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Coronavirus Dents Bookings For IHG

Published on Feb 21 2020 10:30 AM in Hotel tagged: Trending Posts / IHG / InterContinental Hotels

Coronavirus Dents Bookings For IHG

InterContinental Hotels (IHG) has warned that fewer travellers are booking its rooms in China because of the coronavirus outbreak.

The owner of the Holiday Inn chain has been highlighted by analysts as being among the European companies most directly exposed to the epidemic.

The group began to see an impact on bookings in late January and has now closed or partially closed 160 of its 470 hotels in greater China, it said.

The company's annual results show that revenue per available room (RevPAR) declined by 4.5% in greater China last year while its performance in European and US markets was little changed.

Based on current disruption, the impact equates to approximately $5 million per month for IHG's mainland China business, chief executive Keith Barr said on an analysts call, describing the decline as "a short-term blip".

Barr added that the region contributes less than 10% of group profit.

Last month, IHG  said that it would allow customers to change or cancel stays in mainland China, Hong Kong, Macau and Taiwan at no additional cost up to February 29. Rival Airbnb last week extended its suspension of bookings in Beijing until April 30.

Hilton Worldwide has shut approximately 150 hotels in China, which could hit adjusted core profit in the first quarter by between $10 million and $20 million, chief executive Christopher J. Nassetta said this month.

One yardstick for the impact of the crisis on IHG is the previous SARS outbreak, which cut the company's RevPAR in the Asia Pacific region by 27% during the three months to June 2003.

More At Stake

There is more at stake this time. In 2003, IHG had little more than 40 hotels in China. Now more than 400 of its almost 6,000 hotels worldwide are in greater China and it is constructing almost as many again.

The company has been investing heavily in China, its fastest-growing market, and has revamped rooms at Holiday Inns to woo local business travellers. It plans to open 393 hotels in China and operates four hotels in Wuhan, the centre of the coronavirus outbreak.

"[Greater China] is, though, a smaller part of our business overall, representing 15% of our open rooms and less than 10% of our operating profit," IHG finance chief Paul Edgecliffe-Johnson said.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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