IHG Hit By Weak China, Hong Kong Bookings
InterContinental Hotels Group (IHG) has blamed lower business bookings in China and Hong Kong protests for a 0.8% fall in third-quarter revenue per room.
The hotel industry in general is feeling the impact of slowing global growth, which is denting business travel. IHG rival Hilton Worldwide Holdings Inc has warned that lagging growth in China and the China-US trade war would hurt revenue, and Raffles owner AccorHotels has 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.
Strategies To Woo Business Travellers
IHG 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 that the company is seeing more leisure than business travellers, who tend to spend less money on bookings.
Edgecliffe-Johnson said that the company had also seen some pressure in the United States as US manufacturing businesses cut spending on conference halls bookings during the third quarter.