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IHG swings to profit and announces plans for luxury hotel brand

IHG Hotels & Resorts has revealed plans to launch a new luxury and lifestyle collection brand in the coming weeks to capture increasing conversion opportunities and further strengthen its position in the market.

InterContinental Hotels (IHG) has announced it will launch a new luxury brand as the brand swung to a profit in the first half.

Chief executive Keith Barr (pictured) said: “The addition of a collection brand will provide high-quality independent hotels access to the many benefits of IHG’s system, while retaining a property’s distinctive identity. There are currently around 1.5 million independently run rooms in the market segments we are targeting, and we expect the collection to attract more than 100 hotels within 10 years.”

IHG already has several brands in the luxury and lifestyle segment, including Six Senses, InterContinental, Kimpton and Hotel Indigo and the new brand is said to offer a different price point to its upscale conversion brand Voco.

In its half-year results, the hotel group reported significant improvement in demand, resulting in revenue per available room (revpar) of -43% against 2019 and growth of 20% on 2020, with a 6% drop in total revenue to $1,179m (£851m).

The recovery was most advanced in Greater China with second quarter revpar of -16% on 2019 levels, with continued improvement in the Americas to -26%, while EMEAA remained the most challenged at -65%. UK revpar improved in June to -51% as occupancy improved from 22% in January to over 50% in June.

During the first half, IHG opened 132 hotels, taking its global estate to 5,994 hotels, as well as signing 203 hotels with a global pipeline of 1,805 properties. In the first half of the year 102 hotels were removed, of which 56 hotels were Holiday Inn and Crowne Plaza hotels in the Americas and EMEAA following a review of these estates.

Barr added: “Trading improved significantly during the first half of 2021, with travel demand returning strongly as vaccines roll out, restrictions ease, and economic activity rebuilds. It has been great to see our teams welcome more and more guests back into our hotels, with domestic leisure bookings leading the way, particularly in the US and China. 

“Essential business travel was a key element of our resilience throughout the pandemic, and we are now seeing more group activity and corporate bookings start to come back. These trends and the momentum in the business have continued in recent weeks, including in EMEAA where a lifting of travel restrictions in some markets is also now driving improvements in demand. With occupancy and rate continuing to improve, nearly 50% of our hotels achieved revpar above 2019 levels in July.”

The Holiday Inn owner said travel had been slow to recover in European markets and scrapped its dividend to cut costs.

The group will target high quality independent hotels for its new luxury collection with aims to take on more than 100 hotels within the 10 years.

The hotel owner swung to an operating profit of $138m, compared to a loss of $233 million last year, for the six months ended 30 June 2021.

Revenue per available room (RevPAR), a key performance indicator, was up 20 per cent with recovery in Europe, Middle East, Africa and Asia the most challenged.

Vaccination and the easing of travel restrictions in certain markets drove occupancy and bookings up this summer with nearly 50% of hotels achieving RevPAR above 2019 levels in July.

“Our focus on the quality of our estate remains extremely high, and we’re making rapid progress with the review of our Holiday Inn and Crowne Plaza portfolios to ensure the consistency of these leading brands and that they are well positioned for future growth,” Keith Barr, IHG chief executive officer, said.

“While there is a risk of trading volatility in the balance of the year, and discretionary business trips, group bookings and international travel will take time to fully recover, we are confident in the strength of IHG’s future prospects.”

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