Accor, Europe's largest hotel group by portfolio, reported annual room revenue growth slightly above market expectations on Thursday, driven by higher prices and occupancy rates across its regions.

The operator of Sofitel luxury hotels and budget brand Ibis said its revenue per available room (RevPAR), a key performance measure for the hotel industry, rose 5.7% in 2024, versus analysts' average estimate of a 5.2% increase in a company-compiled poll.

In the fourth quarter, RevPAR grew 2% in the Europe North Africa region and 5% in the Middle East, Africa and Asia-Pacific region, of which China accounts for 18%.

While the situation improved in China in the last three months of 2024, year-on-year RevPAR remained negative.

Domestic travel demand in China has been weak amid poor macroeconomic conditions in the world's second-largest economy and worry over wage and job security.

"It's a little more difficult to say anything about the years beyond 2025, but we expect stability in China in 2025," finance chief Martine Gerow said on a call with journalists.

RevPAR in the luxury division, Accor's fastest-growing, rose 9% from the fourth quarter of 2023.

Accor confirmed the medium-term growth prospects it announced in 2023, including a 2025 share buyback programme totalling 440 million euros ($459.01 million).

"Our medium-term objectives are to accelerate our expansion in high-potential markets," Gerow said, adding that around 60% of the company's openings in 2025 will be in the Middle East, Africa and Asia-Pacific region.

Gerow said the company expects to complete a sale of its 30% stake in AccorInvest, a former real estate branch of Accor Group, during 2026.

The group's annual recurring earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 12% to 1.12 billion euros, in line with the company-compiled estimate.

($1 = 0.9586 euros)

(Reporting by Elviira Luoma and Jesus Calero; Editing by Christopher Cushing and Savio D'Souza, Kirsten Donovan)