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IHG Says Business Travel Returning; Labour Shortages Cloud Premier Inn Owner's Bullish Outlook

Published on Oct 26 2021 2:00 PM in Hotel tagged: Whitbread / Premier Inn / InterContinental Hotels Group / IHG

IHG Says Business Travel Returning; Labour Shortages Cloud Premier Inn Owner's Bullish Outlook

InterContinental Hotels Group (IHG) has said that it is seeing encouraging signs of recovery in business and international travel, with strong corporate bookings in the United States as the Holiday In...

InterContinental Hotels Group (IHG) has said that it is seeing encouraging signs of recovery in business and international travel, with strong corporate bookings in the United States as the Holiday Inn owner's room revenue inches closer to pre-COVID-19 pandemic levels.

The owner of the Crowne Plaza, Regent and Hualuxe hotel chains said that hotel room revenue (RevPAR), which is a key performance indicator, rose 66% in the third quarter, with the United States down just 7% from 2019 levels after a busy summer season.

"Domestic leisure demand was particularly strong in a number of markets over the summer, where occupancy and rate climbed back to 2019 levels," CEO Keith Barr said.

IHG said that it is encouraged by signs of an uplift in business travel, group bookings and international trips during September.

Companies in the travel and hospitality industry around the world are recovering from the pandemic, as higher vaccination rates and an easing in restrictions spur an uptick in business and leisure travel.

However, renewed lockdowns due to the spread of the highly-contagious Delta variant, together with pre-flight COVID-19 tests as well as remote work options, still pose a significant constraint for the sector.

Revenue in IHG's Americas region, which account for the bulk of the group's revenue, rose 76% in the quarter and was down 10% compared to 2019.

In China, like other hotel operators such as Marriott International, IHG saw a hit in August from new restrictions.

IHG shares were down 1.5% by 0725 GMT on Friday October 22, with Citi analyst James Ainley saying it reflected the company's underperformance as compared to industry data.

"[IHG's] key Crowne Plaza and Holiday Inn brands in particular weak relative to their segments," Ainley added.

IHG has been reviewing around 200 Holiday Inn and Crowne Plaza hotels to save cost and position itself for growth post COVID-19. It has exited or confirmed the exit of 90 hotels already, it said.

It is targeting an additional $25 million in cost savings this year.

Labour Shortages Cloud Premier Inn Owner's Bullish Outlook

In other global hotel news, Premier Inn owner Whitbread on Tuesday October 26 reported a smaller half-year loss and predicted a full recovery at its UK hotels in 2022, but warned of labour shortages across the industry as it set aside tens of millions of pounds to attract new hires.

The company, which has 30,000 staff in 1,200 its hotels and restaurants across Britain, said that it plans to spend approximately £23 million on salary increases and one-off bonuses as it deals with a "material number of vacancies".

Staff shortages due to the health crisis are widespread but Britain is also dealing with the fallout from Brexit, which has significantly reduced EU workers across a range of industries from poultry to the haulage sector.

"Overall within the industry there is a shortage of people who are available for work, particularly experienced people where the training load is less," chief executive Alison Brittain told a media call. "I think it [labour shortages] is a combination of a number of factors that have all come together at the same time...We just have to work out over a little period of time whether it is a structural issue or a temporary issue."

The company said that high occupancy levels at its hotels combined with the market-wide supply chain issues and tighter labour supply, especially in tourist locations and London, has created a challenging operating environment.

The owner of steakhouses Beefeater and Bar+Block reported a narrowing in its adjusted pre-tax loss to £56.6 million for the six month period that ended on August 26 from £367.4 million a year earlier.

Shares in Whitbread, which is now seeing pre-COVID-19 pandemic levels of demand in some regions, were up 3% on the FTSE 100 blue-chip index by 0825 GMT on Tuesday October 26.

The company said that RevPAR, which is a key performance indicator for hotel operators, on a like-for-like basis in the UK could potentially reach full recovery at some point in 2022.

"The pandemic has likely seen smaller operators forced to close, creating a gap into which Whitbread can expand in the UK," Hargreaves analyst Nicholas Hyett said.

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

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