Multinational Hospitality Group InterContinental Hotels Group (LON:IHG) slides its shares on Friday as its third quarter results presented continued damages being made by Covid Pandemic.
Occupancy improved from 25% in the second quarter to 44% in the third quarter, but this level was 30% of activity in the same period last year. Leading primarily by Covid restrictions, the decline in occupancy was caused by hotels remained closed and 3% of the InterContinental Hotels portfolio (199 hotels) remained closed.
These trends are reflected in the company’s financial performance, with third quarter revenues down 53.4% per room available. This means that revenue for the previous year fell 52.3% year-on-year.
But there was room for optimism. In the third quarter, the company opened 82 new hotels and signed 14,000 more rooms. This has resulted in a total of 23,000 rooms being opened in 2020, with up to 890,000 rooms increasing by 2.9% across 5,977 hotels.
Additionally, the company booked positive cash flow in the third quarter, with total liquidity rising to £2.1 billion at the end of September. He added that it is on track to cut business costs by £150 million, targeting at least half of that number as “sustainable in 2021.”
InterContinental Hotels abandon themselves
Throughout the tough year, CEO Keith Barr discusses both the challenges and opportunities ahead.
Despite the challenges we face, we are opening new hotels and continuing to sign more pipelines. This is a perception of the relationship between consumer preferences and strong ownership for our brands, as well as the long-term appeal of the markets we operate and the relative resilience of our business models. We signed 82 hotels in the quarter, and it was 263 from the start of the year, but over a quarter of that is conversion. As we continue to invest in growth initiatives, we focus on our rigorous focus on cost reductions and our unwavering commitment to acting responsibly for people, guests, owners and communities. ”
“While a full industry recovery takes time and uncertainty remains about the potential for further improvements in the short term, we are confident from the measures taken to protect and support owners and promote demand for hotels, as guests feel safe travel. Our actions have led to continuous outperformance of the industry in our key markets. We are focused on leveraging the strength of brand, scale and market positioning to strongly recover and drive future growth.”
Investor’s Notes
Following the news, InterContinental Hotels Group fell at 2.39% or 102.00p, bringing its share of 4,161.00pa at 23/10/20 12:38 BST. This level is about 5% above the analyst’s target price 3,951.54pa share, but is below the six-month height of 4,484.00p seen in September.
Analysts currently have a “hold” stance on the company’s stock. The AP/E ratio is 18.38 and currently has a “underperformance” rating of 66.92% from the MarketBeat community.
