The FTSE 100 hotel company behind the Holiday Inn and Crowne Plaza brands dropped into the red last year to the tune of $153 million after “the toughest time this company has ever seen”.
Intercontinental Hotels Group reported a halving of group revenues to $2.39 billion while revenue per available room (revpar) — a key industry measure — fell by 52.5 per cent, with the UK down 65 per cent, because of hotel closures and travel restrictions.
The Europe and Middle East region was the worst performer in the final quarter, with revpar down by 70.5 per cent, while Greater China’s recovery was more advanced, with revpar lower by 18.2 per cent. The Americas fell by 49.5 per cent, helped by the domestic focus of the Holiday Inn brand.
Keith Barr, 50, chief executive of IHG, said Covid-19 had taken a heavy toll on demand across the sector and the return to pre-pandemic levels would be a “multi-year” process, depending on the progress of global vaccine rollouts and the lifting of restrictions.
He said that the company had continued to outperform the industry in its key markets, and after excluding exceptionals it had made an operating profit last year of $219 million, down 75 per cent on 2019.
While there was “lots of pent-up demand for business and leisure travel out there”, what was needed was an end to the constant opening and closing of hotels, he said. IHG has almost 6,000 hotels with 890,000 rooms in more than 100 countries, most of them franchised and managed. Its brands include Indigo, Kimpton, Staybridge Suites and Six Senses and it has a further 1,800 hotels under development.
It has a global workforce of about 350,000 people, mostly employed by its hotel partners, although as recently as December it was quoting a figure of 400,000. That implies job losses of 50,000, although Barr said that many would eventually be brought back. Several of its hotels in London, including its premium Park Lane property, below, remain closed. “The hotel industry will not go back to full employment for three years, I would estimate,” Barr said.
The operating loss for the year of $153 million compared with a profit in 2019 of $630 million. At a pre-tax level the company moved from profit of $542 million to a loss of $280 million and there was no dividend.
The group said that it had started a review into the future of about 200 Holiday Inn and Crowne Plaza hotels that are at risk because of customer satisfaction and property condition issues.
Its overall hotel portfolio for the year grew by 0.3 per cent, slower than the 2.9 per cent growth in the third quarter. IHG signed 56,000 new rooms in 360 hotels, a year-on-year decline of 43 per cent, lifting the total to 272,000 rooms in 1,815 hotels.