InterContinental Hotels Group (IHG) will save around $150m (£126m) by scrapping its 85.9¢ final dividend as it battles a collapse in demand for hotel rooms following the outbreak of coronavirus. It stands to save as much as $150m more through cost-cutting measures that include “substantial decreases” in executive salaries and incentives.
Demand for hotels is “currently at the lowest levels we've ever seen”, the hotel group said. IHG experienced an almost 90 per cent fall in Greater China revenues per available room (RevPAR) during February, and expects this metric to drop by 60 per cent around the world as governments increase limits on social contact and travel. The number of hotels closed in Greater China peaked at 178 - this has now fallen to 60 hotels, as reports indicate that China appears to be arresting the pandemic.
IHG has also experienced some disruption to its Chinese business from the Hong Kong protests that took place earlier this year. IHG’s global RevPAR during January and February fell 6 per cent.
IHG is bringing its gross capital expenditure down by around $100m, having recorded a gross capital outlay of $265m last year. The group’s balance sheet also appears robust, with $1.2bn of IHG’s $1.4bn revolving credit facility currently undrawn, while its first bond maturity of £400m is not due to be paid until 2022.
