Holiday Inn owner sees revenues rise as tourism eases

·3 min read
IHG's revenue per available room, a key industry metric, was up 66% in Q3. Photo: Reuters
IHG's revenue per available room, a key industry metric, was up 66% in Q3. Photo: Reuters

The InterContinental Hotels Group (IHG.L), which owns Holiday Inn and Crowne Plaza among other hotel chains, said trading continued to improve significantly in the third quarter of 2021 as travel restrictions around the world eased.

However, shares were down almost 3% on Friday afternoon.

Revenue per available room, a key industry metric, was up 66% in the three months to the end of September compared with a year earlier. But the figure was 21% down compared with pre-pandemic levels.

Growth was particularly strong in the US during the summer holidays, with some hotels exceeding 2019 levels for occupancy levels.

The UK saw revenues per available room down 22% compared to 2019.

“More and more guests returned to our hotels around the world,” said CEO Keith Barr.

“Domestic leisure demand was particularly strong in a number of markets over the summer, where occupancy and rate climbed back to 2019 levels.”

Business travel, group bookings and international trips also showed “increasingly encouraging signs, on top of continuing good levels of essential business demand".

IHG's stock was down on Friday afternoon. Chart: Yahoo Finance UK
IHG's stock was down on Friday afternoon. Chart: Yahoo Finance UK

IHG opened 79 hotels in the quarter with another 91 in the pipeline.

Barr expects development activity to pick up further over the remainder of the year.

“The rapid progress we are making with the review of the Holiday Inn and Crowne Plaza portfolios is also ensuring that we are well positioned for future growth,” he said.

“While we remain vigilant to fluctuating COVID restrictions in different markets, the pace of returning demand is very encouraging as travel increasingly reopens in every region.”

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "True there is some way to go before the group reaches the heights it achieved in 2019, but given the travel restrictions that continue to affect many markets this is a pretty good start." 

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“The group is notable for having stayed profitable throughout the pandemic, no mean feat in the travel industry; however, it is still taking the opportunity to rebalance its estate, exiting poorer performing hotels," he said.

A review of some 200 Holiday Inn and Crowne Plaza hotels remains on track, the company had said, with more than 40 committed to improvement plans and over 90 hotels exited already or with an exit confirmed.

"The group has actually stood still on room numbers over the last 12 months – which is something of a rarity in a company which believes there is considerably more opportunity for consolidation in its core US and Chinese markets," said Hyett.

Last week, the Lloyds (LLOY.L) Bank UK Recovery Tracker showed that tourism and recreation – which includes hotels and travel agents – had a reading of 62.2 in September.

A reading above 50 signals output is rising, while a reading below 50 indicates contraction.

The sector was the fastest growing of the 14 monitored by the tracker, for the first time since January 2012, as it benefited from strong demand and an ease of lockdown restrictions.

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