Holiday Inn Owner Pins Hopes on Vaccines but Remains Cautious on Recovery – About Your Online Magazine

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InterContinental Hotels Group,

the owner of the Holiday Inn and Crowne Plaza brands said on Tuesday that 2020 was the most challenging year in its history, as it posted an annual loss of $ 153 million.

The story behind it. The IHG, along with other hotel groups, has been hit by a collapse in the number of tourists as countries have introduced new travel restrictions in order to prevent the spread of more infectious strains of the coronavirus that causes Covid-19, such as those identified in the United Kingdom, South Africa and Brazil.

Europe’s largest hotel group

Accor

and Premier Inn owner

Whitbread

Both were forced to cut costs and reduce their workforce to deal with the consequences of the pandemic.

Last year, during the height of the pandemic, the World Travel and Tourism Council (WTTC) warned that 174 million global jobs in the sector were at risk. However, in its last review published in January, the WTTC said that so many 111 million jobs it could be revived in its most optimistic scenario, although it was still 17% below the figures for 2019, which represents 54 million fewer jobs.

Reading:Marriott shows a glimpse of post-Covid profit prospects as key adjusted earnings estimates

Hotels in the UK will have to wait until at least May 17 before they can open, according to Prime Minister Boris Johnson’s four-step plan to ease the country from the blockade, which he announced on Monday.

What’s new. The FTSE 100-listed IHG reported a group operating loss of $ 153 million for the year ended December 31, compared with a profit of $ 630 million in 2019, highlighting the extent of the damage the pandemic inflicted on the hospitality sector.

The group’s total revenue fell 48% to $ 2.4 billion during the period, from $ 4.6 billion in 2019.

Revenue per available room (revpar) – the industry’s preferred performance metric – fell 52.5%, although the IHG noted that the variation by region reflected Covid-19’s restrictions on the local market and the pace of recovery. The recovery in greater China was the most advanced, with revs falling 18.2% in the last three months of 2020, while the Americas fell 49.5% and Europe, the Middle East and Africa fell 70.5%.

IHG shares, which have risen more than 13% so far this year, traded 4% higher at the start of London’s trading session on Tuesday, with investors focusing on the recovery across the travel industry, before falling again in the negotiations.

Reading:The owner of the Holiday Inn says it’s gone from the worst, with the help of domestic travel in the U.S. and China

IHG Chief Executive Keith Barr said 2020 was the most challenging year in the company’s history, with Covid-19 strongly impacting demand across the industry. “2021 started with many of these challenges still in existence, with more significant progress towards an unlikely industry recovery by the end of the year and dependent on global vaccine launches, lifting restrictions and an acceleration of economic activity,” said Barr.

IHG reported that it inaugurated another 285 hotels during the year and an average of almost one new property closing per day.

Looking forward.

IHG

took a loss in a challenging year for the hospitality company, and the introduction of new restrictions aimed at curbing the spread of coronavirus in some of the group’s key markets during the fourth quarter slowed progress, said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, in a research note on Tuesday.

Reading:The pandemic could end “effectively” in April, according to J.P. Morgan

“The outlook is also very cautious, with a significant recovery for the industry that is still a little distant and dependent on vaccine launches. Speaking of road maps outside the blocks means that there is light at the end of the tunnel, but it will be a while before hotels are filled to capacity with long-distance travelers or conference delegates, ”she added.

IHG’s franchise model undoubtedly makes it more resilient and flexible than some of its peers, noted AJ Bell’s chief investment officer, Russ Mold, saying the group owns only a few hotels and focuses on franchising and managing facilities. “This should help you get out of the Covid pandemic and has already supported strong cash management, helping to protect your balance sheet and, impressively, allowing you to maintain at least some level of investment in future growth.”

The question for investors, said Mold, is whether the business can grow again in the absence of a full recovery in international travel and, most importantly, with a likely drop in business travel at least in the medium term.