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By Dominique Vidalon
PARIS (Reuters) - Europe's largest hotel group, Accor <ACCP.PA>, said on Wednesday that it expected weak demand for budget hotels in austerity-hit Southern Europe to continue through June as it posted a marked slowdown in first-quarter sales.
The upscale hotel segment remains resilient, meanwhile, with demand still sustained in key European cities and in emerging markets, Accor said in a statement.
"First-quarter 2013 trends - contrasted conditions in Europe and satisfactory business levels in the emerging markets - are expected to continue in the second quarter, given the lack of any observable shift in business at this stage," Accor said.
The world's fourth-largest hotelier makes more than 70 percent of its sales in Europe and is more exposed to the region's ailing economy than larger rivals InterContinental <IHG.L>, Marriott <MAR.N> and Starwood <HOT.N>.
To cope with the situation in Europe, Accor has already unveiled plans to cut costs and is accelerating its expansion in fast-growing emerging markets.
Accor, whose brands range from the luxury Sofitel chain to budget Ibis, said revenue in the first three months of 2013 reached 1.227 billion euros (1.05 billion pounds), a like-for-like decline of 0.1 percent.
This compared with like-for-like growth of 2.5 percent in the fourth quarter of 2012.
Revenue in the budget hotel segment fell 1.8 percent in an economic climate finance chief Sophie Stabile described during a conference call as "uncertain and worsening", notably in Southern Europe.
Revenue per available room, a key gauge of hotel health, was still down by 10 percent in Spain and by around 5 percent in Italy and Portugal, she said.
In France, Accor had a "very good" month in February but suffered in March from calendar effects. Revenue per available room rose by 3 percent in Paris in the first quarter in the upscale and midscale segment.
The trend for Paris is "good" for the coming months as several trade fairs should underpin business, Stabile said.
In the budget sector, business was robust in emerging markets, except in Australia and China, where it had slowed since the end of 2012.
Stabile said the group was now seeing an upturn in China, however, and remained "positive on this country for 2013".
The quarter marked further expansion with the opening of 4,628 rooms, 85 percent of which are under management franchise and management contracts, Accor said.
Shares in Accor have lost around 5 percent since the start of 2013. Accor trades at 18.1 times 12-month forward earnings against 18.6 times for InterContinental and 20.1 times for Marriott.
(Editing by James Regan)