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InterContinental Hotels gets staycation boost

by LLB Reporter
22nd Oct 21 11:28 am

The pandemic had an outsized impact on the hotels sector and InterContinental Hotels was no exception.

Today’s update confirms a recovering picture with the company gradually clawing its way back to its pre-pandemic levels of trading.

Its various franchises, including Holiday Inn and Crowne Plaza, have been boosted of late by domestic leisure travel, as people holidayed at home rather than jetted off overseas. This trend was particularly notable in the US where the gap between pre-Covid and post-Covid trading is narrowest.

“The group’s commitment to growth is notable but it is taking a refined approach, rather than chasing growth blindly, with the business also exiting a large number of hotels and committing to the improvement of others,” said AJ Bell’s Danni Hewson.

“The cost base is being steadily reduced, with suggestion these savings can be sustained even as demand returns to more normal levels across the board.

“An advantage InterContinental enjoys over a lot of its peers is it only owns a handful of hotels and focuses instead on franchising and managing premises.

“As well as generating premium margins, the asset light model also enables it to grow quickly with limited capital investment and to focus on building preferred brands based on guests’ needs, and on strong delivery systems, such as its branded hotel websites and call centres.

“This could help it to adapt to changes in the industry – including the potentially permanent reduction in business travel.

“However, for all the positivity the numbers being reported today are in the rear-view mirror and there may be some trepidation that rising Covid rates in some of its markets will lead to renewed restrictions which could negatively affect performance.”

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