10th Aug 2021 09:21
(Alliance News) - InterContinental Hotels Group PLC on Tuesday said trading "improved significantly" in its first half as bookings began to recover and payroll-related reimbursement costs fell.
For the six months to June 30, IHG swung to an operating profit of USD138 million from a loss of USD233 million a year prior despite a 5.6% drop in total revenue to USD1.18 billion from USD1.25 billion.
A slight drop in IHG's overall income was offset by lower reimbursement costs, which fell 37% to GBP236 million in the first half from GBP375 million the previous year.
Reimbursement costs represent expenses incurred by managed and franchised properties, primarily those relating to payroll costs at properties where IHG is the employer.
Significantly, revenue per available room - a key metric in the hotel industry - was 20% higher than at the same time in 2020.
The Buckinghamshire, England-based hospitality provider under brands such as Holiday Inn said its domestic leisure bookings, particularly in the US and China, enhanced its first-half results.
"Trading improved significantly during the first half of 2021, with travel demand returning strongly as vaccines roll out, restrictions ease, and economic activity rebuilds," said Chief Executive Keith Barr.
"Essential business travel" was another crucial factor in the firm's resilience in the first half, IHG said.
Despite some improvement, the FTSE 100 company said the Covid-19 pandemic continued to hurt its financial performance in the first half, as government travel restrictions introduced in 2020 were maintained in most markets to varying degrees.
As a result, IHG did not declare an interim dividend, but was confident the resumption of dividend payments would resume in "due course".
In the first half, IHG opened 132 hotels and signed another 203, compared to 91 signed in that period a year before.
"With the actions we are taking, and a pipeline that represents more than 30% of our current system size, we expect to return quickly to an industry-leading level of net rooms growth," said CEO Barr.
"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," he added.
Shares in IHG were trading down 0.9% at 4,692.00 pence each in London on Tuesday morning.
By Scarlett Butler; [email protected]
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