IHG Announces $150m Of Cost Cuts
InterContinental Hotels Group (IHG) has announced $150 million of cost cuts to help cope with travel restrictions and lockdowns caused by the coronavirus pandemic.
IHG said that it expects the revenue it gets globally from hotel rooms (RevPAR) to plunge by approximately 60% in March, with steeper declines in markets that have gone into lockdown.
The group said that cancellations for April and May and current booking trends point to continued challenging conditions, but added that it has begun to reopen hotels in China.
IHG operates more than 5,900 hotels worldwide, with nearly 900,000 rooms across 100 countries.
Dividend Withdrawal And Available Cash
The group joined hundreds of other listed companies in withdrawing its final dividend and deferring any further decisions on payouts for now, while also cutting capital spending by approximately $100 million.
IHG said that it has $1.2 billion in un-drawn cash available under a revolving credit facility if need be.
Cost Saving Steps
The group stated that it has taken steps, including reducing salaries, incentives and "substantial" cuts for board and executive committee members, that will save $150 million in costs.
"These were not easy choices, and we are mindful of the impact these decisions will have on our colleagues and shareholders," CEO Keith Barr said.
"In greater China, we now have 60 hotels closed compared to 178 at the peak, and, in recent days, have begun to see improvements in occupancy, albeit at low levels," IHG said.