Return of travelers boost sales at Holiday Inn owner IHG with UK revenues now down just 15% compared to pre-Covid levels
- Occupancy rates at IHG’s hotels across the world have gradually improved
- First quarter revenue per room improved to 82% of what it was in Q1 of 2019
- US saw biggest improvement, but lockdowns have hit demand in China
The return of holidaymakers has helped boost revenues at Holiday Inn and Crowne Plaza owner Intercontinental Hotels Group.
Occupancy rates at IHG’s hotels across the world have gradually improved since the start of the year thanks to a relaxation of Covid rules, except in China, where they have worsened due to the latest lockdowns.
After a’challenging January’, when the Omicron variant scuppered people’s holiday plans, trading has improved, especially in the US, the group’s largest market.
Holiday Inn owner IHG said demand keeps improving, with a return of business travelers lifting revenues at hotels in city centers
Revenue per room has edged closer to pre-pandemic levels, standing in the first quarter at 82 per cent of what it was in the same period in 2019.
The overall figure masks stark differences across the world as the timing of the lifting of travel restrictions varied across different countries.
In the UK, revenue per room was down just 15 per cent compared to pre-Covid levels, while in the US it was down by the least –just 8 per cent.
In Europe, however, revenues fell by a much larger 45 per cent compared to 2019, while in China they were down 42 per cent.
IHG chief executive Keith Barr said demand kept improving, with a return of business travelers lifting revenues at hotels in city centers.
‘We’ve seen very positive trading conditions in the first quarter with travel demand continuing to increase in almost all of our key markets around the world,’ he said.
‘The high level of demand we have seen for leisure travel continues to drive increased rates and occupancy.
‘We also continue to see a return of business and group travel, further supporting RevPAR improvements in many of our key urban markets.’
Hotels have been some of the worst hit during the pandemic, but they have seen business pick up as vaccinations and the lifting of Covid restrictions encouraged a return of leisure and business travel.
Now, however, they face the impact of rising inflation on households, who are likely to become more cautious about splashing out on holidays.
According to Hargreaves Lansdown analyst Matt Britzman, IHG should still benefit from a rebound in demand thanks to its mid-priced hotels.
‘With a cost-of-living crisis sweeping the globe, the group’s focus on a mid-tier value offering should hold it in good stead to capture demand from an increasingly cash strapped consumer,’ he said.
IHG shares fell 0.7 per cent to £ 49.43 in afternoon trading on Friday.