InterContinental Hotels Group revenues feel global strain

InterContinental Hotels Group revenues feel global strain
Fewer business travelers in China and protests in Hong Kong hit InterContinental Hotels Group earnings in the first half of the year, but its operating profit globally rose 14 percent to $457 million. (Reuters)
Updated 06 August 2019

InterContinental Hotels Group revenues feel global strain

InterContinental Hotels Group revenues feel global strain
  • Major hotel chains fear trade wars and a slowing world economy will dampen spending on business travel and leisure

BEIJING: InterContinental Hotels Group (IHG) reported marginally higher first-half room revenue on Tuesday, though fewer business travelers in China and protests in Hong Kong led to a decline in demand from Greater China.

The owner of brands such as Crowne Plaza, Holiday Inn and Hotel Indigo said revenue per available room (RevPAR), the industry’s key performance measure, rose 0.1 percent for the six months ended June 30. In Greater China, where the group operates about 400 hotels, revenue per available room (RevPAR) fell 0.3 percent, IHG said.

Keith Barr, who took over as chief executive in July 2017, has steered the company toward affluent Chinese customers to lessen dependence on highly mature US markets, while aggressively rebranding to compete against the likes of Marriott International and Hilton Worldwide Holdings.

“Whilst there are always macro-economic and geopolitical uncertainties in some markets, our broad geographic spread and the resilient, cash-generative nature of our business gives us confidence in the outlook for the balance of the year,” Barr said in a statement.

Several of IHG’s competitors and an industry group have warned that escalating trade wars and a slowing world economy were set to dampen spending on business travel and leisure, including that in the Chinese market.

Last month, Europe’s largest hotel group Accor predicted another “record year” after a strong quarter, but warned the trade standoff between Washington and Beijing made improvement difficult in China.

Hilton also predicted a weaker second half in China and cited the global slowdown as it cut its full-year outlook for a key revenue gauge, even as its quarterly profit beat forecasts.

China let the yuan breach the key 7-per-dollar level on Monday for the first time in more than a decade on Monday, in a sign Beijing might be willing to tolerate more currency weakness, which could further inflame tensions with the US.

IHG, the owner of brands such as Crowne Plaza, Holiday Inn and Hotel Indigo said comparable RevPAR increased 0.1 percent in the Americas for the first-half but declined 0.7 percent in the second-quarter hurt by the shift in the timing of Easter and the lapping of hurricane related demand at the start of the quarter.

First-half operating profit rose 14 percent to $457 million.