LIKE OTHER LARGE hotel companies, InterContinental Hotels Group reported serious impacts on its business performance as a result of the COVID-19 pandemic. However, even with the losses it was still able to report an operating profit of $74 million for the first half of the year.
IHG did report a 52 percent decrease in global RevPAR in the first half of the year and a 75 percent drop in the second quarter alone. Underlying operating profit dropped 83 percent during the last six months. Those second quarter losses resulted when occupancy at comparable hotels fell to 25 percent, said Keith Barr, IHG’s CEO.
Barr remained optimistic for the future.
“Small but steady improvements in occupancy and RevPAR through the second quarter continued into July, with an expected RevPAR decline of 58 percent, and occupancy rising to around 45 percent,” he said. “Together with other measures we’ve taken to preserve cash, we have 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.”
Barr credits the company’s Holiday Inn brand family’s appeal to domestic mainstream travelers for the company’s resilience.
“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 over 50 percent,” Barr said. “Reflecting our long-term growth prospects, and the strength of our brands and owner relationships, we opened more than 90 hotels in the half and strengthened our pipeline with an average of one new signing a day, including almost 100 for our Holiday Inn brand family.”
As restrictions ease and traveler confidence returns, Barr said he expects a strong recovery.
“Whilst 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,” he said. “This gives us confidence in our ability to meet the needs of our guests and owners, and to emerge strongly when markets recover.”
Extended Stay America also had a relatively good second quarter, according to its earnings report. ESA’s net loss for the quarter of $8.8 million was lower than most other large companies.