DENHAM, United Kingdom — IHG released its interim half-year results last week, which showed a $6.6-billion total gross-revenue decline, representing a 52-per-cent decrease.
According to Keith Barr, CEO, IHG, “Throughout the crisis, we have continued to act responsibly, doing all we can to support our hotel colleagues and owners and create a clean, safe-stay experience that we know guests can trust. The teamwork, dedication and care that our colleagues and owners have shown to adapt our approach is central to meeting the evolving needs and expectations of guests, as well as the communities in which we operate.”
The impact of COVID-19 on IHG’s business has been substantial. Global RevPAR declined by 52 per cent in the first half and was down 75 per cent in the second quarter, when occupancy at comparable hotels fell to 25 per cent. Despite this challenging environment, the company delivered an operating profit of $74 million. Small but steady improvements in occupancy and RevPAR through the second quarter continued into July, with an expected RevPAR decline of 58 per cent and occupancy rising to around 45 per cent.
Barr said the support IHG has offered owners, such as fee relief and increased payment flexibility, has been well received. “Together with other measures we’ve taken to preserve cash, we’ve maintained substantial liquidity of around $2 billion. Our ongoing actions to reduce costs include plans to make around half of the $150 million of savings we will achieve this year sustainable into 2021, alongside continued investment in our growth initiatives. However, with limited visibility of the pace and scale of market recovery, we are not proposing an interim dividend,” says Barr.
Barr stressed that as has been the case in previous downturns, “domestic mainstream travel is proving to be the most resilient. Our weighting in this segment, led by our industry-leading Holiday Inn Brand family, positions us well as demand returns in our key markets. In the U.S., our mainstream estate of almost 3,500 hotels is seeing lower levels of RevPAR decline than the industry, and is operating at occupancy levels of more than 50 per cent.”
The company has opened more than 90 hotels in the first half of the year and “strengthened our pipeline with an average of one new signing a day, including almost 100 for our Holiday Inn Brand family. We have also taken voco, our upscale conversion brand, outside of EMEAA, with initial signings in the U.S. and Greater China.”
“The impact of this crisis on our industry cannot be underestimated,” says Barr, “but we’re seeing some very early signs of improvement as restrictions ease and traveller confidence returns. While the near-term outlook remains uncertain and the time period for market recovery is unknown, we are well positioned with preferred brands in the largest markets and segments, a leading loyalty platform and one of the most resilient business models in the industry. This gives us confidence in our ability to meet the needs of our guests and owners, and to emerge strongly when markets recover.”