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IHG Reports Decline In 3Q RevPAR

October 23, 2020

LONDON—For the third quarter ended Sept. 30, group RevPAR was down 53.4%, including a drop of 49.8% in the Americas. Occupancy improved 44% despite the fact that 199 hotels (3% of the estate) remained closed as of Sept. 30.

“Trading improved in the third quarter, although progress continues to vary by region. RevPAR declined 53%, compared to a 75% decline in the prior quarter, while occupancy was 44%, up from 25% in Q2,” said Keith Barr, CEO, InterContinental Hotels Group PLC. “Domestic mainstream travel remains the most resilient, and our industry-leading Holiday Inn brand family positions us well to meet that demand as it slowly returns.

“Despite the challenges we’ve faced, we have continued to open new hotels and sign more into our pipeline,” he continued. “This is recognition of consumer preference for our brands and strong owner relationships, and also the long-term attractiveness of the markets we operate in and the relative resilience of our business model. We signed 82 hotels in the quarter, taking us to 263 year-to-date, more than a quarter of which are conversions. As we continue to invest in growth initiatives, we do so with a strict focus on cost reduction and an unwavering commitment to act responsibly for our people, guests, owners and local communities.”

Q3 Highlights

  • Group Q3 RevPAR down 53.4%; continued outperformance in key markets; year-to-date (YTD) down 52.3%
  • RevPAR reflects a 30%pts reduction in occupancy YoY, with rate holding at about 80% of prior-year levels
  • Occupancy improved to 44% from 25% in Q2; 199 hotels (3% of estate) remained closed at Sept. 30
  • Net system size growth of 2.9% year-over-year (YOY); global estate now 890,000 rooms (5,977 hotels)
  • 11,000 rooms opened (82 hotels), 23,000 YTD; 6,700 added across mainstream brands, 4,200 in upscale and luxury
  • Signed a further 14,000 rooms (82 hotels), 40,000 YTD; total pipeline now 286,000 rooms (1,899 hotels)
  • Fee Business costs on track to reduce by about $150 million in 2020; targeting half this level to be sustainable into 2021
  • Positive cash flow in Q3, leading to total available liquidity at end of September increasing to $2.1 billion
  • After issuance of new bonds and partial repayment of 2022 bonds in early October, on a pro forma basis, liquidity increased further to $2.9 billion

“A full industry recovery will take time and uncertainty remains regarding the potential for further improvement in the short term, but we take confidence from the steps taken to protect and support our owners and drive demand back to our hotels as guests feel safe to travel,” said Barr. “Our actions have resulted in ongoing industry outperformance in our key markets, and we remain focused on leveraging the strength of our brands, scale and market positioning to recover strongly and drive future growth.”

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