheAccorAcademy. opportunity togo“backstage”atseveralGroup hotelsinParis publications. the ClubNewsletter, AnnualMeetingdocumentsandother content. prize forthebestsitefirst-timevisitorsandsecond Fax: +33(0)145388595 T 75755 ParisCedex15 33, avenueduMaine T Éliane Rouyer Officer Investor RelationsandFinancialCommunications the sitetwoBoursoscan awards forthethird yearinarow. BoursoramaandTLBawarded Lastly, theFinancesectionofwww.accor.com websitewon Investor Relations–Eurostoxx 200”. for 200” andAccorwontheprizefor“BestUseofInternet Rouyer wasnamed“BestInvestorRelationsOfficer –Eurostoxx by UKinvestorrelations magazineIRMagazineEurozone –Eliane The Group alsopickeduptwoawards attheceremony organized in itssectorforthequalityoffinancialcommunications. The ThomsonExtelsurveyrankedAccor“BestEuropean Company” A W E-mail: 0811 010203 Shareholder hotline el.: +33(0)145388626 our MaineMontparnasse wards ebsite: [email protected] www.accor.com/finance ® prizes, includingthefirst“CoupdeCœur” (France only): general informationgeneral I 129

q GENERAL INFORMATION RESPONSIBLE FOR THE “REFERENCE DOCUMENT”

Persons responsible for We audited in accordance with professional standards applicable the “Reference Document” in France the financial statements of the Company and the Jean-Marc Espalioux consolidated group for each of the years ended December 31, Chairman of the Management Board and Chief Executive Officer 2001, 2002 and 2003, prepared by the Management Board in accordance with French generally accepted accounting principles. Benjamin Cohen We expressed an unqualified opinion on such financial statements. Vice-Chairman of the Management Board In accordance with Article L. 225-235 of the French Commercial Code requiring the auditors to justify our assessments, which is Statement by the persons responsible for the “Reference Document” applicable for the first time this financial year pursuant to the Financial Security Act of August 1, 2003, to our reports on the To the best of our knowledge, the information contained in this Company’s financial statements and the consolidated financial reference document concerning Accor is correct and includes all statements, we stated that our audit opinion was based in part the information required to permit an investor to reach an informed on the following information: opinion concerning the assets and liabilities, business, financial • Opinion on the financial statements of the Company: position, results and outlook of Accor. No information has been Note 1.c to the financial statements presents the accounting omitted that would be likely to alter an investor’s opinion. policies and methods applied to assess financial assets value. Jean-Marc Espalioux We reviewed the appropriateness of these accounting policies Benjamin Cohen and methods, and of the related information given in the notes to the financial statements. Statement by the Statutory Auditors and the • Opinion on the consolidated financial statements: Independent Auditors on the “Reference Document” Notes 1.D.5 and 1.D.3 to the consolidated financial statements describe accounting policies and methods applied to assess To the shareholders property, plant and equipment and intangible assets values, as As statutory auditors and independent auditors of Accor and in well as policies and methods used to account for leases and sale- accordance with rule 98-01 of the Commission des Opérations and-leaseback transactions. We reviewed the appropriateness of de Bourse and professional standards applicable in France, we these accounting policies and methods and of the related have performed certain procedures on the information contained information given in the notes to the consolidated financial in this “Reference Document” relating to the historical financial statements, examined the consistency of the data and assumptions statements of the Company. used, and reviewed the supporting documentation, and on these The company’s chairman of the Management Board is responsible basis assessed the reasonableness of the estimates made. for the preparation of the “Reference Document”. Our responsibility These assessments were made in connection with our audit is to report on the fairness of the information presented in the procedures on the Company’s financial statements and the “Reference Document” relating to the financial situation and the consolidated financial statements, taken as a whole, and financial statements. contributed to the formulation of the unqualified audit opinions We conducted our work in accordance with professional standards expressed in the first section of our reports. applicable in France. Those standards require that we assess the Based on the procedures performed, we have no matters to report fairness of the information presented relating to the financial situation regarding the fairness of the information relating to the financial and the financial statements, and its consistency with the financial situation and the financial statements presented in the “Reference statements on which we have issued a report. Our procedures also Document”. include reading the other information contained in the “Reference Neuilly, April 8, 2004 Document” in order to identify material inconsistencies with the information relating to the financial situation and the financial The Statutory Auditors statements and to report any apparent material misstatements of Barbier Frinault & Autres Deloitte Touche Tohmatsu – Audit Réseau Ernst & Young facts that we may have found in reading the other information Christian Chochon Alain Pons based on our general knowledge of the Company obtained during Members of the Versailles Chamber of Auditors the course of our engagement. When reading the forward-looking information determined according to a structured process, we took The Independent Auditors (for the consolidated financial statements) into account the assumptions used by management and the Deloitte Touche Tohmatsu amounts obtained by applying these assumptions.

This is a free translation into English of the original Statement by the Statutory Auditors and the Independent Auditors on the "Reference Document" signed and issued in the French language and is provided solely for the convenience of English speaking readers. The statement of the Statutory Auditors and independent Auditors includes for the information of the reader, as required under French law in any auditor’s report, whether qualified or not, an explanatory paragraph separate from and presented below the audit opinion discussing the auditor’s assessments of certain significant accounting and auditing matters. These assessments were considered for the purpose of issuing the audit opinion on the consolidated financial statements taken as a whole and not to provide separate assurance on individual account caption or on information taken outside of the consolidated financial statements. Such statement should be read in conjunction and construed in accordance with French law and French auditing professional standards.

130 I general information Appointed forsixyearsbytheMay29,2001AnnualMeeting. 41, rueYbry-92576Neuilly-sur-Seine Christian Chiarasini Appointed forsixyearsbytheMay29,2001AnnualMeeting. 92200 Neuilly-sur-Seine 7, Villa Houssaye BEAS Auditors Alternate Date offirstmandate:June16,1995. Re-appointed forsixyearsbythemay29,2001AnnualMeeting. 92203 Neuilly-sur-Seine Cedex BP 136 185, avenueCharles-de-Gaulle Alain Pons Deloitte, Touche, Tohmatsu Audit Date offirstmandate:June16,1995. Re-appointed forsixyearsbythemay29,2001AnnualMeeting. 41, rueYbry-92200Neuilly-sur-Seine Christian Chochon &YoungRéseau Ernst Barbier Frinault&Autres Statutory Auditors and financialinformationispresented onpage104ofthisdocument. procedures related tothepreparation andprocessing ofaccounting Chairman oftheSupervisoryBoardcontrol ofAccoroninternal final paragraph,oftheCodedeCommerce, onthereport ofthe 225-235, The Auditors’report prepared inapplicationofarticleL. T Corporate Secretary Pierre Todorov T Chief FinancialOfficer Jacques Stern T Director, Investor RelationsandFinancialCommunications Éliane Rouyer Persons Responsibleforinformation 92203 Neuilly-sur-Seine Cedex BP 136 185, avenueCharles-de-Gaulle Deloitte Touche Tohmatsu Independent Accountants el.: +33(0)145388733 el.: +33(0)145388636 el.: +33(0)145388626 general informationgeneral I 131

q GENERAL INFORMATION This reference document was filed with the Autorité des Marchés Financiers on April 8, 2004 under no. D. 04-437, in accordance with the COB regulation no. 98-01. It may be used in connection with a financial transaction in conjunction with an Information Memorandum approved by the Autorité des Marchés Financiers.