The owner of the Holiday Inn, InterContinental Hotels Group, suffered a sharp drop in revenue in the third quarter as fresh Covid-19 restrictions kept travellers at home.
The company, which also owns the Crowne Plaza, Regent and InterContinental chains, reported a 53.4% fall in revenue per available room (RevPAR) in the third quarter.
Around 3% or 199 of IHG’s hotels were still closed at the end of September. The company operates more than 5,900 hotels in about 100 countries.
While the fall in revenue was smaller than the 75% decrease in the second quarter, it is the latest sign that the travel and hospitality industry is still struggling, as a second wave of coronavirus cases this autumn led to fresh restrictions on travel and gatherings.
“As government-mandated closures and travel restrictions partially eased, leisure-related demand led to the rate of RevPAR decline improving in July and August, before weakening in September,” IHG said in its earnings update.
Video: Zoom Growth Booms With 355% Revenue Gain in Second Quarter (Bloomberg)
Europe was one of the group’s worst-performing regions, with per-room revenue tumbling 72% in the three months to September. That was compared to a 23% drop in China, where occupancy rates have improved to 57% from 32% in the second quarter and less than 10% in February.
IHG and rivals including Premier Inn-owner Whitbread have already been forced to slash costs as a result of lockdown measures imposed earlier this year. IHG is aiming to reduce costs by around $150m by the end of 2020.
However, the chief executive, Keith Barr, reported a slight improvement in overall occupancy levels, which was 44% compared to 25% in the second quarter – thanks in part to domestic travel. “Domestic mainstream travel remains the most resilient, and our industry-leading Holiday Inn brand family positions us well to meet that demand as it slowly returns,” he said.
The company also continued to add new hotels, adding 82 sites and 11,000 rooms to its portfolio. But Barr said he did not expect a quick recovery from the crisis: “A full industry recovery will take time, and uncertainty remains regarding the potential for further improvement in the short term, but we take confidence from the steps taken to protect and support our owners and drive demand back to our hotels as guests feel safe to travel.”
IHG shares were down 2.2% in afternoon trading.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said IHG had fared better than many of its rivals, given that it does not own many of its hotels outright, and usually licences brands to hotel owners.
“While it’s offered support to its franchisees through the crisis, not being on the hook for hotel running costs has certainly helped the bottom line,” she said.