The hotel chain says protests in Hong Kong has caused revenues in the region to fall by more than a third.
News reporter @JournoKiwi
Friday 18 October 2019 11:19, UK
InterContinental Hotels Group has blamed continuing protests in Hong Kong for a fall in revenue per available room.
The protests began in June as a reaction to a now-abandoned bill that would have seen those suspected of crimes in Hong Kong facing extradition to China.
But over the past few months, the campaign has widened to encompass general anti-China feeling in the city, as residents fear their freedoms are being eroded.
InterContinental, which owns nearly 5,800 hotels under names including Holiday Inn, Crowne Plaza and Regent Hotels, said revenue per available room (revPAR) fell by 36% in Hong Kong during the third quarter.
Worldwide, its revPAR fell by 0.8%, with lower business bookings in China and a tougher trading environment in the US also among the reasons. But by the same measure, Europe and the UK saw an increase.
Chief executive Keith Barr said: “Despite the weaker revPAR environment, and the challenges some of our markets are currently experiencing, we remain confident in our financial outcome for the rest of the year.”
InterContinental shares were down by almost 2% on Friday morning following the news, which comes after similar warnings from competitors such as Hilton Worldwide Holdings and AccorHotels.
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Russ Mould, investment director at AJ Bell, said weaker economic conditions were particularly bad for big hotels that cater mainly for business travellers, with businesses seeing travel as “an easy place to make cuts”.
He added: “The hotels industry has a ferocious appetite for growth and continues to expand at a fast rate. This is fine when demand is strong but if the world does go into a more difficult time economically then the hotel sector could face a situation where prices fall due to excess capacity.
“Hotels are operationally geared – they generally have a large amount of fixed costs so in good times profit can rise at a much faster rate than revenue. But in a downturn profits can fall much faster than sales.
“While we are certainly not at the stage where business travel has been scaled back on a large scale, the cracks are certainly showing. Consumer travel demand has also been patchy of late.”
Also on Friday, easyHotel said its revPAR was down by 0.7% in the year ending 30 September.
They blamed “ongoing political and economic uncertainty”, adding: “Although the London market has continued to perform strongly, with revPAR growing by 4.5%, the regional UK market’s revPAR has remained weak, down some 2.8%, with a number of regions experiencing double digit revPAR declines during the calendar year.
“While the European markets have on the whole continued to outperform the UK, performance has been mixed on a country-by-country basis with revPAR growth slowing during the second half of the financial year.”
