IHG reports Significant improvement in trading in Q3
25 October 2021
InterContinental Hotels Group PLC (IHG) has reported significant improvement in trading, leading to Q3 group RevPAR (21)% vs 2019 (+66% vs 2020), as it issued a Third Quarter Trading Update.• Average daily rate attained in line with 2019 levels; occupancy of ~60% achieved
• Gross system growth of +5.2% YOY; opened 12.3k rooms (79 hotels) in Q3; opened 29.6k YTD, +30% vs 2020
• Review of around 200 Holiday Inn and Crowne Plaza hotels on track; over 90 hotels exited already or with an exit confirmed, and more than 40 committed to improvement plans or scopes of work
• Of 26.5k rooms removed YTD, 17.1k relate to Holiday Inn and Crowne Plaza in Americas and EMEAA
• Net system growth flat YOY (+1.9% excluding the SVC portfolio termination in Q4 2020)
• Global system of 889k rooms (6,031 hotels); 68% across midscale segments, 32% across upscale and luxury
• Signed 12.6k rooms (91 hotels) in Q3; signed 45.2k YTD, +13% vs 2020; global pipeline 270k rooms
• Fee business cost savings of ~$75m vs 2019 on track and sustainable in future years whilst still investing for growth
• Additional temporary cost savings in 2021 of ~$25m
Keith Barr, Chief Executive Officer, IHG Hotels & Resorts, said: "Trading continued to improve significantly in the third quarter. RevPAR recovered closer towards pre-pandemic levels as more and more guests returned to our hotels around the world. Domestic leisure demand was particularly strong in a number of markets over the summer, where occupancy and rate climbed back to 2019 levels. Discretionary business travel, group bookings and international trips have also shown increasingly encouraging signs, on top of continuing good levels of essential business demand.
We continue to grow rapidly, opening 79 hotels in the quarter and signing another 91 in to our pipeline of 1,800 properties, and we expect development activity to pick up further over the remainder of the year. Across our portfolio of 17 brands, owner interest is strong both for those brands recently launched or acquired, in addition to our well-established and industry-leading brands. 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.
While we remain vigilant to fluctuating Covid restrictions in different markets, the pace of returning demand is very encouraging as travel increasingly re-opens in every region. The strength of our brands, platforms and scale gives us confidence in IHG's future prospects and of both exceeding prior levels of profitability and delivering industry-leading net system size growth in the coming years."
EMEAA
Q3 RevPAR was down 43% vs 2019 (up 86% vs 2020). Occupancy rose to 49%, improving from 34% in Q2. Reflecting the differing levels of market restrictions, particularly on international travel, there was a broad spread of performance within the region: Q3 RevPAR was down 22% vs 2019 in the UK, 48% in Continental Europe, 39% in the Middle East, 57% in Japan, and 68% in both South East Asia & Korea and Australia.
Hotels continued to reopen across the region; just 28 or 2% remained temporarily closed at the end of September, compared to 215 at the start of the year.
Gross system growth was +5.3% YOY. In the quarter, 4.1k rooms (22 hotels) were opened, while 1.3k rooms (7 hotels) were removed (which included 0.9k Holiday Inn and Crowne Plaza rooms), leading to net growth of +1.7% YOY. We signed 2.2k rooms (14 hotels) in the quarter, half of which were conversions.
