Holiday Inn-owner IHG reports drop in quarterly revenue per room

Earnings


Holiday Inn-owner InterContinental Hotels Group blamed lower business bookings in China and Hong Kong protests for a 0.8% fall in third-quarter revenue per room on Friday, the latest company to be pinched by weaker global travel.

The hotel industry, in general, is feeling the impact of slowing global growth, which is denting business travel. Rival Hilton Worldwide Holdings Inc warned that lagging growth in China and the China-U.S. trade war would hurt revenue. Raffles owner AccorHotels narrowed its full-year profit guidance, citing uncertainty on China-related issues.

Four months of protests in Hong Kong have taken a toll on tourism, while weak economic data from China has been discouraging.

IHG reported a 6.1% fall in revenue per available room (RevPAR) in Greater China during the quarter, with a 36% drop in Hong Kong. 

“While we are certainly not at the stage where business travel has been scaled back on a large scale, the cracks are certainly showing,” AJ Bell’s Investment Director Russ Mould said.

Shares in IHG, which has nearly 5,800 hotels including the Crowne Plaza and Regent Hotels & Resorts brands, fell nearly 2% in early trade on Friday.

The company has been putting more money into China, its fastest-growing market, using new loyalty programmes, digital payment options and revamping rooms at Holiday Inn to woo local business travellers. Of the 13,000 rooms IHG opened across its brands in the quarter, 4,100 were in China.

But Chief Financial Officer Paul Edgecliffe-Johnson said the company was seeing more leisure than business travellers, who tend to spend less money on bookings.

Edgecliffe-Johnson said the company had also seen some pressure in the United States as U.S. manufacturing businesses cut spending on conference halls bookings during the third quarter.



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