IHG’s profit slumps 82% in the fiscal H1 due to COVID-19
- IHG’s profit slumps 82% in the fiscal H1 due to COVID-19.
- The hospitality company slashes its workforce by 10%.
- The British firm sees slight improvement in RevPAR in July.
InterContinental Hotels Group (LON: IHG) expressed confidence on Tuesday that early signs of recovery in demand were starting to appear in recent weeks after months of inactivity due to the Coronavirus pandemic that resulted in an 82% decline in its profit in the fiscal first half (H1) of 2020. Its U.S. peer, Marriott International, also reported to have swung to £179.47 million of loss in fiscal Q2 on Monday.
Shares of IHG opened more than 1.5% down on Tuesday. The stock, however, jumped roughly 9% in the next hour to £42.92 per share. InterContinental Hotels Group is currently just under 20% down in the stock market on a year to date basis. At the time of writing, it has a market cap of £7.62 billion and a price to earnings ratio of 26.05.
IHG slashes its workforce by 10% due to COVID-19
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The Holiday Inn owner also highlighted on Tuesday that it was faced with uncertainty in predicting how long it will take for the travel market to pull out of the impact of COVID-19. According to CEO Keith Barr of IHG:
“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.”
Barr also revealed on Tuesday that IHG had slashed its workforce by 10% to shore up financed amidst the health crisis.
In the six months that concluded on 30th June, the hospitality company registered £372.38 million of revenue that represents a 52% decline on a year over year basis. In terms of adjusted operating profit, InterContinental Hotels printed £56.47 million as compared to £312.86 million in the comparable quarter of last year.
IHG sees slight improvement in RevPAR in July
But the average revenue per available room (RevPAR) was seen slowly improving in recent weeks. In July, IHG’s RevPAR was 58% lower versus the year-ago as compared to a much broader 75% annualised decline in the fiscal Q2 at large.
In its announcement on Tuesday, the British company also expressed confidence that it is committed to cutting its fee business costs by roughly £115 million in fiscal 2020. The company’s board decided in favour of keeping the interim dividend suspended to cushion the economic blow from the health crisis.
On Tuesday, IHG boasted to have concluded the fiscal first half with £1.53 billion of available liquidity.