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Earnings

Holiday Inn owner cuts jobs after first-half profit slump

FILE PHOTO: A Holiday Inn hotel in Tbilisi, Georgia, June 8, 2016. REUTERS/David Mdzinarishvili

(Reuters) - InterContinental Hotels IHG.L will reduce staff by 10% at the corporate level, its chief executive said on Tuesday, after the Holiday Inn-owner's revenue more than halved and profit slumped 82% in the first half of 2020.

IHG, whose other brands include the Crowne Plaza, Regent and Hualuxe hotel chains, also underlined that it had limited visibility on when the travel market would recover after six months that have seen billions in business travel and holidays cancelled due to the pandemic.

The job cuts, announced internally in July, follow similar moves by major hotel operators, including Europe's biggest hotel group Accor ACCP.PA, Premier-inn owner Whitbread WTB.L and Hyatt Hotels H.N as they battle one of the worst downturns in the hotel industry.

“The impact of this crisis on our industry cannot be underestimated, but we are seeing some very early signs of improvement as restrictions ease and traveller confidence returns,” CEO Keith Barr said.

In line with other major hotel operators, IHG’s revenues dropped 52% to $488 million and adjusted operating profit was $74 million, down from $410 million a year earlier, as the group strove to cut costs and get hotels up and running again.

However, it said there were “small but steady” improvements in hotel room revenues (RevPAR) - a key performance indicator for the industry - with July RevPAR seen down 58% after a near 75% slump in the second quarter.

Shares in the company, which have fallen around 20% this year, were up 4% by 1133 GMT.

IHG, which employs around 400,000 people globally, said it was on track to reduce costs in its fee business by about $150 million this year.

“As ever is the delicate balancing act, and as with many companies, this necessary reduction in cost has sadly had to involve looking at headcount across the business,” Barr said in a call with analysts.

Reporting by Yadarisa Shabong and Samantha Machado in Bengaluru; Editing by Aditya Soni/Patrick Graham/Susan Fenton

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