InterContinental Hotels sees revenue drop 5.5% in first half of 2021

Holiday Inn Bristol City Centre

InterContinental Hotels (IHG), the multinational hospitality company that owns Holiday Inn, Regent Hotels & Resorts and Candlewood Suites, have reported that their revenue in the first half of the financial year was down 5.5% to $1.2bn, as improved performances in the US and China were outweighed by a slowdown in Europe, the Middle East and Africa.

Second-quarter average revenue per available room (RevPAR) was at 57% of 2019 levels in the first half, with second-quarter RevPAR rising to 64% of 2019 levels.

Recovery was greatest in Greater China, where RevPAR in the second quarter was 16% lower than 2019 levels.

In total, they also opened 17,400 rooms (132 hotels) in the first half of the year, which is 46% higher compared to 2020 levels. Their global estate now stands at 884,000 rooms spread across 5,994 hotels.

Underlying operating profit also more than tripled to $188m, reflecting improved demand across most geographies.

However, company shares were broadly flat following the announcement.

Keith Barr, Chief Executive Officer, IHG Hotels & Resorts, said: “Trading improved significantly during the first half of 2021, with travel demand returning strongly as vaccines roll out, restrictions ease, and economic activity rebuilds.

“It has been great to see our teams welcome more and more guests back into our hotels, with domestic leisure bookings leading the way, particularly in the US and China.”

Industry Reaction

Laura Hoy, Equity Analyst at Hargreaves Lansdown: “The results from IHG this morning were pleasantly positive. Although the group saw revenue decline, underlying profits showed robust growth from last year. Both China and the Americas saw demand return as restrictions were lifted, but the group was held back by its performance across Europe, where tighter controls kept many of its hotels from operating at full strength until the end of the half.

“China, which had been first to recover from the pandemic is starting to show signs of weakness as another round of restrictions hurt demand in June. There’s no telling whether this will continue as variant concerns set in, but we’re mindful that China seems to be a few steps ahead of the rest of the world when it comes to the pandemic. If lockdowns ramp up through the rest of the summer, it could be a bleak forecast for other regions, which would chip away at IHG’s already precarious recovery.”