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IHG sees revenue halve for 2020

Global hotel giant, IHG has posted its Preliminary Results for the year to 31 December 2020, showing £9.6bn total gross revenue, which is down by 52%.

The results are as follows:
• FY RevPAR (52.5)%; variation by region reflects local market Covid-19 restrictions and recovery pace; Greater China recovery most advanced with Q4 RevPAR (18.2)%, Americas (49.5)%, EMEAA (70.5)%.
• Continued outperformance in key markets, driven by portfolio mix and resilience of our business model.
• £107m reduction in fee business costs; targeting ~£53m to be sustainable into 2021, while still investing for growth.
• Operating profit from reportable segments down 75% to £156m
• Strong cash management, resulting in free cash inflow of £21m, with an inflow in H2. Total available liquidity of £1.5bn (on pro forma basis for repayment of £600m UK Government CCFF at March 2021 maturity).
• Global estate now 886k rooms (5,964 hotels), with +0.3% net system size growth
• Signed 56k rooms (360 hotels)
• Global pipeline now 272k rooms (1,815 hotels); 11% share of industry pipeline vs 4% current market share.

CEO Keith Barr said, “Since the very start of the pandemic, we have worked tirelessly to prioritise the health and safety of colleagues and customers, quickly protect our business and our thousands of hotel owners, and help support a strong recovery as travel returns.

'I would like to thank our hotel colleagues and owners for their incredible efforts, including all they have done to help our communities in such difficult times, bringing to life our purpose of True Hospitality for Good around the world.'

Barr continued, '2020 was clearly the most challenging year in our history, with Covid-19 heavily impacting demand across our industry. 2021 has begun with many of these challenges still in place, with more meaningful progress towards recovery for the industry unlikely until later in the year and dependent on global vaccine rollouts, lifting of restrictions and an acceleration in economic activity.

'The shape of recovery remains varied globally, but we’ve continued to outperform the industry in key markets thanks to the strength of our teams, business model and segments in which we compete. This includes our industry-leading position in upper midscale, where demand remains stronger.

'To succeed in this environment, we’ve evolved our purpose as well as our strategic priorities, ensuring a focus on continued investment in our brands and digital capabilities to maximise revenue for our hotels and create more seamless guest experiences; keeping guests and owners at the heart of everything we do; and strengthening how we care for our people, communities and planet.

'These elements form the pillars of our corporate strategy, which together with our new 2030 Responsible Business Plan, will ensure we continue to successfully and sustainably grow our brands and business.'

Barr went on, Despite so many challenges in 2020, the long-term confidence we share with our owners was reflected by another 285 hotels opening during the year and an average of almost one new signing a day.

'Conversion activity increased across our brand portfolio, including the launch of voco in the US and China, taking the brand to more than 20 countries. We’re building avid and Atwell Suites to be future brands of scale, while continuing to drive the growth of our established brands, with strong performances for Hotel Indigo and Kimpton, and our Holiday Inn Brand Family accounting for 60% of all openings and half of all signings in 2020.

Barr concluded, 'Having demonstrated resilience and outperformed in 2020, we continue to work closely with owners to capture demand, alongside investing to capitalise on our industry’s long-term growth prospects.

'Our preferred brands in attractive markets and segments, even stronger technology and loyalty platforms, and a substantial proportion of our pipeline being under construction, give us confidence in our ability to achieve industry-leading net rooms growth as the market recovers.”