The boss of hotel giant IHG has revealed demand for hotels is at the “lowest levels’ it has ever seen as the coronavirus continues to impact the hotel industry.
In an update it revealed that IHG’s Global RevPAR decreased 6% across January and February, with a broadly flat performance in the US offset by declines in Greater China, which saw an almost 90% decline in February.
During March, given the measures adopted by governments around the world to restrict travel and social contact, it said it anticipates Global RevPAR declines of around 60%, with steeper declines in those markets most impacted by restrictions.
However, In Greater China it said it now has only 60 hotels closed compared to 178 at the peak, and in recent days has begun to see improvements in occupancy, “albeit at low levels”.
It also added it has “acted decisively” across the business to challenge all discretionary costs and reduce salary and incentives, including “substantial decreases” for board and executive committee members. These measures will result in a reduction of up to $150m (£127m) in its fee business costs.
Keith Barr, CEO, IHG, said: “At this unprecedented time, our top priority remains the health and wellbeing of our guests, colleagues and partners, and ensuring that in light of such a significant impact on the global economy and, in particular, on the travel industry, we take the right steps to protect the long-term health of our business.
“Demand for hotels is currently at the lowest levels we’ve ever seen. IHG has a robust business model and the measures we are announcing today to reduce costs and preserve cash give us the capacity to manage the business through this unique environment and to support our owners during this incredibly difficult time.”
He added: These were not easy choices and we are mindful of the impact these decisions will have on our colleagues and shareholders. However, we believe that these are essential to ensuring that we come out of this as strong as we possibly can and ready to capitalise on what remains an industry with excellent long-term growth potential.”