French leisure group Accor SA (ACCP.PA: Quote, Profile, Research) reported a 17.6 percent rise in year pre-tax profits to 603 million euros ($718.4 million) on Wednesday and said it would grow its core hotels business by over 40 percent by 2010.

Accor said it would spend 2.7 billion euros to add at least 200,000 new rooms over the next four years, compared with the total of 471,000 rooms it owned or had access to via management or franchise agreements on June 30, 2005.

It said 50 percent of the new hotel rooms would be in the economy and budget segment and only 30 percent would be owned or leased properties. Two thirds would be in emerging markets.

To help fund its strategy Accor said it would sell some 1.5 billion euros of assets between 2005 and 2008.

It has in recent weeks already announced a flurry of deals to trim its portfolio in Europe and the United States, while opening new rooms in China.

The company said on Wednesday that in line with a policy of selling non core businesses it had also sold its last 1.42 percent stake in caterer Compass Group Plc (CPG.L: Quote, Profile, Research) for 96 million euros.

The company said it would also invest 500 million euros by 2010 in growing its various services businesses.

The pre-tax profit result was below the average forecast of 611 million euros given in a Reuters poll of nine analysts and compared with the guidance of 590 to 610 million euros Accor had provided when announcing its 2005 sales in January.

Group net profit rose 42.9 percent to 333 million euros from 233 million euros in 2004, restated to take account of a switch to Europe's new IFRS accounting rules.