Source: IHG
By Tanishaa Nadkar and Pushkala Aripaka
(Reuters) – InterContinental Hotels warned on
Tuesday that fewer travelers are booking its rooms in China because of the
coronavirus outbreak.
The owner of the Holiday Inn chain has been highlighted by
analysts as among the European companies most directly exposed to the epidemic.
The group had begun to see an
impact on bookings in late January and has now closed or partially closed 160
of its 470 hotels in Greater China, it said on Tuesday.
The company’s annual results
on Tuesday showed that revenue per available room (RevPAR) had already declined
by 4.5% last year in Greater China while performance in European and U.S.
markets was little changed.
Based on current disruption
the impact equates to about $5 million a month for IHG’s mainland China
business, Chief Executive Keith Barr said on an analysts call, describing the
decline as “a short-term blip”.
Barr added that the region
contributes less than 10% of group profit.
IHG last month said that up
to Feb. 29 it would allow customers to change or cancel stays in mainland
China, Hong Kong, Macau and Taiwan at no additional cost. Rival Airbnb last
week extended its suspension of bookings in Beijing until April 30.
Rival Hilton Worldwide has
shut roughly 150 hotels in China, which could hit adjusted core profit in the
first quarter by between $10 million and $20 million, Chief Executive
Christopher J. Nassetta said this month.
One yardstick for the impact
of the crisis on the company is the previous SARS outbreak, which cut IHG’s
RevPAR in the Asia Pacific region by 27% in the three months to June 2003.
There is more at stake this
time. In 2003 IHG had little more than 40 hotels in China. Now more than 400 of
its almost 6,000 hotels worldwide are in Greater China and it is constructing
almost as many again.
The company has been
investing heavily in China, its fastest-growing market, and has revamped rooms
at Holiday Inns to woo local business travelers. It plans to open 393 hotels in
China and operates four hotels in Wuhan, the center of the coronavirus
outbreak.
“It (Greater China) is,
though, a smaller part of our business overall, representing 15% of our open
rooms and less than 10% of our operating profit,” said IHG finance chief Paul
Edgecliffe-Johnson.
(This story has been refiled
to correct to February 29 from February 3 in paragraph 7.)
Editing by David Goodman
_____
Source: Reuters
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